Adopting a Dynamic Risk Management Approach
At Sage Consultancy we are advocates of the importance of risk management within the school setting. As the responsibility of ensuring that risk management receives the attention that it deserves often falls upon the Business Manager role, it is useful to know how to approach this work and where to turn to for support to get this important work completed.
In this article Steve Lang from ACN www.acnetwork.com.au emphasizes some reasons why schools should review their current approach to risk management and what factors underpin successful risk management.
Many schools are undertaking a reset in the post Covid world, tougher compliance requirements and increasing 'people' related risks are driving many to review their risk approach. Going beyond 'ticking the box' and becoming more proactive is a priority.
Traditional risk management approaches often do not consider factors such as cognitive bias. Neither do they account for the “collective lens” on risk. The tendency for an organisation to become insular with its risk identification is real. Expanding the risk horizon beyond the traditional lens is key. Seeking alignment on the key focus of operational risks is a critical step. Many underestimate the impact of culture and people risks to the value of their business. This approach provides an opportunity to explore risk appetite, a conversation often overlooked. Good risk management should look at the upside of risk not only the downside!
Other risks that are also causing schools to review management capability include Diversity and Environmental Sustainability. Current structures are not well positioned to cope with these current risk challenges. Staff attraction and retention issues are increasing where these areas are not managed. More accurately, leadership and values are exposed if they are not authentic and experienced everyday.
These factors are exposing gaps between those changing their risk approach and those who are not. Best practice now includes people and cultural dimensions of risk management, giving a greater weight to the expertise and partnership required to these risks is key.
People and cultural aspects of risk management have surfaced as critical in a more holistic approach to risk. Consider all aspects of change and transformation when developing an approach to risk, input from all of your community far beyond risk experts is required to give a better perspective.
A good risk management process reveals all critical vulnerabilities. Provocative questions that uncover 'what's so' can reveal hidden dimensions to risk. It is a good investment in time and effort! The process should look at a complete set of stakeholders and identify localised risks as well as enterprise risks. Alignment on the level of risks/risk perspectives will provide a set of risk priorities and point to the effectiveness of controls.
Once the risk landscape is known, it is important to project manage actions to ensure risk tolerance becomes easier. This increased visibility also gives a clear line of sight for a Board Risk Committee to understand its work. Their is a consistent pattern that works for managing and optimising risks.
The factors that underpin successful risk management within a school are:
Distributed accountability for risk, including the development of a set of critical perspectives on risks, a localised functional view of risk, a cross organisational view of risk, and an integrated view of risk.
A consistent and sustainable implementation of the risk process, this occurs across the organisation, often inclusive of suppliers, is critical in the face of risk challenges.
Visibility of and interaction with the Board, developing and discussing the true picture of risk for the organisation and the required quality of risk management and oversight.
Leadership maturity in relationship to business continuity and management of risk, this must be factored into the process with a willingness to confront, consider, and adjust to ongoing new entrants in the risk landscape.
Supportive Technologies, using the right technology to support and reinforce the designed changes to the risk process is critical. Software that readily interfaces with existing information systems, particularly at the scoreboard level, allows the risks to be managed appropriately at the multiple spots in the school.
Collecting relevant data as defined in the newly designed risk process allows for tracking and reporting advancements at all levels, from external stakeholders to employees to investors.
Reporting of incidents in a way that they can be permanently addressed in an honest and reflective manner that allows for ongoing improvements to the risk and related processes.
Process design, An optimised process design is the outcome of the engagement and relationship method undertaken to define the new risk process for the organisation. This risk process must include a set of inputs, from the culture of risk management, selections in the spectrum of risk tolerance, considerations beyond mitigations, and the allowance and consideration of unplanned work.
A culture of risk management connects each member of the school to risk and its relationship to work within the business.
A choice of risk tolerance serves the school in its day-to-day operations. The entirety of the school knowing its boundaries in risk decision-making facilitates critical activities.
Thinking beyond risk mitigation as the primary solution to addressing risks allows the school to reconsider key decisions, strategic plans, and significant partners.
Recognising the dynamism of risk as related to unplanned or unpredictable work and having procedures to address the spontaneous work requirements is, in and of itself, a risk management technique.
If you consider the countless complexities that face many schools. There is no choice but to step up the school’s ability to manage the dynamism resident within the risk management process. The emergent risk process must be flexible and support the growth of the school’s ability to navigate risk.
Your risk strategy must be able to stand up to the scrutiny of key stakeholders, including students, employees, and the parent community. Most importantly, it should provide confidence to boards so they trust senior managers to do their job. Once the whole school is clear on its role in risk, value is both protected and leveraged.
Finding the right partner or experienced guide in the development of your risk management process is not easy. An experienced partner will support the development and implementation of your risk management process. They will put in place the reinforcing mechanisms that ensure the ongoing practice of the new processes. Your partner will help to facilitate the organisation through the tough conversations required. Support Governance, Process, and Implementation. Ideally, they will have a solid platform and be able to build risk skills in your school.
Sage Consultancy offers support to international schools in different aspects of finance and operations, this includes the establishment, audit and support of your risk management systems.