Last month, I moderated a panel with two board chairs and two presidents during an AGB member’s board retreat, and separately, I spent three days with 30 board chair-CEO teams at the AGB Institutes. I not only learned about their unique challenges (and successes!), but I also shared leading practices about the principles of strategic board leadership and trusteeship to complement and contribute to their missions, strategic priorities, and desired outcomes. During these conversations, participants frequently discussed the board’s role in overseeing risk.
AGB underscored the critical importance of risk oversight in our recently published Top Strategic Issues for Boards 2022–2023. Further, you may recall that I discussed governance, cyber, and business model risks in a prior update. As institutions prepare for a new academic year, this update focuses on another risk for boards to oversee in collaboration with their chief executives and leadership teams: reputational risk.
As Janice Abraham wrote in the AGB publication Risk Management: An Accountability Guide for University and College Boards, “…reputational risk is the risk that an institution will fail to meet the expectations of its stakeholders, resulting in tangible harm to the institution.” It is a “second-order risk” where, as one colleague shared with me, it can often be a component of other, more concrete types of risk. It is widely acknowledged, but difficult to quantify and can be overlooked using traditional risk metrics. Therefore, there is value in acknowledging reputational risk separately and as part of the overall risk portfolio.
One example of reputational risk oversight that many boards may not consider relates to articulating and implementing free speech policies that advance freedom of expression while also promoting diversity, equity, and inclusion (DEI). AGB recently published Freedom of Speech and Diversity, Equity, and Inclusion on Campus: Considerations for Board Members and Chief Executives. While both freedom of speech and DEI are pillars of the educational experience, they occasionally can come into conflict with one another.
Boards should understand the impact of policies that regulate freedom of speech and DEI on campus, ensure that the policies are in harmony, and hold the administration and faculty responsible for implementation in a fair and equitable manner. Failure to do so is a direct threat to the institution’s reputation, and can affect student success metrics, admissions, philanthropy, and more. In some instances, it can become a legal risk that can be costly to address. Freedom of Speech, a complimentary AGB publication, includes a set of recommendations that can help boards and executives navigate such situations. I encourage you to download this new resource. You may also be interested in listening to the latest Trusteeship Podcast episode on preparing for campus activism.
It is easy to think of risk oversight as a defensive exercise. Losing a bet is painful; being conservative is safe. But being bold is increasingly necessary as the higher education landscape evolves and transforms. I encourage boards and their members to deepen their knowledge and capacity to oversee risk, follow the steps outlined in Risk Management, and develop crisis leadership and crisis communications plans. Consequential boards have strong risk oversight processes to make substantial, even transformational, decisions.
Questions for Board and Committee Chairs
- How do you integrate risk oversight, including oversight of reputational risk, into committee meetings?
- Should risk oversight be the responsibility of one committee, be distributed throughout each committee, or be a responsibility of the board as a whole?
Questions for Board Members
- How can you leverage your risk oversight experience outside of higher education to help the board oversee risk?
- What might senior leaders overlook that may have an outsized impact on the reputation, and long-term success, of the institution?
Questions for Chief Executives and Leadership Team Members
- How can you educate board members about the unique aspects of higher education that may have an impact on risk oversight and risk management, especially regarding reputational risk?
AGB Policy Alert on the U.S. Supreme Court’s Recent Decision to Overturn Roe v. Wade
On Friday, June 24, 2022, the Supreme Court of the United States issued its decision in the case of Dobbs v. Jackson Women’s Health Organization. The Court held that the U.S. Constitution does not confer a right to abortion, and that the authority to regulate abortion is returned to the states. This decision may have significant effect on institutional policies and practices. I encourage you to read our Policy Alert to help you consider the ramifications on your campus.
New AGB Membership Benefits
I am delighted to announce that AGB has launched a new suite of unique, complimentary member benefits. Now, included with AGB membership at no additional cost is a Board Self-Assessment Tool, a One Hour-Governance Consultation, a Personal and Customizable Home Page and My Resource Library, and for those in the important role of a board professional, a Board Professional Certificate program. Take a moment to learn more about these new benefits at AGB.org/NewMemberBenefits.
Have a great summer!