Is Your Higher Education Institution Ready for ERM?
Enterprise risk management (ERM) is a practice that is catching on at colleges and universities across the country. But before you take on an ERM implementation project, you should assess whether your higher education institution is actually primed and ready for this intensive, cross-organizational effort.
Here are some items you might consider as you contemplate whether your institution is ready for ERM.
Understand and acknowledge what ERM is
ERM is an ongoing process that identifies, prioritizes, and manages risks across your entire institution. It involves a vast representation of personnel and provides a methodical approach to assessing risks at the entity-wide level before they become damaging. The process provides an objective means of allocating resources and tracking your institution’s plan to respond to risks. The process helps organizations align resources with areas of highest vulnerability in order to protect your organization, which is critical in times of budget cuts or constraints. Several key pieces must be in place for successful implementation.
A strategic plan is non-negotiable
RM addresses risks in relation to strategic objectives. If your organization does not have a current strategic plan, it will be difficult to articulate risks. Before you raise the idea of ERM with leadership, the prerequisite is a relevant strategic plan.
Operational stability is essential
Implementing ERM can be a straightforward process — if your operations are stable. If your organization must devote all of its energy to stabilizing normal business operations, it is not ready to implement ERM. Your institution will not be able to respond to the risks identified until operations produce consistent and accurate results.
Support from executive leadership makes all the difference
For an ERM project to be successful, you need sustained energy and interest from executive leadership. Support from executive leadership is key to ensuring the resources will be made available for the completion of the project. If buy-in from executive leadership is in question, an ERM initiative may fail before any real progress is made. Without committed leadership, faculty and staff may not be motivated to expend much energy towards the project.
A cabinet-level champion gives the project necessary gravitas
Implementing ERM consumes time and energy outside the scope of normal responsibilities. C-suite-level affirmation of ERM’s priority will help ensure the process moves forward. It is also beneficial to have someone from within the president’s cabinet act as the project champion by communicating support and enthusiasm and, if necessary, ensuring that others in the organization fulfill their responsibilities in the process.
Appropriate time must be budgeted
If you are tasked with facilitating ERM, be prepared to dedicate considerable time to the project. Contracting with a consultant will help reduce the burden considerably, but the truth is, many activities involve the expertise of key personnel, so you can’t rely entirely on third-party coverage. If the person leading an ERM initiative has too many critical responsibilities, ERM may not get the attention it needs.
Scheduling ERM activities so that they avoid campus crunch times will help keep the project on track. Don’t plan critical meetings during the first week of class or when the controller is up against reporting deadlines. Excellent time management is extremely important in a time intensive project.
Not ready? Consider an alternative ERM starting point
If you don’t have a strategic plan in place, stable operations, committed leadership, or the necessary time for a successful ERM implementation project, it’s important that you still pay attention to risk. Consider an entity-wide risk assessment as an alternative to ERM and a first step in the right direction toward cross-institution ERM. Then begin laying the groundwork so you can pursue a full-scope ERM project later.
How we can help
CLA’s higher education professionals can help you assess whether your college or university is ready for ERM. If the time is right, we can help you design and implement a customized ERM program that meets your organization’s needs. We can show you your risk profile, assess your current risk management processes against best practices, and strategically craft an ERM program from the ground up, tailored to your institutional needs.