Increasing attention is being paid to risk management by governing bodies. This in part reflects cases of ineffective risk management in the private sector, which have resulted in corporate failure. Equally, the action of higher education governing bodies is in response to the increasingly uncertain and less predictable operating environment faced by institutions.
Governors must be mindful of risk, and, in particular, be vigilant as to whether the decisions they are being asked to make bring significant reputational or financial risks. Where they do, governors need to assure themselves that the risks has been fully assessed and effective mitigation strategies adopted to minimise the likelihood of any adverse reputational or financial consequences occuring.
The Scottish Code of Governance (p9) emphasises that 'institutions must adopt a risk-based approach to strategic planning.' In otherwords when selecting a strategy, institutions need to assess the risks associated with the different stratgic options, and take account of the risks when selecting their preferred option.
For further information about risk management read Governors' briefing No. 8: Risk Management.
The 'Getting to Grips with Risk' provides a detail discussion of, for example, risk management and governors, the types of risk faced by higher education institutions (HEIs) and a sample risk register (Annex A).
HEFCE has a webpage devoted to 'Risk management guidance'. Publications listed on the page include 'Risk Management: a guide to good practice for HEIs' and 'Handbook for members of Audit Committees in HEIs'.
Although there are clearly differences between private sector companies and HEIs, case examples of what undermined the existence or reputation of commercial companies can nonetheless offer useful insights and increase awareness of some of the risks that HEIs should be mindful of. 'The ‘Road to Ruin - a study of major risk events: their origins, impacts and implications’ provides examples of risk management failures and the problems encountered by mainly commercial organisations.
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