How College Boards Can Manage Reputational Risk with Board Software
A quality education leads to a satisfying career and personal fulfillment. Generally, we assess the quality of an education based on a college’s or university’s reputation. Successful realtors know that high-quality school districts can make or break a home sale. Reputation is even more important at the college and university level, where tuitions are high and competition for admissions is fierce.
Colleges and universities enjoy many benefits of having a strong reputation even though the level of an esteemed reputation is difficult to quantify. College boards understand well that their institution’s reputation is a valuable asset. As Warren Buffett said, “It takes 20 years to build a reputation and five minutes to ruin it.”
The U.S. college admissions scandal, which resulted in charges against 50 people in six states, is a perfect example of the sudden and dramatic impact that scandal can wreak on a higher education institution’s reputation. By engaging in the illegal activity of accepting bribery in return for admission to a college or university, those educational institutions put themselves at extreme risk and are now paying the price in the form of tarnished reputations, among other serious charges.
With so much invested in a college’s reputation and little room for error, it only makes sense for colleges to use every tool at their disposal for managing reputational risk. In today’s higher education arena, that means that colleges should invest in a board management system.
The Great Importance of Reputation in Higher Education
Colleges with good reputations profit. In higher education, a stellar reputation increases admissions and yields greater donations. More money coming into the institution means the college can add new programs, update equipment, add facilities and enhance curricula. In turn, the college’s ranking goes up, and with it, its reputation.
The cycle continues, as a solid reputation feeds even more admissions and additional donations. Over time, reputation plays a key role in the long-term success of the college.
Red Flags for Reputational Risk
Reputational risk at higher education institutions can happen over the course of time or it can rear its ugly head suddenly and without warning. Some of the red flags for reputational risk can occur slowly over time and may be evidenced by poor administration practices and low morale among staff. Another sign of a decrease in reputation may stem from a rise in complaints from students.
Bad publicity due to a crisis event or decreased public funding can also turn a college’s reputation on its side. Sound risk management strategies can help to mitigate or prevent damage to a college’s reputation.
Are Colleges Prepared to Address Reputational Risk?
Most colleges and universities readily acknowledge that reputational risks can be potentially large and damaging. In spite of this recognition, many institutions aren’t rising to the challenge of protecting their schools.
According to a survey by the Association of Governing Boards of Universities and Colleges, in conjunction with United Educators, the following statistics show some telling facts about how college boards view reputational risk:
- 87% of board directors and leaders believe boards are responsible for reputational risk
- 83% of college boards believe reputational risk is more important than it was three years ago
- About 78% of boards are confident that they know what drives reputational risk
- Only 67% of colleges surveyed have a reputational risk plan and response in place
- Only 26% of the respondents believe that their college takes a proactive approach to reputational risk
The survey also indicated college boards’ thoughts on the size and impact of reputational risk:
- The majority of respondents believe that the number of reputational risk events occurring is large
- They also recognized that some reputational risk issues could devastate the institution
- About 54% of colleges stated that they didn’t believe their school had the ability to withstand a major reputational risk event
With the prevalence and impact of reputational risks, board portal systems are an easy solution to help colleges manage reputational risk.
How Board Software Helps to Manage Reputational Risk
The major benefit to a board management system is the high level of security. For example, BoardEffect incorporates three levels of data protection into its software. The security features detect and prevent against accidental and intentional data leaks and attacks. The built-in data recovery system protects data in the event of a power outage or other material loss of data.
User permissions should also be in the hands of the board administrator, who should be able to set role-based permissions for the various parts of the board software. The high level of security ensures that the college board’s work will remain highly confidential unless they choose to release any of it.
A board management system provides a secure online space for risk management committees and audit committees to work toward identifying and preventing reputational risk factors. The security of the platform allows risk management teams to address external factors, such as an economic downturn, potential natural disasters, regulatory changes, changes in the political environment, and the lack of support from students, parents and the community.
Risk management teams will also be able to use the board management solution to address such internal risk factors as lack of policies and procedures, lax internal controls, regulatory concerns, poor supervision of students and staff, and lackluster leadership. Additionally, board directors can use the software to increase crisis management planning and increase board training and communication. The board and risk management committee will be able to use the solution to estimate the impact of risk to their reputation and find ways to address it.
Board software has many other valuable features. For example, it can streamline the processes for creating and managing board agendas and board meetings, so that board directors can focus more heavily on the agenda and minutes processes.
Managing reputational risk is part of every enterprise risk management protocol. By taking a proactive approach to addressing risks and opportunities, colleges create value for their stakeholders, staff, students and others. College boards that use a board management system like BoardEffect will spend less time worrying about reputational risk and more time preventing it.
To learn more about how a BoardEffect board management system can serve your organization and support your reputation risk management, request a demo today.
