What Every Pastor Should Know About
Risk Management - Part 1

It is true of many professions that there can be a surprising difference between what you study in school to prepare for your profession and what you actually need to know once you begin to work. I have heard many times from pastors who assure me this is accurate for them as well.

Studies in eschatology and ancient languages and the most current evangelistic techniques have an obvious benefit to ministers. However, many pastors are surprised to discover they also need other skills. They must know how to run a board meeting, review financial statements, negotiate contracts, manage risk, and navigate legal issues, and more.

The good news is that Adventist Risk Management has educational resources, tools, and strategies to assist you as you lead your flock. You do not have to navigate this alone. This article will introduce some of the key issues you need to be familiar with in the area of risk management. A second article will cover a few more essential points, and resources to help you delegate and collaborate with team members, such as a safety officer/committee, to effectively address risk in your areas of ministry.

So, what is risk management? We think of risk management as having three pillars.

1. Risk Identification is about knowing and understanding what risks we face. For example, we might analyze the facility through a self-inspection and discover a ripped carpet, which is a tripping hazard.  
2. Risk Control is about taking measures to prevent or minimize risks. In our example, we might prevent people from walking where the carpet is ripped and identify the area with a sign until it can be replaced or repaired.
3. Risk Transfer is another word for insurance. In our example, this could be an insurance policy through the local conference that responds to pay the medical bills if,  due to the ripped carpet, someone trips, falls and injures themselves.

The Facility and Activities

Most of the risks we usually think of take place in the context of our property and our church’s activities. You can easily think of examples or risks to your property, such as an electrical problem that would present the risk of fire. Another example might be damage to the roof that causes water damage. There are risks associated with activities, such as transportation risk, including the potential of a vehicle accident en route to an event. Other risks associated with activities involve the possibility that somebody might experience an injury at an event such as camping or at a park.

Give thought to these hazards, and put plans in place to regularly assess and respond to maintenance issues and safety hazards as they arise. At adventistrisk.org free resources are available to help your church determine maintenance needs, and safety hazards around your facility and campus.

Working with Contractors and Third Parties

What is the risk/reward for working with a contractor or vendor versus doing it ourselves? Like most nonprofits, ministries need to be very careful with their funds. This is especially true with money that has been donated to the organization. This can often lead to the temptation to take shortcuts to "save money" for the organization by having volunteers do things that should be done by professionals.

Sometimes a risk is best distanced from our organization to control it, even if that comes with an upfront extra expense. For example, when it comes to high-risk professional work such as roofing or electrical work, it is best to hire a contractor rather than do it ourselves. Ask the contractor to provide proof of liability insurance, which can respond if they damage the building or cause injury to members or guests. They should also have workers’ compensation to respond if their employees are injured while doing the work. Their insurance should pay if their work fails and causes damage or injury in the future.

But what if you have a professional electrician in your congregation who is willing to do the work for free? This can seem like a significant cost-savings up front. However, your organization may have no protection if the property is damaged in the course of this work. You may also be held liable without the limitations that come with workers’ compensation if a volunteer worker is injured on the job.

Often hiring a reputable contractor is a better way to manage risk, even if that comes with an additional upfront expense.

Fraud and Embezzlement

Unfortunately, fraud and embezzlement do take place in church ministries. As a Christian leader, you have a duty to be aware of this risk and ensure the appropriate steps are taken to prevent it.

Fraud is intentional deception for personal gain. The “fraud triangle” offers three reasons why someone may commit fraud in your church:

1. Opportunity – they have access to organization funds
2. Pressure – they face personal financial challenges
3. Rationalization – they have come to believe they are justified in taking the funds

Internal controls are policies or procedures put in place to safeguard church assets. The goal of internal controls is to limit the opportunity section of the fraud triangle. They also protect treasurers and church leadership from accusations of misappropriation.

Learn more about preventing fraud and embezzlement, including internal controls, red flags to look out for, and more at the following resources:
 

• Article: Is There a Thief in your Church?
• Article: Church Embezzlement: How to Lower the Risk

Risk management is one of those areas that a pastor or any church leader can benefit from continued learning. This discipline serves to help the individual leader and the church body avoid costly pitfalls and unfortunate distractions from the core work of ministry. As a pastor, you have a leadership role in your church and your community. You are the shepherd of your flock, responsible for the care, safety, and well-being of your members, ministry leaders, volunteers, and those you are seeking to reach in your community.

In part two of this series, we will look at more essential issues and some valuable opportunities to delegate and collaborate to ensure that risk management is integrated effectively across the culture of all the church’s ministries.

If you have found this article helpful, please consider sharing it with a pastor or leader you think might find this information useful.
 
 Image Credits: Photo by Ben White on Unsplash.