Risk management priorities — and challenges — for church leaders (part 1)FEATURE STORIES, RISK MANAGEMENT Tuesday, September 3rd, 2013
By RaeAnn Slaybaugh
New normal realities: (part 1)
Our Roundtable Panel
- (Co-moderator) Peter Persuitti, Managing Director, Global Religious Practice, Arthur J. Gallagher Risk Management Services
- Dana Crowl, Senior Area Vice President — Program Manager, Arthur J. Gallagher Risk Management Services
- Stephen Drachler, PR and Crisis Communications Professional, Drachler and Associates
- Rod Flanders, Director — Agency Division, Church Mutual
- Pat Moreland, Vice President — Marketing, Church Mutual
- Eric Spacek, JD, ARM, Risk Management & Loss Control Senior Manager, GuideOne Insurance
- Cheryl Tamasitis, AVP, Commercial Lines Underwriting, Philadelphia Insurance Companies
- Karl Williams, Business Development Specialist, GuideOne Insurance
- Shawn Yingling, President, Glatfelter Religious Practice
Last month in Charlotte, NC, Church Executive and Arthur J. Gallagher & Co. and its Religious Practice leader, Peter Persuitti, hosted an in-depth roundtable discussion on the “new normal” priorities and challenges facing church leaders.
It took place at the National Association of Church Business Administration (NACBA) annual conference. Several high-level executives representing the most recognizable names in church risk management and insurance were on hand to share their insights.
The highlights of this conversation will be published in two parts. In this issue, we’ll deep dive on church leaders’ top-of-mind concerns. In our October/November 2013 issue, the panelists will offer strategies for overcoming these new-normal challenges.
What areas of risk are keeping your church-based clients awake at night right now?
Eric Spacek: People-related risks. As a former church business administrator, that was always my concern — particularly in the child care area. When children come to church, we’re standing in the place of their parents. We need to be sure children are properly protected. So, screening and protection against predators is critical.
We had an opportunity to ask this question last night at a meeting of Southern Baptist business administrators. Their responses were along the same lines: predators.
The business administrators also raised the issue of benevolence requests — people walking in off the street. They have concerns regarding the safety of church staff in those instances.
Pat Moreland: At churches with schools or camps, I’d add bullying to the list.
Sexual molestation is another big concern, as is the selection and supervision of staff.
And, if you look at risk from a volume perspective, what we see today — as a result of strapped church budgets — is maintenance that needs to be done, but isn’t, and volunteers doing work they aren’t always qualified to do.
We have to help our churches and other customers try to look at things from an outsider’s perspective.
Rod Flanders: Cyber risk is an exposure which most churches have, yet not all realize it. If a church is collecting money and saving financial information, that data can be stolen. So, churches are becoming more aware of their exposures and the need to employ adequate controls to protect the information they capture and store.
Also, a lot of small and midsize churches are starting to understand the exposures they face related to the people leading the church. These people have the fiduciary responsibilities, or they’re on the board of directors. Large churches have understood these risks for many years, and the types of folks who sit on the boards of these institutions are usually aware of their obligations and the responsibilities they have assumed. In smaller institutions, though, that hasn’t always been the case. I think it’s important that we continue to make them aware of their exposures in this area.
Shawn Yingling: Churches face many challenges when managing their exposure to loss. Protecting their buildings, their staff members and their congregation is important.
What is also important in this day and age is managing the actual costs that a church incurs versus its budgeted costs. I hear this very frequently from churches and religious organizations of all sizes. A church sets an annual budget and allocates funds to meet anticipated expenses. However, as the church moves through the year, the actual expenses incurred many times stray from what has been planned for and allocated. That certainly causes stress within the organization and is cause for keeping church leaders awake at night.
Stephen Drachler: In terms of minimizing or negating risk, I think it’s important for church leaders to communicate in ways that help attendees feel comfortable at the church. These people should understand that the church has taken all the appropriate steps to keep their children safe, to protect the staff and so on, because a church is a sanctuary. When you make folks comfortable, I think they’re subconsciously more alert — first of all, because you talk about it; secondly, because if (God forbid) something does happen, it’s recognized as an anomaly versus absolute negligence.
Peter Persuitti: Over the past several years, what do you all think has been foremost on church leaders’ minds, beyond their people and some of the facility/property issues we’ve discussed?
Cheryl Tamasitis: Security. I can’t tell you how many calls we get about that every day. The gun laws are changing, so customers are asking, “Can we allow people to carry concealed weapons on our campus? What do you recommend?”
It’s complicated, because attitudes regarding gun laws vary by region. For example, there was a situation in New Jersey where a minor posted a Facebook photo of himself holding the rifle he’d gotten for his 13th birthday. He was suspended from school, and ATF was at his house. That same photo — if the 13-year-old lived somewhere else — might’ve gotten 10,000 “likes.” So, we’re really trying to get our arms around the security issue.
Another pressing issue is leasing buildings. How does a church keep its beautiful sanctuary in place when only 100 people are showing up on Sunday? It might make sense to lease or rent the space to make extra money. But, many churches don’t have the wherewithal to ask for certificates of insurance, to have somebody from the church onsite to lock up afterwards, and so on.
Peter Persuitti: Dana, do you have anything to add from a ministry perspective?
Dana Crowl: I think there are lots of emerging issues. But, there are also concerns that are consistently present.
For instance, so many of the churches I talk to don’t understand why they can’t have 15-passenger vans. They hear this from all of us at the table, but they really don’t understand the reasons why transportation is such an issue. I think this confusion is coming back to the forefront because church leaders want to reach outside of their churches to minister and bring people in.
As a whole, I feel that we haven’t done the best job of explaining what the exposure is regarding 15-passenger vans, and why there’s an issue. We could do that by talking about some of the past losses. I think we really need to continue to focus on these risks, and not lose track of the transportation issue — how numbers of people can be killed at one time.
My daughter is on a missions trip within the U.S. right now. They took a big bus to New York. Thinking about that, you wonder, Did they take all the right precautions?
Pat Moreland: We’ve actually done a lot in the way of educating churches on the risks associated with operating 15-passenger vans. We issued an alert on these vehicles even before the federal government did, and we’ve frequently communicated to our customers the measures they need to take to make their vans safer.
We still insure tens of thousands of 15-passenger vans. We’ve produced two videos on the topic, and we offer a booklet and driver checklists to help our churches operate them safely.
Would we love for churches to get rid of them altogether? Yes, absolutely. But, we’ve got to cover them if we’re in the church market. So, we’ve chosen to try to make their operation safer.
Peter Persuitti: It’s amazing to me that church planning committees spend so much time going over the financials. Those are important, obviously, to the church’s viability; but, why aren’t they dedicating the same focus and time to risk management? Why aren’t they making it a “standing item” on their agenda?
Cheryl Tamasitis: I think it’s because nobody really wants to take ownership of it. They have to be diligent about risk management and take it seriously, not just talk about it.
Have recent national events — mass shootings, bombings and so on — impacted church leaders’ risk management priority lists?
Karl Williams: Yes. Sandy Hook and other shootings have been instrumental in putting the protection of kids at the top of many churches’ priority lists.
And, few years ago, a shooter came in to the midst of a Baptist church in Dallas. That definitely brought the gun issue to the forefront, there. So, yes, all the issues related to shootings are high on the list.
But, sometimes the urgent risks come up very quickly, and the important, more common risks get put on the back burner. It’s easy to say that all risk issues should be on the front burner in a church, but is that realistic?
To piggyback a little bit on what [Moreland] just said, one avenue we’ve taken is to provide risk management education to our customers. Beyond just insuring churches, we’ve been focusing on coming alongside them with our risk management expertise. I think that’s important in this market — that churches know there’s somebody out there with the right knowledge, and who’s accessible to them. They can get that from us online, or we can go out there personally to help them along.
Persuitti: How do we know that that information and assistance we’re providing churches is impacting their priorities? Are there ways to measure that?
Eric Spacek: It’s really anecdotal. For us, we can tell by following up with conversations to hear about the steps they’re implementing.
For me, the foundational piece in this whole discussion is that risk management and safety is ministry. We tend to think of the business side of the church and the ministry side of the church as separate things. Our approach is really to supply “the missing ministry.”
Shawn Yingling: When a church goes about implementing risk control measures, I think there needs to be a buy-in from top management levels. The church needs to really want to do it and see it as benefitting their organization, not just the insurance company. Often, risk management is viewed as one-sided and only benefitting the insurer, so there can be reluctance on a church’s part to implementing a risk control program. But, once there is buy-in from the religious organization, and the potential impact for both parties can be seen, it’s a better playing field and the results become more apparent.
Peter Persuitti: I’ll direct my next question to Steve [Drachler]. We’re all so influenced and impacted by the media, especially church board members. And ours is such a litigious society. I’m just wondering how board members move from watching CNN as observers, to really starting to ask some liability questions at trustee meetings. Am I really covered as a board member? I’m giving up my time and talent, and now — all of a sudden — I’m being approached to buy personal excess liability insurance, personally? We’re all circling around this directors-and-officers coverage issue: Am I personally putting my family and assets at risk?
Stephen Drachler: Getting away from business jargon is important. Directors and officers need to begin looking at what they do — at work, at home and at play — from a theological perspective.
My work is a ministry, with a clear theological foundation. When I go to a congregation, I don’t just talk about what I do; I talk about how it relates to our theological basis, our own polity, and the church’s polity.
Peter Persuitti: It’s great that you say that. With church boards, I’m seeing many “half-timers” who are making move from their corporate success to wanting to bring significance to their work and are now running or leading some of our faith-based institutions. I think it’s very exciting, impressive and promising.
— Reporting by RaeAnn Slaybaugh
Editor’s Note: Look for part 2 of this roundtable round-up in our October/November 2013 issue.
An employee benefits/HR perspective
Sitting in on the roundtable discussion was Philip C. Bushnell, area executive vice president and managing director of the religious and nonprofit practice group at Arthur J. Gallagher Risk Management Services.
For his part, Bushnell contends that many of the questions posed are equally applicable to the employee benefits and human resources aspects of his company’s offerings.
What areas of risk are keeping your church-based clients awake at night right now?
Philip C. Bushnell: The continually rising cost of health insurance, coupled with the increasing burden of compliance with state and federal regulations, is becoming nearly impossible to manage. The Affordable Care Act has added new layers of compliance that might require some churches to revamp their benefit plan design, eligibility provisions, payroll and record-keeping systems.
Organizations that employ 50 or more full-time equivalents are forced to make the decision between offering qualified health plans and paying significant penalties.
At the same time, increases in technology, use, required benefit enhancements and fees related to health care reform are causing the cost of health insurance to rise.
What keeps me awake is cost and compliance.
Have certain recent national events — mass shootings, bombings and so on — impacted church leaders’ risk management priority lists?
Philip C. Bushnell: The types of events referenced above can have an impact on our employee assistance programs and create potential problems with absenteeism and/or presenteeism.
However, the recent national events that have a greater impact on our employees and their employee benefits programs are legislative actions, such as the Affordable Care Act (ACA), the preventive benefits provisions of the ACA — such as the HHS contraceptive mandates — and the recent Supreme Court decision on DOMA.
Editor’s note: Part 2 of Bushnell’s benefits-and HR-centric responses to the roundtable questions will appear in our Oct/Nov 2013 issue.