ERM in industry and academia assignment

There are many drivers in a higher education environment which are increasing pressure for the institutions to transform the risk management. Strategies used to address these challenges are introducing more risks. ERM is the solution to manage these complex risk portfolios. The ERM framework provides the structure of the risk management, it will also preserve the fundamental philosophy, mission statement, goals, and objectives of the institutions in the higher education environment (The University Risk Management and Insurance Organization (URMIA), 2007). 

For-Profit businesses have their own enterprise-wide risk management frameworks. These can be adopted by higher education environments as well. However, there are certain restrictions like the one imposed by the SEC for the for-profit entities which cannot be adopted by higher educational environments (Fraser, Simkins, & Narvaez, 2015, p. 152-153).

So, many ERM architecture models that are being created by for-profit businesses are being created in a way that it can be useful for the universities which can fall in the territory of the higher education environment (Fraser, Simkins, & Narvaez, 2015, p. 152-153).

Discussion 2

The focus of their discussion was on the definition of risk. The risk drivers in higher education, implementation of risk management programs to effectively assess, manage, and monitor risk; and how to proactively engage the campus community in a more informed dialogue regarding ERM. Their conversation produced a white paper, "Developing a Strategy to Manage Enterprise wide Risk in Higher Education" (Cassidy et al. 2001). In 2007, NACUBO and the Association of Governing Boards of Universities and Colleges (AGB) published additional guidance in their white paper, "Meeting the Challenges of Enterprise Risk Management in Higher Education." The University Risk Management and Insurance Association (URMIA) also weighed in with its white paper, "ERM in Higher Education" (2007). In 2013, Janice Abraham wrote a text published by AGB and United Educators, entitled Risk Management: An Accountability Guide for University and College Boards. These documents provide guidance and information to institutions considering the implementation of an ERM program and discuss the unique aspects of the higher education environment when considering ERM implementation.

Several authors have discussed the transferability of the ERM model to higher education, even with the cultural and organizational differences that abound between the for-profit environment and higher education. URMIA (2007) concluded that "the ERM process is directly applicable to institutions of higher education, just as it is to any other 'enterprise'; there is nothing so unique to the college or university setting as to make ERM irrelevant or impossible to implement”. Whitfield (2003) assessed the "feasibility and transferability of a general framework to guide the holistic consideration of risk as a critical component of college and university strategic planning initiatives" and concluded that "the for-profit corporate sector's enterprise-wide risk management framework is transferable to higher education institutions"

National conferences for higher education associations such as NACUBO, AGB, URMIA, and others had presentations on ERM. Insurers of higher education, such as United Educators and Aon, as well as consultants such as Accenture and Deloitte, among others, provided workshops to institutions and published white papers of their own, such as the Gallagher Group's "Road to Implementation: Enterprise Risk Management for Colleges and Universities" (2009). In the early 2000s, many IHEs rushed to form committees to examine ERM and hired risk officers in senior-level positions, following the for-profit model. However, when specific regulations such as those imposed by the SEC for for-profit entities did not emerge in the higher education sector, interest in highly developed ERM models at colleges and universities began to wane. Gurevitz (2009) points out that the early ERM frameworks weren't written with higher education in mind and were often presented "in such a complicated format that it made it difficult to translate the concepts for many universities."

Institutions with ERM programs have taken various paths in their selection of models and methods and have been innovative and individualized in their approaches. There is no comprehensive list of higher education institutions with ERM programs, and not all IHEs with integrated models use the term ERM. Exhibit 9.3 shows a snapshot of IHEs that have adopted ERM; a review of their websites demonstrates the various risk management approaches adopted by IHEs and the wide variability in terminology, reporting lines, structure, and focus. In many instances, those IHEs with highly developed programs today had some form of "sentinel event" (regulatory, compliance, student safety, financial, or other) that triggered the need for widespread investigation and, therefore, the development of more coordinated methods for compliance, information sharing, and decision making.

When I first started seeing the phrase "enterprise risk management" pop up in higher education literature, my reaction was one of skepticism. It seemed to me yet another idea of limited value that someone had created a label for, to make it seem more important than it really was.

Discussion 3

Colleges and universities have often perceived themselves as substantially different and separate from other for-profit and not-for-profit entities, and the outside world has historically viewed and treated them as such. Colleges and universities have been viewed as ivory towers, secluded and separated from the corporate world. Higher education was largely a self-created, self-perpetuating, insular, isolated, and self-regulating environment. In this culture, higher education institutions were generally governed under the traditional, independent “silos of power and silence” management model, with the right hand in one administrative area or unit often unaware of the left hand’s mission, objectives, programs, practices, and contributions in another area. In his text regarding organizational structures in higher education, organizationally and culturally, colleges and universities differ in many ways from other organizations. He attributes this difference to several factors: the “dualistic” decision-making structure the lack of metrics to measure progress and assess accountability; and the lack of clarity and agreement within the academic organization on institutional goals.

Each of these models can provide a conceptual framework by which to understand and evaluate the culture of a college or university. Understanding the organizational type of a particular institution is imperative when considering issues such as the process by which goals are determined, the nature of the decision-making process, and the appropriate style of leadership to accomplish goals and implement initiatives. What works in one university organizational type may not be effective in another. The leadership style of senior administration may be operating from one frame or model while the culture of the faculty may be operating from another, thus affecting policy and practice in positive or negative ways. Understanding this cultural and framing difference is important when considering the adoption and implementation of ERM in the university environment, and can help to explain why many universities administrators and faculty are skeptical of the more corporate approach often taken in ERM implementation outside of higher education.

Several authors have discussed the transferability of the ERM model to higher education, even with the cultural and organizational differences that abound between the for-profit environment and higher education. URMIA   concluded that “the ERM process is directly applicable to institutions of higher education, just as it is to any other ‘enterprise’; there is nothing so unique to the college or university setting as to make ERM irrelevant or impossible to implement”. Whitfield  assessed the “feasibility and transferability of a general framework to guide the holistic consideration of risk as a critical component of college and university strategic planning initiatives”  and concluded that “the for-profit corporate sector’s enterprise-wide risk management framework is transferable to higher education institutions” . National conferences for higher education associations such as NACUBO, AGB, URMIA, and others had presentations on ERM. Insurers of higher education, such as United Educators and Aon, as well as consultants such as Accenture and Deloitte, among others, provided workshops to institutions and published white papers of their own, such as the Gallagher Group’s “Road to Implementation: Enterprise Risk Management for Colleges and Universities”. In the early 2000s, many IHEs rushed to form committees to examine ERM and hired risk officers in senior-level positions, following the for-profit model. However, when specific regulations such as those imposed by the SEC for for-profit entities did not emerge in the higher education sector, interest in highly developed ERM models at colleges and universities began to wane. Gurevitz  points out that the early ERM frameworks weren’t written with higher education in mind and were often presented “in such a complicated format that it made it difficult to translate the concepts for many universities.