Magazine article University Business

Taking Risks with Risk Management

Magazine article University Business

Taking Risks with Risk Management

Article excerpt

JANICE ABRAHAM REFERS TO THE RESULTS OF A RECENT RISK management study as a wakeup call for higher ed leaders. "They need to make enterprise risk management a priority right now," says Abraham, CEO of the education insurance company United Educators, which co-sponsored the study with the Association of Governing Boards of Universities and Colleges.

"There seems to be, across higher education, an understanding of the importance of enterprise risk management," explains Richard Legon, AGB president. Yet of the 600 respondents--mainly presidents, chief financial officers, and governing board members but also including provosts and risk managers-only one-quarter conduct a comprehensive risk assessment on an annual basis.

In fact, 60.1 percent of respondents report that they do not identify major risks to the success of their institution's mission through comprehensive strategic assessments. Instead, they are likely to evaluate risks on an ad hoc basis, with respondents citing events such as a campus incident, an audit, or the aftermath of another institution's tragedy (such as Virginia Tech's) as prompting action.

Less than half of respondents "mostly agreed" that their institutions adhere to the following recommended attitudes:

* An institution's appetite and tolerance for risk need to be understood and be part of the institution's decision-making culture.

* Risk tolerance ought to guide strategic and operational decisions.

As for who is making those decisions, discussion and consideration of institutional risks take place most often in finance and audit committee meetings, as opposed to meetings of the full board, as is recommended in the report. …

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