Reputational Risk in Higher Ed: More Talk Than Action? March 14, 2018

Kimberly M. Goff-Crews, JD Today’s Speakers Janice M. Abraham Kimberly M. Goff-Crews, JD Paul Walker, PhD, CPA President & CEO Secretary and Vice President for Student Life Executive Director, Center for Excellence in ERM United Educators Yale University St. John’s University ERM and Reputational Risk

Agenda Introduction The State of Enterprise Risk Management Keys to Successful ERM Reputational Risk on Campus Reputational Risks in Student Life Building Your ERM Processes How to Protect Your Reputation ERM and Reputational Risk

ERM/Reputational Risk Report ERM and Reputational Risk

Research Process Respondents represented these roles on campus: Survey administered by the Association of Governing Boards of Colleges and Universities in February 2017 Respondents represented these roles on campus: ERM and Reputational Risk

The State of Enterprise Risk Management (ERM) NYSE listing requirements SEC rules (item 1a, 302, 404, 33-9089) SEC National Exam Priority Dodd-Frank Act ORSA OMB A-123 Court cases Rating agencies Every major economy has walked down this path ERM and Reputational Risk

Swans, ERM, and a Core Competency White Swans – risks you must see Grey Swans – risks you should see Black Swans – risks you could not see White, grey, or black? Stakeholders might forgive black swans Stakeholders might not forgive the white and grey swans because… it signals lack of management/risk competence and poor board risk oversight ERM and Reputational Risk

ERM on Campus: Signs of Progress 70% of respondents reported having a formal ERM structure and process in place (up from 33% in a similar 2013 survey) 14% believe the process is effective ERM and Reputational Risk

Board Engagement in ERM “We need to formalize our ERM and highlight it often.” “We are just beginning, just getting it off the ground, the momentum is starting to pick up….” 2017 AGB/UE Survey: Board Chairs, Presidents, CFOs, GC ERM and Reputational Risk

Keys to Successful ERM Create a structure that gets the right information to the right people at the right levels. Ensure that everyone knows what the key issues are and what is expected. ERM and Reputational Risk

Keys to Successful ERM: Culture and Engagement Communicate the mission, core values and guiding principles of the institution Encourage and reward a culture of ongoing improvement and assessment to meet the mission ERM and Reputational Risk

Keys to Successful ERM: Focus and Transparency Focus your efforts “High and to the Right” Vancouver Island University Be transparent: communicate, coordinate … and communicate again. ERM and Reputational Risk

Reputation Risk Is Ascending: Strongly Agree Reputation risk is more important than three years ago My institution has identified drivers of reputation risk A reputation risk plan and response are in place Response to reputation risk is consistently proactive 83% 78% 67% 26% ERM and Reputational Risk

Incidents Threatening Reputation 62% had one major reputation event 14% had 4 – 6 major events 49% had major event that didn’t become public ERM and Reputational Risk

Knowing Is Not Planning 26% Reputational risk plan is consistently proactive 54% Don’t believe they have ability to withstand major reputational risk event ERM and Reputational Risk

Top Risks: Past and Future ERM and Reputational Risk

Reputational Risks in Student Life Risk registers: student activities are “high and to the right” Pervasiveness of social media increases risk and speed of impact Decision-making must be based on mission and values ERM and Reputational Risk

Student Life: Top Risks Sexual Assault/Title IX continues to be key risk Prevention and response strategies to sexual misconduct Shifting regulations from OCR Public perception Student Behaviors Mental health Alcohol and other drug use prevention and response strategies Student organizations General campus safety Athletics Safety of athletes; coach and student behavior Campus Climate Diversity and inclusion of faculty, students, and staff; discussion of controversial topics ERM and Reputational Risk

Campus Climate and Controversial Speakers Free Speech Controversy At SMU Makes National Headlines - CBSDFW, August 2017 “White Privilege Seminar” sparks some controversy on ND campus – WNDU, December 2014 The real issue in the campus speech debate: The university is under assault – Washington Post, August 2017 ERM and Reputational Risk

Controversial Speakers: Key Risk Mitigation Strategies Establish rapport with a wide range of students at all times Communicate principles of freedom of expression, academic freedom, and diversity and inclusion Ensure that key policy and protocol is in place Develop communications protocol Invest in continuous training ERM and Reputational Risk

Building Your ERM Processes ERM and Reputational Risk

The new Framework adopts a components and principles structure. ERM and Reputational Risk

--Chronicle of Higher Education, 3/20/17 The Non-Value Obvious “The board’s post-mortem is just one more way in which the Sandusky scandal continues to divide the university’s leads and to consume time, energy and emotion.” says Robert Capretto, a Penn State University trustee. “It wears on you, I’m tough, but if I told you it didn’t wear on you, I’d be lying.” --Chronicle of Higher Education, 3/20/17 ERM and Reputational Risk

But does ERM work? Add value? The Value Question But does ERM work? Add value? Higher performing institutions are more likely to: Have a formal ERM Assign adequate resources to manage reputation risk Know when a reputation risk event has occurred Have a better reputation ERM and Reputational Risk

How to Protect Your Reputation Develop a common understanding of the institution’s reputation Assess and strive to steadily improve the culture Identify ownership and lines of communications for specific reputational risks Pay attention to sacred cows Manage reputational and other risks in a portfolio and understand how the risks are connected Share the risk register and mitigation plans regularly with the board Establish a monitoring system that will give early warning of emerging reputational damage ERM and Reputational Risk

Questions? ERM and Reputational Risk

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