March 31, 2011

A new approach to risk management

by Anne Krapfl

Good track record

ERM steering committee member Dave Biedenbach said enterprise risk management has been used successfully in the private sector for several decades and is a growing trend in higher education. The California and Penn State university systems are leaders in enterprise risk management in higher education; Biedenbach said Iowa State is learning from others' best practices.

ERM is coordinated out of the executive vice president and provost's office. The office of risk management will continue to provide the same services it has in the past.

Say several faculty colleagues hope to pilot a study abroad experience in a country no Iowa public university currently has programs in. In recent years, perhaps they'd work with their chair, the dean of students office and the study abroad center to develop a program plan and fully assess the risks of offering the program before making a final decision.

The university's new approach to risk assessment -- called enterprise risk management (ERM) -- demands a broader but coordinated approach to measure, monitor and more efficiently manage the many kinds of risk a university faces -- whether physical, financial or reputational. The process of implementing this new approach is just beginning and will take several years.

"It's a high-level look at risk that removes the traditional silos to managing risk at a university. This will allow us to view risk through different lenses," said Dave Biedenbach, director of university budgets and member of a new 15-member ERM steering committee.

Members have expertise in key campus functions, for example, environmental health and safety, dean of students office, office of research and economic development, information technology, treasurer's office and public safety. The director of the risk management office also sits on the committee. Members meet monthly, sharing information about their circles of activity. In addition to designing a common-sense approach to risk management, they're assigned with developing methods for identifying, assessing and prioritizing risks. The steering committee will report routinely to executive vice president and provost Elizabeth Hoffman on identifying and managing risk that is seen as high priority.

The goal is to improve communication, eliminate duplication and identify gaps in the area of risk management. The goal is not to eliminate risk, just do a better job of identifying and managing it.

"This new approach doesn't mean we stop doing things," Biedenbach said. "President Geoffroy, who supports this change, was very clear that the ERM process can't be an impediment to entrepreneurial activities."

Biedenbach said Iowa State's CIRT (Critical Incident Response Team) is the best example of where the ERM steering committee is headed. Since 1995, CIRT has worked to prevent unsafe situations -- such as violence, riots, explosions or diseases -- from occurring on campus. Team members represent administrative units across campus.

And that faculty team wanting to launch a new study abroad program? The intent is to outline a new process, not simply add a layer to the current one. Biedenbach said the steering committee aims to develop a proces that would help the faculty team identify the risks -- using many of those same offices as resources, and determine whether the benefits of the program outweigh the risks. If the decision is to move forward with the study abroad program, the faculty would have resources to help manage the risks.

"We're a long way from making this the reality, but ideally this is what should occur as we implement ERM," he said.