Action Steps in Strategic Risk Management
Sessions in this track focused on risk management at the institutional level as well as management of specific campus incidents.
The Role of Top Leadership
College presidents and boards should collaborate in developing a system of risk management at the strategic level, according to a survey by the Association of Governing Boards (AGB) and United Educators (UE). The survey report, “The State of Enterprise Risk Management at Colleges and Universities Today,” was featured in the session “Creating a Risk Discipline: Action Steps for Boards and Leadership.”
Nikki Krawitz, vice president, finance and administration, University of Missouri System; Janice Abraham, president and CEO, United Educators; and Richard Legon, president, AGB, shared five best practices that college presidents and boards can use to assess risk:
- Define risk broadly. Institutions need to think of risks other than those financial risks covered by insurance. In 2000, NACUBO identified five types of risk: strategic, financial, operational, compliance, and reputational.
- Recognize both the opportunities and downsides of risk. Institutions should weigh risks against potential rewards, understanding that promising opportunities often involve heightened risk.
- Develop a culture of evaluating and identifying risk at multiple levels. Presidents and board members rarely see the first warnings of risk. Institutions need to identify and assess risks regularly at multiple levels so that the most critical ones filter up to top decision makers.
- Look at the total cost of risk. Risk is not just about dollars and cents. Institutions must consider all the consequences of risk, such as negative publicity.
- Boards and presidents should collaborate. By working together, presidents and boards can fulfill their shared responsibility for ensuring the success of the mission and stability of the institution.
The full report, including action steps and worksheets, can be found on AGB's Web site.
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