Background checks crucial for nonprofits

For nonprofits, the volunteer workforce is often critical to the safe and successful running of events. But with volunteers come risks.

While bad apples can be found everywhere, in any organization, the reputational repercussions for nonprofits from illegal or improper activities can be dire. That’s why insurers for nonprofits encourage the use of background checks on all volunteers.

Peter Persuitti, managing director of the nonprofit practice at Arthur J. Gallagher, said nonprofits were held to incredibly high standards – and not conducting background checks could open them up to serious reputational harm.

“One of the things that has been very clear in our understanding of risk is that, especially with employees and volunteers who are dealing with children, or dealing with vulnerable situations, or transporting people … that you really ought to do background checks,” he said.

And while the market is mature enough to know that 94% of crimes are committed by people who have passed background checks, allowing someone through the cracks could spell particular disaster for a nonprofit, Persuitti said.

“Reputational damage is [risk] number one,” he pointed out. “Nonprofits are held to a much higher standard than even the President of the United States, if you think about it. So there’s that potential… the stakes are extremely high for the institution.

“And there’s also, of course, other things that can happen as a result of an organization’s negligence. Coverage could be cancelled on a go-forward basis. So now there would be the chance that the organization doesn’t have the exposure or the risk covered or they have to go find it somewhere else. So there’s a myriad of things, but I think reputational damage and the harm to the victim – those things are just so huge.”

When it comes to background checks, nonprofits should also ensure they’re using a properly accredited company to conduct the screening, he added. Failure to use a proper organization can lead to other problems, like in one instance Persuitti mentioned, where a huge data breach at a nonprofit is speculated to have come from a third-party screening company.

Storms

Corelogic has released its 2017 Storm Surge Report which shows that nearly 6.9 million homes along the Atlantic and Gulf coasts are at potential risk of damage from a hurricane storm surge inundation with a total reconstruction cost value (RCV) of more than $1.5 trillion. The reconstruction cost value is the cost to completely rebuild a property in case of damage, including labor and materials by geographic location, assuming a worst-case scenario at 100-percent destruction. Storm predictions indicate the 2017 hurricane season will see fewer storms than both 2016 and the 30-year average. The National Oceanic and Atmospheric Administration (NOAA) predicts 12 total storms, six of which will develop into hurricanes, and three of those are predicted to be Category 3 or higher.

Corelogic’s latest study examines risk from hurricane-driven storm surge for homes along the Atlantic and Gulf coastlines across 19 states and the District of Columbia, as well as for 86 metro areas. Homes are categorized among five risk levels: Low (homes affected only by a Category 5 storm), Moderate (homes affected by Category 4 and 5 storms), High (homes affected by Category 3, 4 and 5 storms), Very High (homes affected by Category 2, 3, 4 and 5 storms) and Extreme (homes affected by Category 1-5 storms).

“Despite the fact that this year’s hurricane season is predicted to have fewer storms than last year, it doesn’t mitigate the risk of storm surge damage,” said Dr. Tom Jeffery, senior hazard scientist at CoreLogic. “As we’ve seen with past storms, even one single hurricane at a lower-level category can cause significant damage if it makes landfall in a highly populated area.”

At the regional level, the Atlantic Coast has 3.9 million homes at risk of storm surge with an RCV of $970 billion, and the Gulf Coast has just under 3 million homes at risk with $593 billion in potential exposure to total destruction damage.

At the state level, Texas and Florida – which have the longest coastal areas – consistently have more homes at risk than other states. Again this year, as in previous years, Florida ranks first with just under 2.8 million at-risk homes across the five risk categories, and Texas ranks third with 536,000 at-risk homes (Table 3). Since the number of homes at risk strongly correlates with the accompanying RCV, these two states rank first and fifth, respectively, for having the largest RCV).
States with less coastal exposure but lower-lying elevations that extend farther inland, such as Louisiana (ranked second at 808,000 at-risk homes) and New Jersey (ranked fourth at almost 470,000 at-risk homes), tend to have more total homes at risk because of the potential for surge water to travel farther inland. Louisiana and New Jersey are also near the top of the list for RCV, with Louisiana totaling almost $181 billion (ranked second) and New Jersey totaling $140 billion (ranked fourth).

At the local level, 15 Core Based Statistical Areas (CBSAs) account for 67.3 percent of the 6.9 million total at-risk homes and 68.6 percent of the total $1.56 trillion RCV . This disproportionate distribution of homes suggests that the location of hurricanes that make landfall is often a more important factor than the number of storms that may occur during the year. The Miami CBSA, which includes Fort Lauderdale and West Palm Beach, has the most homes at risk totaling almost 785,000 with an RCV of $143 billion. By comparison, the New York City CBSA has slightly fewer homes at risk at 723,000, but a significantly higher total RCV totaling $264 billion due to the greater home values and high construction costs in this area.

Corelogic