www UE org Reputational Risk in Higher Ed
- Slides: 27
www. UE. org Reputational Risk in Higher Ed: More Talk Than Action? March 14, 2018
Today’s Speakers Janice M. Abraham Kimberly M. Goff-Crews, JD President & CEO United Educators Secretary and Vice President for Student Life Yale University ERM and Reputational Risk Paul Walker, Ph. D, CPA Executive Director, Center for Excellence in ERM St. John’s University 2
Agenda § § § § Introduction The State of Enterprise Risk Management Keys to Successful ERM Reputational Risk on Campus Reputational Risks in Student Life Building Your ERM Processes How to Protect Your Reputation ERM and Reputational Risk 3
ERM/Reputational Risk Report ERM and Reputational Risk 4
Research Process § Respondents represented § Survey these roles on campus: administered by the Association of Governing Boards Chief Financial 14% Officer of Colleges and 37% President 16% Universities in Chair, Board of February 2017 33% Trustees Other senior administrators ERM and Reputational Risk 5
The State of Enterprise Risk Management (ERM) § § § § § NYSE listing requirements SEC rules (item 1 a, 302, 404, 33 -9089) SEC National Exam Priority Dodd-Frank Act ORSA OMB A-123 Court cases Rating agencies Every major economy has walked down this path ERM and Reputational Risk 6
Swans, ERM, and a Core Competency § White Swans – risks you must see § Grey Swans – risks you should see § Black Swans – risks you could not see ERM and Reputational Risk § White, grey, or black? § Stakeholders might forgive black swans § Stakeholders might not forgive the white and grey swans because… • it signals lack of management/risk competence and poor board risk oversight
ERM on Campus: Signs of Progress 70% 14% of respondents reported having a formal ERM structure and process in place (up from 33% in a similar 2013 survey) believe the process is effective ERM and Reputational Risk 8
Board Engagement in ERM “We need to formalize our ERM and highlight it often. ” “We are just beginning, just getting it off the ground, the momentum is starting to pick up…. ” 2017 AGB/UE Survey: Board Chairs, Presidents, CFOs, GC ERM and Reputational Risk 9
Keys to Successful ERM § Create a structure that gets the right information to the right people at the right levels. § Ensure that everyone knows what the key issues are and what is expected. ERM and Reputational Risk 10
Keys to Successful ERM: Culture and Engagement § Communicate the mission, core values and guiding principles of the institution § Encourage and reward a culture of ongoing improvement and assessment to meet the mission ERM and Reputational Risk 11
Keys to Successful ERM: Focus and Transparency § Focus your efforts “High and to the Right” Vancouver Island University § Be transparent: communicate, coordinate … and communicate again. ERM and Reputational Risk 12
Reputation Risk Is Ascending: Strongly Agree § Reputation risk is more important than three years ago § My institution has identified drivers of reputation risk § A reputation risk plan and response are in place § Response to reputation risk is consistently proactive 83% 78% 67% 26% ERM and Reputational Risk 13
Incidents Threatening Reputation 62% 14% 49% had one major reputation event had 4 – 6 major events had major event that didn’t become public ERM and Reputational Risk 14
Knowing Is Not Planning 26% 54% Reputational risk plan is consistently proactive Don’t believe they have ability to withstand major reputational risk event ERM and Reputational Risk 15
Top Risks: Past and Future ERM and Reputational Risk 16
Reputational Risks in Student Life § Risk registers: student activities are “high and to the right” § Pervasiveness of social media increases risk and speed of impact § Decision-making must be based on mission and values ERM and Reputational Risk 17
Student Life: Top Risks Sexual Assault/Title IX continues to be key risk § § § Prevention and response strategies to sexual misconduct Shifting regulations from OCR Public perception Student Behaviors § § Mental health Alcohol and other drug use prevention and response strategies Student organizations General campus safety Athletics § Safety of athletes; coach and student behavior Campus Climate § Diversity and inclusion of faculty, students, and staff; discussion of controversial topics ERM and Reputational Risk 18
Campus Climate and Controversial Speakers Free Speech Controversy At SMU Makes National Headlines - CBSDFW, August 2017 “White Privilege Seminar” sparks some controversy on ND campus – WNDU, December 2014 The real issue in the campus speech debate: The university is under assault – Washington Post, August 2017 ERM and Reputational Risk 19
Controversial Speakers: Key Risk Mitigation Strategies § Establish rapport with a wide range of students at all times § Communicate principles of freedom of expression, academic freedom, and diversity and inclusion § Ensure that key policy and protocol is in place § Develop communications protocol § Invest in continuous training ERM and Reputational Risk 20
Building Your ERM Processes ERM and Reputational Risk 21
The new Framework adopts a components and principles structure. ERM and Reputational Risk
The Non-Value Obvious “The board’s post-mortem is just one more way in which the Sandusky scandal continues to divide the university’s leads and to consume time, energy and emotion. ” says Robert Capretto, a Penn State University trustee. “It wears on you, I’m tough, but if I told you it didn’t wear on you, I’d be lying. ” --Chronicle of Higher Education, 3/20/17 ERM and Reputational Risk 23
The Value Question § But does ERM work? Add value? § Higher performing institutions are more likely to: § Have a formal ERM § Assign adequate resources to manage reputation risk § Know when a reputation risk event has occurred § Have a better reputation ERM and Reputational Risk 24
How to Protect Your Reputation 1. Develop a common understanding of the institution’s reputation 2. Assess and strive to steadily improve the culture 3. Identify ownership and lines of communications for specific reputational risks 4. Pay attention to sacred cows 5. Manage reputational and other risks in a portfolio and understand how the risks are connected 6. Share the risk register and mitigation plans regularly with the board 7. Establish a monitoring system that will give early warning of emerging reputational damage ERM and Reputational Risk 25
Questions? ERM and Reputational Risk 26
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