Dealing with risk is very much a management activity. But there is a clear responsibility for all governors. Guidance from PricewaterhouseCoopers notes that, "The governing body of any higher education institution is ultimately responsible and accountable for the operation of the organisation".
What this means in practice is that the governing body should, as a minimum, ensure that there is an ongoing process for identifying, evaluating, and managing the risks faced by the institution, and should review this process regularly.
Within this, the governing body must also establish its risk appetite – this is the overall level of risk exposure that the institution is prepared to accept. Establishing the risk appetite helps a board to consider the way it responds to risks, and what it is prepared to undertake or not. The level of acceptable exposure will vary between institutions depending on numerous factors, and the views of the funding bodies and other external stakeholders on risk tolerance will also be an important influence.
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