Innovating to Better-Manage Risk

United Educators, a higher-education insurance company, and the Association of Governing Boards of Universities and Colleges have released the results of a survey that shows "less than a quarter of colleges regularly assess how they could prevent or respond to threats such as criminal acts, environmental catastrophes, and financial misconduct. And half of colleges plan for such risks only after receiving an audit, experiencing a campus crime, or seeing the fallout from such a problem on another campus."

United Educators' chief executive was quoted in a news release saying, "This data is certainly a wake-up call for higher-education leaders that they need to make enterprise risk management a priority now so they can avoid such pitfalls.”

Why should you care? You should care because how a university plans and prepares to manage risk can affect the people who live, work and visit campus, and people in the surrounding community. Risk management also affects the financial standing of the university and the university's reputation.

Several people responded to an online posting of the story. Some of them felt risk management only adds to a university's bureaucracy while others understand the potential value in planning and preparation.

Earlier this year, UNC Charlotte formed the Risk Management Department, which combined the offices of Business Continuity Planning, Police and Public Safety, Environmental Health and Safety and Risk Management and Insurance.
Bringing these four areas under one umbrella is a relatively new model, though Cornell University has utilized this structure for many years.

UNC Charlotte is adopting a model that is visionary by combining four operating units together in an umbrella organization to assist in the ERM initiative.”

The areas represented by the Risk Management Department have contact with virtually every operating unit across campus. By bringing them into one unit, the University will benefit from improved communication and strategic planning. Because large research universities such as UNC Charlotte operate as small cities, they are subject to adverse situations that can impact students, faculty, staff and visitors.

There are many scenarios that could affect operations or the University’s reputation, including a pandemic, such as swine flu; a residence hall or laboratory fire; severe weather; or sanctions resulting from failure to comply with federal, state or local regulations.

Risk won't go away, and occasionally adverse thigs happen. But the Enterprise Risk Management approach will help plan for and manage the risks inherent in operating a public research university.