With ERM, educational institutions are able to determine both what needs to go right and what can possibly go wrong, and then plan accordingly.
Enterprise risk management (ERM) is an important strategic tool to help management evaluate risks that could impact an organization and hinder its long-term success. While it has proven vital to the overall health of any business or organization, it can be a particularly valuable tool for independent schools.
While many independent schools have enjoyed sterling reputations and legacies that have been built up over many years, there are numerous areas of potential risk to consider. The areas where schools take on risk include athletics, academics, international students, cyber security, general campus security, student travel, fraud, privacy, faculty retention, enrollment, and various forms of misconduct. There is much to protect, and ERM provides that needed level of protection.
The goal of ERM is to identify and prioritize the core risks (both internal and external) to the organization and create a set of tasks and activities to minimize the effects of those risks. This accomplishes many vital tasks, including:
An independent school can implement ERM in four phases, each of which must be followed carefully and deliberately to ensure no key steps are missed. Phase 1 involves basic ERM training for the Board of Trustees and others involved in the school’s governance, and it also lays out the framework for the overall process. The initial discussions on risk need to be broad so all bases are covered, and this is also the phase where any software or technological needs are determined.
Once this is done, Phase 2 involves identifying all possible areas of risk (such as the ones mentioned above and possibly others) and prioritizing them. ERM workshops are conducted with the appropriate participants. Although labor intensive, obtaining input from across the organization is valuable.
Following the determination of specific risks and the workshops, Phase 3 will be where results are communicated to various audiences, and risk mitigation and testing will begin. From here will come the development and testing of formal risk mitigation plans, plans that will be put in place for the long term and become a critical tool in protecting the school’s well-earned reputation.
Even though the plan has been built, tested and implemented, the ERM work is not yet over. Phase 4 is all about risk monitoring and tracking, about ongoing monitoring to ensure no further risks have popped up, and about continual assessment to determine possible improvements. It is Phase 4 where the school can truly be given peace of mind in knowing that not only is there a risk mitigation plan in place, but ways to update and improve them are consistently being considered. A successful ERM program uses Phase 4 to identify and react nimbly to emerging risks on a continuous basis and should be an agenda item at the regular Board meetings. Implementing ERM into a school’s management structure is an involved process, but given the level of risks that these institutions assume on a daily basis, it can prove invaluable.
With ERM, educational institutions are able to determine both what needs to go right and what can possibly go wrong, and then plan accordingly. Schools that respond appropriately to these challenges and build an ERM process around them will not only be more agile in managing these risks, but will also find opportunities for growth and future success.