Is enterprise risk management worth the effort? What’s gained by evaluating top risks across an entire college or university?
A recent survey of 921 higher education leaders found a “conflicted” attitude toward comprehensive risk programs. Academic leaders say that ERM is an institutional priority, yet many of them don’t follow through. At Grinnell, we examined risks across the institution and found these seven methods of ERM can help a campus learn to engage with risk in productive and creative ways.
1. Make risk your lingua franca.
When college leaders speak the language of risk, they discover one another’s concerns and motives. By imagining how institutional strategies and operations could be derailed, they gain respect for what colleagues face. Planning to address shared risks can increase communication across offices and departments.
To make budget decisions this year, we practiced adding risk as a criterion. The common currency of risk factors helped us determine what to fund right away and what could be postponed.
2. Stalk your risks like wild animals.
Some risks on campus—such as fraud prevention and food safety—are well managed, like domesticated animals. But even domesticated animals can sometimes suddenly turn on their handlers.
If your campus is revising emergency plans or compliance policies, these could represent examples of a second type of risk. These animals have been captured, but not yet tamed. For these, we need to develop better management methods.
Finally, consider elusive risks. What hazardous materials are stored on campus? Are multiple offices approving travel abroad? These risks still live in the wild. It’s tempting to ignore elusive risks, hoping they’ll keep their distance. Even if action is obviously needed, responsibility remains unclear.
3. Assign risk accountability.
What happens when the risk lacks an owner? This problem was famously described after General Motors faced a rash of ignition-switch failures—everyone had responsibility to fix the problem, but no one took responsibility. One executive called it the “GM nod,” when everyone nods in agreement to a proposed plan of action, but no one does anything.
Interdisciplinary risks—not clearly located in one office—are easily neglected. Examples include coordinating access for people with disabilities and keeping minors safe on campus.
4. Exploit risk gateways.
The risk gate opens when someone submits an application, request or other bid for approval. Is that concert venue equipped for pyrotechnics? Does this expenditure comply with the terms of the grant?
Risk gatekeepers learn that if they don’t seize this chance to inquire, the true extent of any risks involved is unlikely to be volunteered by those proposing the activity.
5. Mobilize the four Ts.
A risk can be addressed by one or more of these classic options:
- Terminate the risk (discontinue, prohibit or avoid offering a high-risk activity).
- Treat with preventive measures that reduce risk impact or likelihood.
- Tolerate the risk (e.g., focus on response instead of prevention).
- Transfer or share a portion of the potential loss, via contracts or insurance. Discussing these four paths can reveal a productive direction once the “risk” label is deemed applicable.
6. Engage risk as a system.
Action taken to soothe one risk may exacerbate another. For example, new security measures can impede efficiency. Try to forecast possible consequences of any risk treatment—a cascade of cause-and-effect that might otherwise become visible only after the damage is done.
7. Know thyself through risk.
While risk management—like any field—can bristle with technical formulas and jargon, its basic principles can readily assist college leaders. The real challenge is understanding how decisions are made at your institution.
In the end, how does risk management differ from just plain “good management?” The difference is in its forward-looking focus. Even a glimpse of the path ahead can suggest how best to prepare, and can give campus leaders a little more time to respond.
Paula V. Smith is a professor of English and director of the Purposeful Risk Engagement Project at Grinnell College in Iowa.
