The 2014 Attitudes to Risk in Independent Schools Report is based on the findings of a survey of independent schools across the UK, commissioned by Lucas Fettes & Partners in association with Baker Tilly.
The research uncovered new insights into how schools approach their risk management strategies. This report reveals their biggest concerns, uncovers the truth about confidence levels, finds out who in schools is responsible for the risk strategy, how they mitigate against potential risks and what they believe the future holds.
Asking the key questions such as, ‘How do bursars feel their school is protected against revenue risks’ and ‘Are governors more worried now than they were last year?’, researchers spoke to 50 independent schools across the UK, including all age groups (3–18), different sized schools and geographic locations.
Robin Lucas, Chairman at Lucas Fettes & Partners, commented: “The world of ‘risk’ is constantly evolving, and never more so than within the independent education sector. Independent schools are exposed to the same gamut of risks as their state peers but, unlike state schools, as commercial entities they face other, broader business risks including reputation and in turn revenue. And, of course, no two schools are the same.
“There has historically been a real lack of information into the risks facing the sector. We were interested to learn how independent schools perceive the risks they face.”
Schools appear to perceive themselves to beâ€¨ well informed and prepared about the risks they face, with 96% stating they have a formal risk management strategy. But the research highlighted that schools’ approach to risk management tends to be operational rather than strategic: an exercise in achieving a required level of legislative compliance. When asked what’s included within their strategy, all but a few cited child welfare, health and safety, buildings and assets and school trips – all risks that schools are required by law to manage.
More telling are the types of risk that schools are failing â€¨to proactively manage. The two areas highlighted as posing the most significant threat were risks to revenue and reputation (i.e. long-term business viability). These are areas in which risk management solutions can’t simply be prescribed via legislation and instead have to be more bespoke to the school. Schools readily admit to being ill equipped to deal with these risks. Almost a quarter don’t believe that revenue related risks are covered by insurance and 18% believe the same is true of reputational risks.
Other risks that schools cite as being ill equippedâ€¨ to manage are also non-regulated, such as business continuity and emerging risks. Up to 38% of schools are ill equipped to manage business continuity risk andâ€¨ 15% do not even include business continuity in their risk management strategy. This should be of particular concern – if a business continuity process needs to be implemented, the school will need a robust plan in order to keep its doors open.
In spite of the rise in cyber crime and in particular cyber bullying, 31% of schools surveyed do not have a strategy that covers this emerging risk. Schools are beginningâ€¨to respond as awareness of the threat grows, but it’s a reactive rather than pre-emptive stance.
A similar lack of proactivity and failure to identify future risks has hit schools hard in other areas. Child abuse claims, for instance, have been prevalent in recent months, with incidents often not emerging until years later. What will the next emerging risk be? Schools must think ahead to protect the welfare of their pupils, their reputation and their long-term financial viability.
Four in 10 schools assign the risk management responsibility to the finance team, increasing to 50% â€¨in primary schools, yet only 13% of risk management measures within the formal strategy are directly related to the financial running of a school. There appears to â€¨be a siloed mentality towards management of risk, with the responsibility predominantly falling to the senior management team and governors. Over two thirds (67%) of schools do not include teachers in this process and 87% do not involve parents. Given that teachers, parents and, to a lesser degree, pupils, offer a ‘front-line’ perspective on child welfare and health and safety, it is surprising that many schools do not consult or involve them in the process.
When asked what the next five years hold, 28% of schools said that they anticipate legislation becoming more rigorous and believe that this will distract or discourage them â€¨from providing extra-curricular activities for pupils. This anticipated increase in bureaucracy is further evidence of a perceived ‘risk management burden’. What if schools were to view their risk management strategy as a means to deliver excellence, to their economic and competitive advantage? Could taking a proactive, integrated approach to creating a more robust risk strategy not only protect schools from a broader range of risks, but also serve as a marketing tool to differentiate them from their competitors?
To read the full report click here.
Watch the video of the findings here:
For more information visit www.lucasfettes.co.uk/independentschools.
Tel: 0161 972 2480