The Risk and Insurance Management Society, Inc. (RIMS) Board of Directors (Board) has agreed that reserves (consisting of the Net Assets amount shown on the balance sheet) should be maintained at a level of at least 50% of the annual budget. For the purposes of this policy, the budgeted revenues and expenses are considered equal in any given year.
Should the reserve level fall between 45% and 49%, the Executive Director (XD), with input from the Chief Financial Officer (CFO), will create an action plan to correct the problem, and notify the Board. A quarterly report will be made to the Board until reserves are again at least 50%.
Should the reserve level fall between 40% and 44%, the XD, with input from the CFO, will create an action plan that is shared with the Board. Monthly reserve-level updates will be made to the Board until reserves are again at least 45%.
Should the reserve level fall below 40%, The XD, with input from the CFO, will directly involve the Board in creating an action plan and request their approval of the steps to be taken. Monthly reserve-level updates will be made to the Board, and monthly Executive Committee meetings will be held to discuss the deficit, and how to cure the problem, until reserves are again at least 40%.
The Board may, at its discretion, decide to intentionally use the reserves in such a way that the balance will fall below 50%. Such an action must be voted on and approved during a Board meeting. In that instance, the above actions will still be required.