Helping universities manage key risks
- Universities are feeling the force of government austerity measures
- To adapt and survive, they are employing a number of different strategies, from diversifying into non-core activities to opening campuses overseas
- Each strategy brings its own risks and rewards. Zurich Municipal has published a downloadable guide packed with helpful guidance on how these can be managed
Higher Education (HE) organisations are facing challenging times.
In June, Chancellor George Osborne announced that the Department for Business, Innovation and Skills was facing £450 million of cuts, with the Student Opportunity Allocation, a fund that helps universities recruit poorer students, reportedly under threat.
In this age of austerity, universities are employing a variety of strategies to adapt and survive – each carrying its own set of potential risks and rewards.
Expanding into international markets
A strong global reputation is essential to attract more international students and the most talented staff. Zurich Municipal’s latest sector report – New World of Risk: Expanding Horizons – Perspectives on risk for Higher Education – highlights research which shows that while international students make up only 10% of first time degree students, they generate 37% of the total university tuition income.
Opening an overseas campus is one way a university can enhance its global reputation, but such activity carries risk.
HE organisations should carefully research the political climate in the country they are considering, to understand whether their academic freedom could be threatened by government interference.
Universities should also establish robust monitoring processes to safeguard the quality of teaching and the student experience. They must also consider what procedures are in place for protecting their overseas assets, and whether suitable insurance is available in the country being considered.
Partnering with other institutions
Rather than opening their own campuses overseas, nearly half (42%) of UK universities have chosen to run collaborative programmes abroad with local partners.
These universities face the challenge of ensuring a high quality of service delivery without having full control over the way courses are run.
Other activities which involve partnership working include e-learning, executive education programmes and technology transfer arrangements.
Partnerships can have huge benefits – introducing a university to new markets and potentially enhancing its reputation – but of course, there are risks. Collaborative activities are likely to involve using or licensing the university’s brand on some level so any failure could potentially cause reputational damage.
Before entering any partnership, it is important that universities research their partner organisation carefully and understand exactly what they are committing to. They must ensure contracts are clear on the different parties’ risk management responsibilities and that procedures are in place for monitoring effectiveness.
Diversification of services
All of the universities surveyed for Zurich Municipal’s New World of Risk report said they were diversifying into non-core activities as a way of generating extra income, including: issuing bonds, sharing sports and leisure facilities, selling and licensing intellectual property, collaborating with businesses, and providing accommodation.
The main risk of diversifying is that it involves entering unknown territory, and often puts institutions in competition with private sector companies with greater resources and experience.
Get the strategy wrong and universities risk reputational damage, financial loss, reduced quality of service, reduced workforce capability, and damaged staff morale if the changes are not properly communicated.
A successful strategy, however, can reap significant financial rewards. Such a strategy requires a sound long-term business plan, sufficient resources, and staff with the right skills to make these non-primary activities a success.