Reputation risk in schools can be hard to quantify but can make or break a non-government school. Reputation can be one of a non-government school's most valuable assets, with schools that have a good brand and reputation attracting higher funding, greater enrolments and better teaching staff.

 

What is Reputation Risk?

Reputation is a valuable, sometimes unappreciated, asset of a school. It is a value judgment about the attributes of a school that can affect financial performance and provide a source of competitive advantage. The Aon’s 2017 Independent Schools’ Risk Report outlined the top ten risk factors for independent schools in Australia. It should come as no surprise that brand and reputation were two of the top risk factors indicators of reputation risk can be wide and varying, often coming from the strangest areas, and, in this case, often school boards are not thinking creatively or broadly enough about the potential risks to their reputation. Take the following as some examples of reputation risks:

• a previous student raises a complaint about a current teacher in relation to historical child sexual abuse
• a current teacher accuses the principal of bullying on a current affairs media program
• a current student is involved in a serious crime while in school uniform, which is later reported by the media
• the canteen provider used by the school is implicated in funding terrorism activities overseas
• the school's IT systems are hacked through a phishing attack and student medical records are widely available over the internet
• a key fundraising committee member associated with the school is also a director of a company that has been implicated in modern slavery along its procurement chain.

Most schools do an inadequate job of managing the risks to their reputations despite the fact that a good reputation can be a support base when crises like the varying circumstances illustrated above occur. Most schools instead tend to focus their energies on handling the threats to their reputations that have already surfaced, or in managing their compliance (which looks backwards and ends at the present). Neither of these approaches is risk management. Instead, schools should be looking at an enterprise risk management model, with reputational risk being one of the factors considered across the school.

 

Enterprise Risk Management for Reputation

As mentioned in our previous article, in very simple terms Enterprise Risk Management (ERM) is a methodology that assists board members, principals and executive managers to predict future events, which may impact (positively or negatively) on their school’s activities and allows them to take appropriate action to address the impact of these events.

Unlike traditional risk management approaches, which tend to have been managed through silos (e.g. safety, finance, insurable risk), ERM draws together risks across the whole of an enterprise, allowing directors and officers to make decisions based on the highest quality financial and non-financial information.

Risk is defined in the current Risk Management Standard as “the impact of uncertainty on objectives”. So, school boards need to ask the question - what are the uncertainties that would impact on the school’s objective of having a positive reputation in the community and be held in high regard and esteem by that community? In terms of reputation risk management, school boards need to look at these uncertainties across the school before they occur and identify the three most common risk indicators for reputational risk which are:

• differences between perceptions of reputation between the school and stakeholders
• expectations of the school's stakeholders that have changed or shifted
• weak internal co-ordination of procedures and processes.

The financial and legal impact of reputation risk is also often underestimated by schools, with an event which initially affects the school's reputation quickly having a financial impact through decreased donations or funding and decreased enrolments. Further, the impact of potential legal action may make it more difficult to attract quality teaching staff.

It is also important for all school boards to recognise that ERM is a continuous and dynamic process.

The ERM risk management process often includes reports provided on a quarterly basis with movements in risk ratings highlighted. It is common for risk management to be a standing item on a board’s agenda, providing board members with an opportunity to raise any particular risk concern, including reputation risk, that they may have outside formal reporting periods.

 

Why is Reputation More Important in the Social Media Era?

The initial challenge for any school is to understand the difference between what it believes its reputation is and how its stakeholders perceive it. It is in this gap that crises can occur, with the ever present social media environment waiting to turn problems into emergencies within hours or minutes. Importantly for schools, social media provides a platform where key stakeholders can gather and influence others in a matter of a few clicks rather than by formal in-person meetings.

School boards need to have an excellent understanding of their key stakeholders and ensure that they have an effective, credible and transparent communication and engagement framework in place so that the communities with which they interact can be properly consulted, expectations can be aligned and any concerns can be given the early attention they deserve, and not responded to via a new hashtag on social media.

Fresh problems emerge each year; from cyber bullying, to terrorist attacks, from allegations of child abuse, to allergic reactions. The instantaneous nature in which communication now flows, and the ease of publishing to social media, coupled with new and emerging causes of crises or incidents, mean that it’s not enough to have a critical incident and communication plan in the top drawer – it needs to be regularly reviewed, updated and tested, specifically for handling social media conversations.

 

How Can Schools Manage Their Reputation Risk?

Managing reputation risk to the school involves a cultural shift in priorities with key stakeholders, in this case, students, parents, alumni and the greater school community, at the core of any plans for management. The key steps to effectively manage reputation risk are:

1. Assess the school's reputation. This will involve a contextual, objective and quantitative analysis of the perception of the school.
2. Evaluate the internal culture of the school. The internal culture should reflect the school's reputation.
3. Close the gaps between the school's reputation and the internal culture. This may involve further training or changes in internal processes or procedures.
4. Monitor the changes in key stakeholder beliefs. This may involve setting up tools to monitor social media or having a dedicated marketing team.

Schools should also have control strategies in place to proactively, rather than reactively, manage their reputation risk. One thing is to make sure the school has well-developed systems in place to manage events that could impact on reputation. A school’s reputation is often damaged more by how it responds to a major issue than by the issue itself. With that in mind, schools should have policies and systems in place that ensure responses are appropriate and show that the issue is being managed appropriately. For example, do school policies respond to the following questions:

• Is it clear who in the school has the authority to speak for the school when the media comes knocking at the door?
• Do staff know that they cannot speak to the media about the school unless authorised to do so?
• Do appropriate staff have some training in dealing with the media or are consultants retained to provide advice when handling the media?
• Is there a good understanding through the school's insurers as to what staff are permitted to say in response to an issue without affecting the school's insurance cover?

To protect brand and reputation, it is pivotal that schools train key personnel in how and when to respond and ensure that the plan is continuously reviewed and updated to reflect changing conditions. While schools cannot totally prevent damage to reputation, they can substantially mitigate it by undertaking proactive risk management.