A university official presented a new plan at yesterday’s Board of Trustees Audit Committee meeting that would allow the university to assess and combat “uninsurable” risk.
The University Risk Management Initiative would expand the university's risk assessment and create new ways of managing university-wide risks, according to a presentation by Joe Adams, interim associate vice president for Risk Management and Safety.
“We don't want to eliminate all risk, because that would eliminate rewards,” Adams said. “We want to identify global risks and find some way to deal with them. … We want to go beyond insurable risk and look at uninsurable risks.”
This initiative is relevant right now because of the budget cuts the university is facing, Adams said, adding that additional risk assessment and management will allow Ohio University to spend money more efficiently. OU will need to cope with a total deficit of $9.64 million during next fiscal year.
However, it is also necessary to assess uninsurable risks because of the negative effects they can have on the university, Adams said. He listed hiring practices and uses of certain materials as examples of uninsurable risks.
“It’s easy to insure a building,” Adams said. “If a building burns down, we have insurance and we rebuild it. But how do we insure our reputation? … There are a lot of risks out there that we can't insure ... that hurt (OU’s) reputation.”
Adams presented a five-step plan to identify, assess, evaluate, mitigate and monitor risk. The most important step is mitigating risks and finding “strategies to make the risks acceptable,” he said.
Some of the possibilities for managing uninsurable risks would include transferring some of the risk to other organizations, making people aware that specific risks exist and exploring alternative ways to conduct actions that have risk involved, Adams said.
The Board of Trustees would mainly be involved by assisting the Risk Management and Safety employees in prioritizing the risks and receiving annual updates from the risk assessment committee, Adams said.
Once the new risk management processes are in place, the Internal Audit office would assess those processes.
“Once there’s a strategy employed to mitigate the risk, then we can come back and audit and see if it's effective,” Chief Audit Executive Kathryn Gilmore said.
Gilmore emphasized that the Internal Audit office would be available to assist with the process and offer advice but added it would not be managing or controlling the risk assessment process.
Work on this initiative will begin in July, Adams said.
“The entire project, it’s a big elephant to take on, and I foresee it taking about five years,” he said.
OU President Roderick McDavis, who was present at the Audit meeting, said he approved of the plan to begin looking more at uninsurable risks.
“I think this is a proposal that will help us going forward with finding areas of risk and seeing how to eliminate as many of them as possible,” McDavis said. “It just makes us a better university at the end of the day when we have less risk.”
