Top risks in education

Article

Top risks in higher education

Taking an enterprise approach to risk management for tertiary education institutions

What are the top risks in tertiary education today? How can an enterprise approach to risk management help Tertiary Education Institutions (TEIs) take effective action to avoid risks as well as prepare for worse case scenarios to lessen the damage of events that are out of their control? By taking an “enterprise” approach to risk management, organisations can be more proactive and prepared; avoiding, accepting, mitigating, sharing, or exploiting risk where possible, or responding to tertiary education issues and challenges more effectively when they arise.
 

Breaking down siloes

Many TEIs are re-thinking how they look at risk. Whereas risk management has historically been confined to specific domains (compliance, internal audit, safety, insurance) and often managed in siloes, TEIs today are realising their risk portfolio is inherently interconnected. Greater visibility helps but is often not enough. Polytechnics, universities and Wānanga are finding they need the infrastructure—governance, data, processes, and culture—to be prepared for the threats (and opportunities) that will determine whether they can survive or thrive.

TEIs do not need to have all the answers to all the risks they face, but they can be more aware of the increasingly wide spectrum of threats affecting them and thus more proactive. Institutions should also consider developing an "enterprise" approach to risk management, as opposed to siloed plans that exist within specific divisions or units to deal with risks specific to their function or mission.
 

Five tertiary education risk categories

Looking at recent examples of brand and financially-damaging events, five broad categories emerge: Business model risks, reputation risks, operating model risks, enrolment supply risks, and compliance risks. These risks begin to show why the sector has been steadily investing in the people, systems, and capabilities to survive in the new normal of perpetual discomfort.

  1. Business model risks
    Business model risks challenge an institution's ability to generate adequate revenue and, in some cases, to even exist. The factors below impact the sustainability and relevance of the tertiary education business models in an environment where new approaches to education delivery, revenue generation, and enrolment are evolving rapidly. Institutions that do not plan for these factors may find themselves outpaced by more agile competitors.

  2. Reputation risks
    In the 24/7 news cycle where negative headlines score highly, tertiary education institutions have become more frequent targets. Institutions with reputational awareness and control over their increasing presence in the media can reduce the risk of damaging a reputation they have spent years building.

  3. Operating model risks
    Operating model risks stem from inadequate processes, people, and systems that affect an institution's ability to function efficiently and effectively. Operational agility is critical to staying competitive, flexible, and relevant as strategies and business models shift. Tertiary education operating models involve a range of activities such as how to deliver academic and vocational programs, conduct research, make decisions, manage relationships with vendors and partners, or sustain enrolment.

  4. Enrolment supply risks
    In the absence of robust, consistent student enrolment, tuition-dependent institutions cannot sustain their financial health and fund operations. Gaps between estimates and actual student enrolment limit the ability to forecast faculty/departmental turnover, resource use, and infrastructure needs to support the student population. Supply risks have been top of mind for many institutions recently due to the impact of COVID-19 border restrictions on international student enrolments.

  5. Compliance risks
    Leadership and governance are expected to remain compliant with a growing array of rules and regulations, including health and safety regulation, privacy legislation, TEC funding rules and more. Failure to comply with these regulations can lead to wide-ranging consequences for the institution and in some cases its leadership and governance personnel.
     

Embracing the new normal

As tertiary education continues to rapidly evolve, new risks will emerge, known risks will take new forms, and crises will inevitably unfold. TEIs should accept that they will not have all the answers. Knowing they have taken steps to be more resilient in the face of risk, Councils, Boards, management, and the rest of the tertiary education community can be more confident as they embrace a challenging future.

Did you find this useful?