The Five Keys to Risk Management for Higher Education Boards
As fires, school shootings, and public scandals at colleges and universities hit the headlines, risk management for higher education is taking center stage for boards. Potential legislation targeting campus safety is also putting added pressure on higher education boards, motivating them to focus more intently on risk management.
Risk management requires boards of higher education institutions to take an enterprise-wide view of risk oversight. As risks evolve and change in priority, risk management is also evolving and changing.
How College and University Boards Are Making Risk Management a Priority
The risk management landscape for colleges and universities is starting to look different in recent years than in the past. For example, the 2022 United Educators Top Risks Survey, highlighted the following changes in the priorities of risks at colleges and universities:
- Risks related to recruitment and hiring leaped from 14th place to 3rd place.
- Student mental health ranked 5th (included in the survey for the first time).
- External pressures (economic, societal, and political) were a non-issue for the last few years, but are now in the top ten.
- Risks related to the past pandemic and future pandemics dropped to 20th place.
In other statistics, 67% of college and university leaders cited enrollment and retention of students as a top risk priority, followed closely by data security, which is a concern for 65% of higher education leaders.
Boards must also be concerned about the outlook for higher education, which isn’t strong. According to FitchRatings, the outlook in 2023 is “deteriorating” compared to the prior year. Higher Ed Dive cites an S&P Global press release, which shows the outlook for higher education as “mixed” — slightly more optimistic than the FitchRatings assessment.
College and university boards are making risk management for higher education a priority by evaluating the change in risks and the potential for them to occur. Considering the drastic changes in the risk profile of higher education institutions, boards are taking steps to reduce their liabilities and keep students and faculty safer.
The Five Keys to Risk Management for Higher Education Boards
To combat and mitigate risks, college boards can take a five-step approach to risk management for higher education that includes identifying, analyzing and evaluating risks, implementing a risk management program, and monitoring their efforts.
1. Identifying Risks
The first key to developing any risk management plan is to identify potential risks, which is no small task. Senior administrators are a valuable resource for understanding the issues that drive various risks in this industry, as they have a “boots on the ground” perspective.
Colleges and universities face a variety of types of risks, such as:
- Insurance risk
- Strategic risk
- Financial risk
- Operational risk
- Compliance risk
- Reputational risk
In assessing potential risks, boards need to evaluate their risk profile and align it with the institution’s philosophy, goals, and objectives. Identifying risks may require boards to work with multiple investment managers and financial experts. Furthermore, boards must connect the dots between the top risks and relate them to the various types of risks listed above.
For example, the top risk priority for colleges and universities is enrollment and retention, and decisions about improving enrollment could involve strategic risk, financial risk, operational risk, and reputational risk.
Many colleges and universities have specific types of operational risks. Certain institutions that have a strong focus on research must factor in risks related to handling toxic materials, safe laboratory practices, designing research facilities, and similar risks. These types of operational risks often correlate with compliance risks in the research fields such as laws and regulations that govern medicine and science.
Another area of great risk is college athletic activities, where risks include injuries, equipment safety, facility safety, crowd control, and traffic control. Risks in this area could encompass insurance risk, financial risk, operational risk, and reputational risk.
2. Analyzing Risks
Colleges and universities won’t have to look too far to find tools to help them analyze their risks. The most effective tool is a matrix in which risk management teams can classify risks as low, medium, high, or extreme.
Templates are also helpful for evaluating and prioritizing risks. In analyzing risks, your board will get a clearer picture of how a certain risk impacts policies and processes.
3. Evaluating Risks
Evaluating risks is different than analyzing risks because it involves understanding how a particular risk will impact the institution overall. Minor risks may be worth taking, while major risks require greater planning and consideration.
A good strategy to evaluate risks is to list all activities within each classification and enter the associated risks for each activity. These steps will help teams assign a risk score based on the severity of the risk and the probability of it occurring. The matrix is also a helpful tool for listing ways to mitigate or manage each risk.
4. Implementing a Risk Management Program
Each step of a risk management program requires risk management teams to revisit the institution’s strategy, goals, history, and condition of the campus, including the property, students, and resources.
Before determining how best to implement risk management for higher education programs, risk management teams must develop shared definitions for risk management terms to reduce communication problems during the next step – monitoring and reviewing the risk management plan.
5. Monitor and Review the Risk Management Plan
To ensure accountability, boards may decide to designate a particular individual who is responsible for creating and implementing the risk management program and developing a timeline. The risk manager should develop a risk portfolio, which can provide the basis for validating and prioritizing risks as they emerge.
The board must play a continual role in overseeing and monitoring the risk management program, as risks affect nearly every part of higher education. This responsibility extends to ensuring that all stakeholders do their part to protect the institution from risk.
Board Technology Provides a Secure Platform for Risk Management Planning
Together, a strategic risk management plan and technology support good governance principles to ensure the sustainability of today’s higher education institutions. With a platform like BoardEffect, risk management for higher education is much easier for boards to tackle, as it has the necessary tools and features to get the job done efficiently.
BoardEffect features a secure platform that ensures secure communications. As an added benefit, board administrators can set up granular permissions to control who has access to various parts of the risk management process.
See how BoardEffect, a Diligent Brand, can help your higher education board strengthen your risk management and organizational resilience. Request a demo today.
