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ITS 835 Chapter 9

Lessons from the Academy: ERM Implementation in the University Setting

Enterprise Risk Management

Professor Miguel Buleje

Introduction

• Higher education environment

• ERM in higher education

• Adopting ERM in Colleges and Universities

• The University of Washington case study

• Summary

Higher Education Environment

• Generally considered “different” from enterprises • Non Profit different as for Profit. • No Target by legislation

• Historically separate from targets of legislation

• Often, success may lead to lack of risk management

• Tendency to be little more relax on the risk management side of the house.

• Multiple high-visibility scandals have shed light on HE

• Scandals financial / student / faculty issues.

• Many HEIs have migrated to more corporate ERM

• Different HE cultures demand different ERM solutions

ERM in Higher Education

• Recognition of institutional areas • Each encounters unique risks

• Risks can include • Litigation settlements

• Loss • Assets

• Enrollment

• Donors

• Reputation damage

• Will directly impact enrollment and donor participation

Adopting ERM in Colleges and Universities

• Think tank in Higher Ed to discuss ERM • 2001 • PricewaterhousCoopers (PWC) • National Assoc of College and Univ Bus Officers (NAUCUBO)

• Focus • Definition of risk • Risk drivers in HE • Implementation of risk management to assess, manage, monitor

risk

• Proactively engage the campus community

University of Washington

• Sentinel event • $35 million fine for Medicare and Medicaid overbilling

• Push to implement ERM to improve compliance • UW is built on a decentralized governance model • Started with

• Strategic Risk Initiative Review Committee (SRIRC) • Each initiative asked

• Does this proposal add value? • What obstacles are apparent and how can they be addressed? • How can this proposal be improved?

University of Washington, cont’d.

• Committee recommendation • Create a Culture-Specific ERM

• Examined other HEIs

UW Evolution of ERM

UW ERM Structure

UW’s ERM Integrated Framework

UW’s ERM Process

UW’s Risk Assessment: Likelihood and Impact

Summary

• Outcomes are consistent with guidance offered by • National Association of College and University Attorneys (NACUA)

• NACUA eight critical factors • Establish the right vision and realistic plan • Obtain senior leadership buy0in and direction • Align with mission and strategic direction • Attack silos at the outset • Set objectives and performance indicators • Stay focused on results • Communicate vision and key outcomes • Develop a sustainable process versus a one-time project