Is risk management worth the time and effort for churches and charities? Yes, say experts.

"Churches and religious charities are facing an increasing threat of insolvency from sexual abuse claims," says Terrance Carter, a lawyer with Carter and Associates in Orangeville, Ont. A specialist in legal issues involving churches, he also noted that costly damage settlements can result from bodily injury and third-party liability claims.

Board members have a legal responsibility to protect charitable property. This means they need to become familiar with legislation governing charities. "Otherwise," says Carter, "directors run the risk of being found in breach of their fiduciary duty or in breach of trust in failing to protect charitable property."

Directors are not only responsible for fundraising mismanagement. One ruling found that directors can be held personally liable for damages. This means that boards are ultimately responsible for what goes on in a church or organization.

As a first line of defence, organizations need to have directors' and officers' liability insurance as well as comprehensive insurance coverage. Carter urges directors to become familiar with the basic terms and provisions of the organization's policies and to upgrade them as necessary.

Second, it is also important to consider incorporating the organization. This creates a separate legal entity, hence reducing the exposure of the members to risk. "It is also wise to compartmentalize high risk operation, such as schools and camps, and incorporate them as a separate entity," says Carter.