I’ve been thinking a lot about risk.
Is risk something inherently bad that threatens to undermine and wreak havoc, or is it a necessary component to building a resilient, thriving organization? Is it something to be avoided, or to be embraced? And what could we actually achieve if we didn’t take any risks at all?
To provide the best thinking on this topic, AGB commissioned experienced trustee Janice M. Abraham to update the book Risk Management: An Accountability Guide for University and College Boards. As Abraham explains, much has changed since AGB published the first edition. From institutional closings, accreditation, governance, sexual harassment, political influence, employment decisions, fraternization, and more, the risks that higher education confronts span a greater scope of issues and are now more complex. The strategies for overseeing risk have evolved as well—to such an extent that leading organizations recognize the benefits of risk. The most successful organizations, Abraham notes, are optimizing risk to achieve goals. To learn more, tune into our webinar on this topic here.
This fundamental shift, however, elevates the importance of your leadership roles in the boardroom. You now must see beyond the potential for harm that external events can carry, to the promise for how such events can be leveraged to accomplish goals. And you must be able to do it with razor-sharp agility. At the same time, boards also need to manage the increasing demands on time and resources in an era when information moves faster than ever. In short, the burden of risk management has gotten exponentially heavier.
To effectively tackle risk oversight, trustees first must remember the acronym NIFO—noses in, fingers out. The role of the board is to oversee—not to manage—the execution of strategies and policy development to mitigate risks. Second, boards must develop a clear understanding of the roles and responsibilities needed to effectively manage through a crisis. Open communication and strong collaboration between boards, presidents, and cabinet members are essential. Third, no plan on paper is worth its salt unless it’s rehearsed.
Here are recommendations for approaching risk oversight, which is one of my six principles for strategic board leadership:
- Identify and Prioritize: Your board should collaborate with the executive team to identify and prioritize risks. Different types of institutions may have greater risk factors in different areas. Identifying and prioritizing the likelihood of risk specific to the institution is crucial.
- Create: Your board should oversee the development of a written plan on how to protect against, respond to, and recover from a crisis. A well-thought-out crisis response plan—in writing—undoubtedly is one of the most fundamental components of effective risk management.
- Rehearse: The importance of rehearsing the crisis response plan cannot be overstated. Trustees must play out real-world scenarios of their plan. AGB suggests tabletop exercises for board members in concert with local law enforcement officials—as well as with national officials, such as the FBI.
Team AGB is here to help you navigate through the turbulent seas of risk oversight—and we’re ready to help you prepare. By drilling down to the specifics, and by creating and rehearsing a comprehensive plan, you’ll be well positioned to effectively manage any crisis that may come your way.
AGB resources on this topic include two new books: Crisis Leadership for Boards and Presidents: Anticipating, Managing, and Leading Beyond by AGB Senior Fellow Terrence MacTaggart, to be released next month, and the aforementioned Risk Management: An Accountability Guide for University and College Boards (2nd edition), which is being released at our National Conference on Trusteeship next month.
Thank you for your time, membership, and engagement. As always, please send comments, questions, or suggestions to me at hstoever@AGB.org.