Annual Statewide Trustees Conference MANAGING RISK. Staying Focused on the Mission. November 4, 2015

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1 MANAGING RISK Staying Focused on the Mission November 4, 2015 Eric Seaborg, Senior Risk Management Consultant United Educators

2 Prevention and Protection for Education Higher Education K-12 (public/private) 7700 Wisconsin Avenue Bethesda, Maryland 1,200+ nationally Member Owned GL,ELL & LPL (no property/worker s comp) Risk Management Focus

3 PROGRAM STATEMENT thoughts on how to reduce and prevent risks defining and identifying risks can be the first steps toward prevention. Annual Statewide Trustees Conference A G E N D A Headlines & UE Claims AGB/UE Survey Define & Identify Assess & Evaluate Assign Ownership Report Roles & Responsibilities

4 HEADLINES

5 UE CLAIMS (January 1, 2010 December 31, 3014) Total Number of Claims = 11,100 Claims with a Loss = 3,342 (30%) Total Incurred = $335M Average Loss = $100,419 Largest Loss = $11M

6 AGB/UE SURVEYS 2008 & 2013 results 61% have not considered ERM in the last two years 34% strongly agreed that leadership decisions are based on risk tolerance levels [44% in 2008] 39% strongly agreed that they are getting enough information about risk [43% in 2008] 25% Institutions doing a good job identifying, assessing, and planning for institutional risk

7 DEFINE & IDENTIFY Defining why risks are everyone s concern I think that the heart of the change has been discovering that while someone somewhere in the bureaucracy can have the job of managing risks risks have to be thought about and faced and pieced together at the highest levels of responsibility. President Richard H. Brodhead, Duke University

8 DEFINE & IDENTIFY Organizing the discussion Build cross-talented teams and/or committees Members with diverse knowledge Good at research and process development

9 DEFINE & IDENTIFY Identifying the specific risks Brainstorming Emerging Trends Surveys Interviews Benchmarking with Peer Institutions Throw everything in the pot and stir nothing is too abstract

10 DEFINE & IDENTIFY Categorize to Focus Compliance adhering to laws and regulations Financial maintain and protect assets Operational ongoing management processes Strategic high level governance and goals Reputation is always at risk but not a risk derived from a failure in any or all of the categories

11 ASSESS & EVALUATE Prioritizing - creating the appropriate process for the culture I M P A MEDIUM RISK Share HIGH RISK Control & Mitigate C LOW RISK MEDIUM RISK T Accept Control P R O B A B I L I T Y

12 ASSESS & EVALUATE Prioritizing - creating the appropriate process for the culture Impact Likelihood

13 ASSESS & EVALUATE RISK Prioritizing - creating the appropriate process for the culture? Impact Likelihood 1 2 Mild Minimal impact on annual operations, reputation, or financial condition. Unlikely to happen in the near future and no immediate action is needed. 3 Moderate Could delay plans in place, affect shortterm programs, and require moderate management effort: 1-6 months recovery. More than likely to occur and management should begin to mitigate. 4 5 Significant Catastrophic Long-term and significant on ability to recruit students, faculty, financial support; material breach of confidence and reputation. High probability event/risk will occur within a year; immediate action plans needed. SCORE Enter Rating 1-5 multiply Enter Rating 1-5 TOTAL SCORE

14 ASSESS & EVALUATE Scaling down to a manageable list Building the justification on the selected items

15 ASSIGN OWNERSHIP Where does the risk live operationally Oversight by Executive leader Incorporating mitigation strategies within the operational framework Determining milestones

16 ROLES & RESPONSIBILITIES Board of Regents Support the design and operation of risk management Understand key objectives and related risks Monitor the process Provide oversight for risk management activities*

17 President Annual Statewide Trustees Conference ROLES & RESPONSIBILITIES Endorse risk management objectives and its implementation Support risk management leaders in their roles Communicate the value of risk management processes to the entity s community

18 ROLES & RESPONSIBILITIES Officers Identify risks in areas under their responsibility Design the framework Assess the entity s risk management capabilities Consider how the officers conduct business in light of the framework component

19 ROLES & RESPONSIBILITIES Internal Auditor Work with management to design the framework Offer ideas and suggestions Educate the entity about risk and facilitate discussions Provide periodic monitoring of the process and its outcomes

20 ROLES & RESPONSIBILITIES Functional leaders Ensure key functional areas are involved in the process, providing their thoughts on risk as encountered in their daily activities Aid in the implementation

21 REPORT Annual Statewide Trustees Conference Standardized reporting on managing the risk Adjust mitigation strategies as necessary Compare against predetermine benchmarks Report to the Trustees Recommend to remain or be replaced on the Registry

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