1. UNCW Institutional Risk Management Tier 1 Update and Trend Report & IRM Policy Overview Presented to the Audit Committee of the Board of Trustees April 3, 2014

2. University of North Carolina WilmingtonAgenda Tier 1 Update and Trend Report: Tier 1 Update and Trend Report:  Senior officer stakeholder analysis workshop  Interviews of key stakeholders/workgroup leads  Evaluation of key risk indicators  Risk trend and reason for change in trend IRM Policy Overview IRM Policy Overview  Policy overview  Policy review and implementation  Next steps

3. UNCW Institutional Risk Management Tier 1 Update and Trend Report

4. University of North Carolina Wilmington Tier 1 Update and Trend Report – 2013 vs. 2012 Senior officer stakeholder analysis workshop Interviews of key stakeholders/workgroup leads Evaluation of key risk indicators Risk trend and reason for change in trend

5. University of North Carolina Wilmington Senior Officer Stakeholder Analysis Workshop Objectives: Objectives:  Ensure senior level officials are better informed about potential risks at an early stage  Have a dialogue about risks and opportunity through the prism of strategic priorities  In accordance with AGB Best Practices, have top administrators prioritize risks and become engaged in evaluating the effectiveness of risk mitigation strategies  Charge workgroups with next steps

6. University of North Carolina Wilmington Senior Officer Stakeholder Analysis Workshop Discussion: Areas of Challenge and Opportunity Discussion: Areas of Challenge and Opportunity Through the prism of institutional priorities: student completion, student recruitment, attracting talent  Each item below received at least 22% of the total points for a particular question (Presented 5 questions and for each question with 5 possible responses, attendees were asked to anonymously rank the top 3.)  Diversity of faculty, staff and students  Employee collaboration and innovation  Compensation philosophy and faculty incentives  Carry forward reform  Enrollment yield and out of state demand elasticity  GA performance measures  Predictive analytics  Space utilization  Operational efficiency  Adherence/awareness of legislation, regulations and university policies  Policies/guidelines for applied learning, service learning and internships  Business continuity planning (disaster resilience)  Health and safety compliance

7. University of North Carolina Wilmington Senior Officer Stakeholder Analysis Workshop Assessment of Mitigation Strategies Assessment of Mitigation Strategies Possible responses were Keep Doing the Same, May Be Able to Reduce Resources, Need to Apply More Resources, and Need to Try Different Approaches  Apply More Resources (Highest to Lowest)  Campus Health & Safety  Regulatory Intervention & Talent Management  Volatile Essential Resources  Continuity of Operations  Try Different Approaches (Highest to Lowest)  Continuity of Operations  Talent Management  Volatile Essential Resources

8. University of North Carolina Wilmington Evaluation of Key Risk Indicators Regulatory Intervention – High Rating Strategic Objective/ Risk Issue Risk Name/ Potential Impact Key DriversRisk Trend Reason for Change in Trend Mitigate regulatory compliance risk in an inherently decentralized environment Inability to comply with all laws and regulations Increase in federal and state regulations Increased regulatory oversight and intervention:  Accountability for safety  Pressure to increase affordability and efficiency  Governance Turnover in positions responsible for compliance in a decentralized environment DOE: Title IX/Clery Act Nationally, OCR investigations, Resolution Agreements, inquiries UNCW: increased use of trained fact finders for investigations and external agency inquiries New reporting and education requirements in the Violence Against Women Reauthorization Act / and Campus Sexual Violence Elimination Act (SaVE) Provision Pending rulemaking on federal financial aid State legislation – tuition agreements, taxation  Deficient coordination and support  Financial losses  Reputational damage  Limits to institutional control

9. University of North Carolina Wilmington Evaluation of Key Risk Indicators Talent Management – High Rating Strategic Objective/ Risk Issue Risk Name/ Potential Impact Key DriversRisk Trend Reason for Change in Trend (No Change) Mitigate talent management recruitment and retention risk Inability to achieve a right-sized, innovative, highly effective workforce Very limited institutional control over compensation Stagnant wages, colliding with greater economic mobility Young professionals perceive the speed of innovation to be greater in healthcare, tech and other sectors Noncompetitive salary/benefits/startup packagesCounterpoints Instit. Quality and Location Staff compensation philosophy FY12 to FY13, Turnover rose from 9% to 10.8%. The highest numbers were in employees with 0-10 years of service. The highest % increase was in employees with 16-20 and 26-30 years of service. Of the total 10.8% workforce turnover, retirements represented 3.0% of workforce turnover. Turnover was highest among professionals and paraprofessionals (these two classes represent 52.5% of all turnover and increased from 10.8% to 14.7%) Faculty turnover is <6% (Note: Fall ‘13 was marked by a number of failed searches and instances of first choice candidates turning down offers)  High quality faculty and dedicated staff are essential to delivering the programs and services that best serve 21st century students  Strategic  Operational

10. University of North Carolina Wilmington Evaluation of Key Risk Indicators Campus Health & Safety – High Rating Strategic Objective/ Risk Issue Risk Name/ Potential Impact Key DriversRisk Trend Reason for Change in Trend (No Change) Mitigate vulnerability of students, faculty and staff in an open environment Inability to achieve the safest possible environment in which to learn Shift in expectations from shared responsibility to the safest possible environment in which to learn Increased frequency of active shooter threat Fire alarms and suppression system upgrades are not adequately funded with R&R-- at UNCW, Dept. of Insurance and ADA improvements are prioritized with receipt funding and one-time general funds. Title IX training of mandatory reporters CY12 to CY13, violent crimes increased from 10 to 15 Weapons violations decreased and many other indicators remained constant Workers’ compensation costs increased 3.5% Student health as self reported by students improved; health center visits increased 11% 1 reportable fire vs. 0 prior yr 1 fire alarm system upgraded in 2013 and two residential sprinkler systems completed in late 2012 (four building system upgrades planned 2014) (Note: Campus-based consulting and training provided by a Title IX National resource group in 2014)  Expectations and accountability for safety and health is increasing, and existing resources must meet stronger requirements  Reputational  Hazard  Operational  Financial  Compliance

11. University of North Carolina Wilmington Evaluation of Key Risk Indicators Continuity of Operations – High Rating Strategic Objective/ Risk Issue Risk Name/ Potential Impact Key DriversRisk Trend Reason for Change in Trend (No Change) Mitigate impact to students, faculty and staff, facilities and operations on a campus vulnerable to natural disasters Inability to complete our teaching, research, and service mission following a disaster Critical restoration abilities rely heavily on redundancy and hardening of critical services, such as power and data Scientific and computer-based research heavily dependent upon specialized equipment and facilities Dependency upon provision of supplies and services Mutual aid is key when there is a larger scale event affecting the region Effectiveness requires developed knowledge, relationships and training of essential personnel Core mission delivery alternatives aid in recovery Addition of MARBIONC building with generators increased availability of hardened research centers Data connectivity made redundant with MCNC site Improved supplier agreements (e.g., fuel contracts) FY13 - process initiated to update FEMA Mitigation Plan, which develops priorities for maintaining and restoring critical services and specialized needs. (Note: FEMA Approved Plan on 3/24/14, thus allowing federal reimbursement) Relationships with county and system  Continuity of operations plans are essential to minimizing the severity of impact and related business interruption caused by natural or manmade disasters  Strategic  Operational  Financial  Hazard  Reputational

12. University of North Carolina Wilmington Evaluation of Key Risk Indicators Volatile Essential Resources – High Rating Strategic Objective/ Risk Issue Risk Name/ Potential Impact Key DriversRisk Trend Reason for Change in Trend (No Change) Minimize the impact of changing resources supporting University mission and goals Shortfalls in funding with limited time to manage accordingly Other state policy funding priorities Heightened competitiveness for research awards Heightened competitiveness for out of state students Limits on available Pell funding Pressure to increase expenses to meet regulatory mandates Updating, retrofitting and replacing critical infrastructure No significant change in the revenue mix Budget cuts FY14 > FY13, but less than FY12Counterpoints Focused management and support of research Innovation in the creation of new revenue sources Improved Moody’s credit rating outlook Monitoring and watching out of state enrollment for any downside impact  Tuition limits, state support, research funding, and outcomes-based policies have the potential to reduce the availability of essential resources  Financial  Strategic  Operational

13. UNCW Institutional Risk Management IRM Policy Overview

14. University of North Carolina Wilmington IRM Policy Overview IRM statement of goals and focus Consistent approach by the entire university Policy Purpose Standards include ISO 31000 and COSO Approach reflects an understanding of the institution and its context Principles reflect ISO 31000, Risk Management Principles and Guidelines Policy Approach and Policy Principles

15. University of North Carolina Wilmington IRM Policy Overview Board of Trustees Chancellor IRM Steering Committee IRM Officer IRM Committee Executive Sponsors, have the authority and commitment to assist those accountable and responsible Responsibilities Processes and Treatment Cyclical, regular processes Formulation and evaluation of treatment measures

16. University of North Carolina Wilmington IRM Policy Review and Implementation Policy Review and Implementation Policy Review and Implementation:  IRM Steering Committee, Academic Coordinating Council, Student Affairs Directors, and Chancellor’s Cabinet  Implementation begins with the establishment of Executive Sponsors, effective July 1. Next Steps: Next Steps:  Refinement of Key Risk Indicators  Repeat cycle of Risk Identification, including but not limited to:  Academic processes for applied learning and research support  Data security (intrusion protection and detection, vulnerability assessment and policy awareness and training)

17. University of North Carolina WilmingtonQuestions