When asked about risks that they face, most schools governing bodies will include reputational risk as one of the most important risks that a school has to manage. But what is reputational risk and exactly how do you manage it? This article explores these questions.

What is reputational risk?

This Ideagen article defines reputational risk as “the damage that can occur to a business when it fails to meet the expectations of its stakeholders and is thus negatively perceived.” The article also explains that reputational risk “can affect any business, regardless of size or industry.”

Some of the most common sources of reputational risk are:

• data breaches
• misconduct by the organisation or one its stakeholders
• dissatisfaction with an organisation’s product or services
• an organisation not complying with relevant laws and regulations.

What steps can you take to manage reputational risk?

Damage to a school’s reputation is not just ‘bad luck’. In most cases, you can usually identify failures or inadequacies that may lead to reputational damage.

As a result, schools should, at a minimum, do the following to manage reputational risk effectively:

• Flag or identify risks in risk registers that are likely to have a significant impact on the reputation of the school. This allows schools to monitor those risks more closely.
• Ensure that staff understand the social media policies and codes of conduct that apply to them, and make sure that you enforce these polices. Students should also understand their responsibilities in using social media and the potential harm it can cause to both them and other people.
• Make sure that there are effective and accessible complaints handling systems in place that allow for students, parents, and the broader school community to make complaints. Welcoming complaints and feedback is an important way of finding out about issues before they escalate.
• Manage risk well. A lack of risk capability is more likely to lead to reputational damage.
• Make it easy for staff to report compliance and risk incidents and issues and make sure that they know that concerns will be taken seriously and that they will suffer no detriment if they raise them.
• Develop a culture that encourages feedback and is proactive in dealing with issues rather than a culture that attempts to cover up mistakes and ignores issues, hoping that they will go away.
• If serious issues arise and the media comes calling, make sure that there is a clear understanding of who is authorised to speak to the media.
• When serious incidents occur, conduct a detailed investigation into the causes or potential causes that led to the incident. In other words, learn from previous mistakes.
• Don’t assume that because there have been no serious incidents when conducting a longstanding activity (e.g., a camp) that this means incidents are less likely to occur in the future. Past performance is a poor indicator of future risk.

The importance of risk capability

Any conversation about reputational risk must also include a discussion about an organisation’s risk capability. Risk capability is the current capability of the school to manage risk effectively. By managing risk well, you can minimise the possibility of reputational damage.

A school’s risk capability will be the product of the organisation’s risk resources, risk expertise and risk maturity. A school with poorly developed systems for managing risk is more ‘at risk’ of reputational damage than a school that has well developed risk management systems and processes and constantly monitors the effectiveness of risk controls.

The “X factor” in risk capability is the risk culture of the school. The risk culture of a school will be impacted by whether:

• the governing body sets the ‘tone from the top’ with respect to risk management
• risk management is integrated into organisational decision making
• the management team is actively engaged with risk, has clear risk responsibilities and accountabilities, and can articulate the benefits of effective risk management
• all staff understand that risk management is ‘everyone’s responsibility’ and actively support the risk management requirements of the school.

Importantly, schools need to consider their capability to manage all risks, not just reputational risk, as reputational risk can have its source in other risks that are not effectively managed.

Conclusion

Reputation is often described as “hard to win, but easy to lose”. While this is probably true, there are many things that schools can and should do to manage reputational risks, including by ensuring that they are managing all areas of risk effectively. Importantly, this starts by cultivating a healthy risk culture at the school.