Charities that do not develop effective risk management plans face potentially crippling bills for damages, according to the Association of British Insurers.
The ABI has produced a free guide, Living with Risk, for voluntary organisations.
It says good risk management should involve assessing the risks of potentially hazardous activities, minimising risks through training and appointing someone responsible for health and safety.
Nick Starling, the association's director of general insurance, said: "In the voluntary sector, managing risk is especially important because of the wide range of activities involved and the often limited resources it has to deal with the financial implications if things go wrong.
"Effective risk management should be straightforward and common sense, an integral part of planning for any event."
The guide was welcomed by Shirley Scott, chief executive of the Charity Finance Directors' Group. "If risk management helps contain insurance premiums, it must be worth the effort," she said.
However, a 2003 survey of voluntary bodies by Charity Logistics and research firm Z/Yen found "no relationship between risk management and insurance premium prices increases".