Mitigating Reputational Risk in Higher Education

By Andrew Liuzzi, Vice President, Crisis and Issues Management, Chicago

Higher education has confronted a number of high-profile issues and crises in recent years that have altered the academic landscape and sparked a new era of reputational risk to campuses across the United States.  As a working definition, Edelman defines reputational risk as the gap between an organization’s performance/behavior and stakeholder expectations. 

In the wake of scandals at Penn State, Syracuse, Florida A&M and Wisconsin, schools now face intensified scrutiny around the clock and, consequently, their stakeholders expect them to develop a robust capability to manage and mitigate reputational risk.

We believe that it’s crucial for a university to employ the same laser-focus on managing against reputational risk as it traditionally has devoted to other enterprise risks, such as operations (e.g., 2010 shooting at the University of Texas-Austin), financial (e.g., tuition shortfalls) and legal.

Here’s one reason why. Any sensitive issue that now emerges at a major institution will fuel media interest and trigger any number of stakeholder responses. This is especially true when the issue involves high-profile athletics. As such, any school must be prepared for such situations with a robust set of mitigation strategies.

The schools that properly integrate this risk into a broader Enterprise Risk Management strategy will almost certainly gain enhanced protection against destabilizing issues that threaten their core license to operate. Those that do not will likely experience a severe loss of confidence in their institution and erosion in trust that could damage alumni giving, enrollment and a school’s brand equity.

We have found that shortcomings in three key behaviors compel institutions to act to improve or overhaul the management of reputational risk: accountability, decisional analysis and preparedness. Accountability encompasses understanding of who is ultimately responsible for reputation-risk management; preparedness entails development and training against a crisis plan; and decision analytics serves as a foundational element for any risk-mitigation plan.

Crises often are created or greatly exacerbated by an organization's inability to make decisions quickly—this is only enhanced within higher-education as much of a university’s accountability and oversight management is decentralized and handled by school/discipline. While this framework works well given the wide range of components within the university structure, it also poses substantial risk and can raise questions of accountability and unchecked powers.  This usually reflects the highly charged emotional environment that a crisis creates, as well as the lack of tested procedures that channel the emotions and strain of a crisis into action and constructive public engagement.

Brain studies demonstrate that sound strategic decisions rarely emerge in the heat of battle. The military, obviously, doesn't wait for live fire to begin training and preparing their personnel for combat, nor does a school’s football team wait for the season opener to practice. That’s why schools cannot wait for a crisis to erupt before planning for its possibility.  Instead, the university’s officer in charge of risk must structure and employ a reputational risk decision-making process and protocol to facilitate needed information gathering. The officer also must identify and dismantle cultural and operational silos that hinder decision-making. This process will ensure a school’s early engagement to avert crisis.

Edelman favors a sound reputational risk decisional model built of three tenets:

• Reputational risk-based information gathering and decision-making is an ongoing process.
• Effective decisions are made on the basis of recurring analysis and strategic insight.
• Decision-making systems are informed by data and research and organized so that responsibilities are clear.

Just ask any administrator at a university or college who faced an unexpected crisis that damaged the school’s reputation; they will underscore the critical importance of planning ahead.  Their responses, alone, will underscore that such preparation should begin immediately.