What is your board’s relationship to risk? Does its work reflect a culture of risk taking or risk avoidance?
The question surrounding board culture and its engagement with risk seems to arise more frequently these days as boards are increasingly encouraged to travel two seemingly conflicting roads of risk -- the entrepreneurial road of risk taking and the security-conscious road of risk management.
Which road do you prefer to travel? Given your institution’s situation, which road must you travel?
First, consider risk management. Historically, governing boards have been encouraged to avoid risk -- think of IT, investments, operational budget, building maintenance, hiring, tenure questions, etc. Risk avoidance seems to come with the territory of fiduciary responsibility. In business as well as in higher education, this arena is often referred to as enterprise risk management (ERM).
An ERM plan is encouraged with all high-level decision making, especially in financial areas. According to a recent article in Trusteeship magazine, 62 percent of boards surveyed are involved in risk discussions -- up from 47 percent in 2008. However, though more boards are involved in these discussions, only 39 percent “strongly agreed” that they had enough information to fulfill their legal and fiduciary duties.
Though Trusteeship highlights these increases in board involvement with risk, the article is cautionary in its conclusion: the state of ERM in higher education leaves many institutions unprepared for high-priority risks. Some of these institutions’ ERM policies, processes, and procedures are still lagging behind where they need to be.
Do these same results apply to theological schools? To me, the answer is clearly “yes.”
In contrast to risk management, consider risk taking. These days, many presidents, program directors, academic deans -- even CFOs -- are actually encouraging risk in developing new programs and services. Entrepreneurial energy and experimentation are becoming a normal part of operations as we work to adapt to the changing ecology of theological education and to create strategic strength for the future of our schools. “The status quo is no longer sustainable” has become the mantra on many presidents’ lips. In these schools, risk is greeted warmly and encouraged.
So does your board reflect a culture of managing risk from the side of caution or a “full speed ahead” entrepreneurial approach? Even more importantly, which risk-road best reflects your path forward? Your context will certainly say much about how you approach this question. But as multiple pressures mount on theological schools, don’t be surprised if your board needs to follow both roads simultaneously in order to create success for your school. As the old Yogi Berra quote goes: “When you come to a fork in the road, take it.” In this case, take both!
To read more on this topic, see “Losing Ground on Risk Assessment” by Kristen Hodge-Clark in Trusteeship, May/June, 2014, p. 6. (Article is behind a paywall.)