Risking Your Reputation

By Susan Whealler Johnston    //    Volume 25,  Number 6   //    November/December 2017

What’s the most fragile part of your college or university? If you said, “our reputation,” you’re right. Something that takes decades to build can be damaged in a week or, thanks to social media, even an afternoon, making it harder to attract potential funders, students, and their parents, and damaging your relationship with the community. The threat of reputational damage is real for every institution. Consequently, every board’s work should include oversight of risks to the institution’s reputation as part of the larger risk responsibility of the board. According to AGB data, higher education’s governing boards have started taking risk more seriously over the past decade, but there is still plenty of room for improvement, particularly in reputational risk.

A 2017 survey conducted by AGB and United Educators (UE) found that boards and senior administrators are discussing major risks more regularly than in the past. In fact, over the past nine years, this important indicator has moved 16 percentage points. Yet, more than one-third of boards still use an “as-needed approach” to risk. They do a post-mortem on problems after they arise instead of anticipating risks and focusing on risk mitigation or avoidance.

Only 24.3 percent of boards reported that they discuss risk at every board meeting, and 27.9 percent reported that they discuss risk once a year. Given these numbers, it is not surprising that nearly onethird of respondents described their board as “somewhat under-engaged” or “not actively engaged” in discussions of risk.

While the needle is moving on board oversight of risk, it’s less clear that boards are paying sufficient attention to reputational risks such as the business model, including enrollment; campus climate and protests; and sexual assaults, which, in the AGB/UE survey, board members indicate are the most important risks for the next three years. Reputational risk is more important now than three years ago, according to 84 percent of survey respondents, but less than half say their institution has the resources and capabilities to withstand a major reputational risk event.

Nearly one-quarter say the reports to the board on these risks are not sufficient. Roughly one-third say their institutions do not have response plans for the drivers of reputational risk and the resources available to manage reputational risk are not sufficient. More than 40 percent say their institution has not identified the top outcomes of a reputational risk event.

About one-fifth say their institution’s approach to managing major reputational risk is “sometimes reactive,” with 50 percent saying it is “sometimes proactive.” Only about one-quarter say their institution’s approach is consistently proactive.

Oversight of an institution’s reputational risk is a board responsibility. More than 87 percent of respondents agree, and yet these data paint a picture of underdeveloped board and institutional capacity for this oversight responsibility. If the next decade is as challenging as the last for higher education, boards will need greater skill, understanding, and engagement to help their institutions navigate the risks, including reputational risks. As one survey respondent said, risk oversight “needs to feel less like a ‘check the box’ activity and more like a critically important conversation.”