By DAN REYNOLDS, senior editor of Risk & Insurance®
It's not that colleges and universities are ignoring the precepts of enterprise risk management. It's just that there is much more work to be done in not only conducting better ERM but in raising the awareness of its importance.
Those are the findings of a study conducted jointly by the Association of Governing Boards of Universities and Chevy Chase Md.-based United Educators, the risk retention group that counts more than 1,100 schools as members.
Janice Abraham, the president and CEO of United Educators, said the ERM study was conducted because both associations had their suspicions that ERM at our nation's schools needed a little kick in the butt.
"We wanted to take the temperature of the community knowing that senior leadership of institutions needed to become invested in this issue," said Abraham.
The response rate to the survey, for one, was worth mentioning. Out of 4,192 surveys sent out to both public and private universities, 606 schools responded, for a response rate of 15.3 percent.
That alone, according to Abraham, is an indicator that many more boards and administrators need to grasp the importance of ERM.
"The 15 percent response rate I think is indicative that it hasn't registered as much as we had hoped," Abraham said.
PRIVATE VS. PUBLIC
Abraham said another factoid that came out of the survey is worth noting. Even though 80 percent of our nation's students attend public institutions of higher education, 77 percent of schools that responded to the survey were private institutions, not public.
"There is clearly a lot more public than private institutions, and yet the response rate was really flipped in this so that was a concern because clearly public institutions, they do have a different governance structure, they clearly have a different funding structure but enterprise risk management is critical for them," Abraham said.
Other responses of note? More than 60 percent of responding schools noted that their organizations do not conduct comprehensive strategic risk assessments. In addition, fewer than 42 percent of responders report frequent monitoring of political or reputational risks that pose serious threats to college campuses.
9 ACTION STEPS
The purpose of the survey was not merely to take the temperature of the risk management capacity of schools. It was also to provide a checklist for university administrators who want to bolster their risk management programs.
The survey provides nine action steps and five examples of what United Educators considers best practices, guidelines that administrators and board members can use to get their programs started or to expand them.
It includes a worksheet as a way of helping school officials get started in assessing who in their institution should be responsible for analyzing and reporting on risk exposures in such areas as academic affairs, operational risk and external relations, for example.
The point being that, in these times of tight finance and radically altered budgets, risk managers and their associates needn't look at their risk management quest as some impossible budget item that's going to get laughed off the table at the next board meeting.
Abraham stressed that changing the mindset of an educational institution as it relates to risk management is something that can be just as well accomplished with organization, communication and willpower, as it can be with greenbacks.
Abraham said written survey responses from many risk managers indicated that they needed emotional support as much as anything.
"There was just a cry to help us get started. Budgets were just starting to compress on campuses and they wanted some very specific guidelines, and so that is what led us to these best practices," Abraham said.
July 7, 2009
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