Property damage and lawsuits threaten international NGOs

International aid groups increasingly work in high-risk environments. This makes their employees and operations targets. Most of the time they are accidental targets. But in a troubling turn, militant groups and even nonstate actors are attacking nongovernmental organization staff and property. From hospitals in Yemen to offices in Afghanistan, aid workers run the risk of violence, kidnap and ransom, in addition to other serious threats. As recent raids on food supplies in South Sudan and elsewhere indicate, international NGO equipment and goods are being more frequently targeted for theft and destruction.

The threat is visible in news reports and statistics from the Aid Worker Security Database, among other sources. It is also the troubling message of the Summer/Fall Clements Worldwide Risk Index. Clements Worldwide surveyed more than 400 organizations of varied sizes, including over 100 international NGOs operating in every region. Data on “Top Losses” provide a striking picture of immediate threats to international NGOs.

Property damage: Political risks grow

Aid groups lose more to property damage and destruction than to any other cause. These losses fall into two categories: vehicle fleets and inventory. Both types of losses are closely tied to political violence.

Theft and looting is increasingly centered on the inventory of goods NGOs distribute to beneficiaries — food, tents, clothing, mosquito nets, etc. This theft often occurs in areas in which rival political forces engage in violence with one another and against civilians. Crime is a common method to fund their operations.

Similarly, losses in vehicle fleets increasingly occur in conflict and other high-risk zones. While most vehicle damage is due to accidents, about 40 percent of analyzed fleet claims occurred in the 22 countries designated as severe or extreme risk by Lloyd’s of London. After staff, vehicle fleets are usually an international NGO’s second highest operational cost. Losses in this area not only impede operations. They can impose severe financial costs, especially on smaller NGOs.

General liability: Lawsuit culture takes root outside the US

International NGOs are experiencing more third-party lawsuits from staff, customers and others. For many years, humanitarian aid groups viewed themselves as immune from lawsuits faced by commercial enterprises. The assumption was that regular recourse to the courts was a particularly American phenomenon directed at “deep pocket” corporations.

The Clements Worldwide Risk Index demonstrates that is no longer true — if it ever was. Examples of national staff turning to local courts include employment disputes, accidents and other incidents in offices or distribution centers. In addition, beneficiaries can and do seek legal relief in situations in which they are cared for by an NGO, such as a hospital or other medical facility. There are also direct demands outside of the courts, which would still be covered by a general liability policy.

Given lean NGO budgets, these kinds of suits can be financially devastating. Many NGOs lack adequate and appropriate liability coverage for their operations outside the U.S. Litigation and even the threat of litigation can be costly, as can settlements. Even lawsuits that do not result in guilty verdicts can impose crippling costs on NGOs.

So what can NGOs do to reduce these and other drivers of loss and risk identified in the Summer/Fall Clements Worldwide Risk Index?

Here are a few to consider:

1. Written policies and procedures.

Travel, basic human resources and other guidelines should be provided to all employees — even those heading to “safe” countries. Interactions with national staff, beneficiaries, government officials and others need to be done safely and in accord with all relevant laws and regulations. Also, NGOs need security protocols to protect inventory and vehicles. These include armed guards, increased fencing, and procedures to move these assets in case of political unrest.

2. Training.

A number of reputable training organizations offer programs to teach aid workers how to avoid, and deal with, kidnappers; drive safely and defensively; and understand cultural environments and potential problems. By requiring employees to take these and other training classes, NGOs reduce risk and demonstrate duty of care. This training is included in certain insurance policies.

3. Risk management plan.

NGOs need risk management plans that involve and include security, communications, HR and other relevant departments and operations. If a facility is attacked, staff are injured and goods are stolen, how will your organization communicate with family, other employees, local officials and additional parties? How do you properly document events for various stakeholders? Addressing such situations in an ad hoc way is a recipe for legal and other trouble.

An important part of an effective risk management plan is proper insurance. Many NGOs renew insurance policies annually without analyzing them against current operating processes and conditions. NGOs should regularly review their policies to determine if they meet current needs and if additional insurance coverages — kidnap and ransom, medical evacuation, political violence extension for property, etc. — are necessary. For instance, an NGO recently had $2 million of mosquito nets stolen in a West African country during a political riot. A political violence extension covered the claim.

Unlike commercial enterprises, NGOs often do not have a choice whether or not to operate in high-risk areas, with risks of violence, stolen and damaged property, communicable disease and other threats. There are new forms of risk management designed to meet these particular challenges. The Summer/Fall Clements Worldwide Risk Index confirms the need to make proactive risk management a central part of international NGO operations.

Join the Devex community and access more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.