|
|
|
MONTHLY NEWSLETTER: APRIL 2006 ISSUE
|
CHARTER BOARDS AND MANAGING RISK
BY CINDY WILKERSON, CALIFORNIA CHARTER SCHOOLS ASSOCIATION
|
|
|
Risk can be defined as “the chance of loss,” while management can be defined as “using assets wisely.” Therefore, charter school risk management can be defined as “using assets wisely to protect the charter school from the chance of loss.” Considering that a charter school’s assets include students, employees, property, finances, and reputation, every decision involves some aspect of risk management. Therefore, risk management is one of a charter school board’s primary responsibilities.
Let’s look at the types of risk that face a charter school. Taking a holistic approach, risk can be classified into the following four categories:
Financial: Per pupil funding rates; Cash flow; Access to credit; Ability to fundraise
Strategic: Charter approval/renewal; Changes in charter legislation and policies; Ability to recruit students; Ability to gain support from the community
Hazard/Event: Contracts/leases; Natural events; Litigation; Vendors/suppliers; Public Access/interaction; Property; Employees; Students
Operational: Board composition; Conflicts of interest; Community relations; Quality control; Accounting controls; Talent management/acquisition
Charter schools do not operate in a risk-free environment – in fact, the charter school environment can be ripe with risk. As new risks come into play, some unforeseen, a charter school must respond. Some risks may not be covered by traditional insurance policies, so purchasing insurance is only one of many risk management techniques to employ. What can be done to protect a charter school from the risks it may face?
The answer is a general awareness of risk, coupled with a cohesive Risk Management Program that includes:
(1) Risk Management Policy Statement
(2) Risk Management Policies and Procedures Manual
(3) Implementation with accountability
(4) Monitoring/Adaptation
For a charter school to address risk properly, all involved persons – especially the charter school board – need to be committed to the school’s Risk Management Program. Buy-in at each level is critical. Developing a Risk Management Policy Statement – a mission statement specific to risk management – is the first step. This statement is integral in communicating the charter school’s posture toward risk. The rest of the Risk Management Program is developed to fulfill this statement.
The next step is to develop a Risk Management Policies and Procedures Manual. Policies and procedures are adopted to define a framework from which the administration will operate regarding risk management. These policies and procedures will detail how certain areas of risk will be addressed. For example, a school’s Field Trip Policy details student-to-chaperone ratios, transportation, permission/release forms, etc. Involving the school’s Safety Committee in this process will provide for diverse input to make sure all areas are considered.
Implementation of the Risk Management Policy Statement and the Policies and Procedures Manual will involve every person – from administrators to students – in order to be successful. Supervisor accountability for following risk management guidelines is essential. If guidelines are not met at every level, losses can occur. For example, field trip transportation guidelines can be airtight, until one person doesn’t follow them resulting in unnecessary harm to students. A Risk Management Program with accountability for non-compliance will succeed in preventing similar incidents.
Finally, the charter school environment is continually changing. The effectiveness of the Risk Management Program and its Policies and Procedures need to be constantly monitored. Flexibility is important, because a charter school’s Risk Management Program will need to adapt as the risks encountered change with the environment.
One of the charter school board’s primary responsibilities is that of risk management, because the charter school will face risk on many different levels with a myriad of possible consequences. The charter school board is charged with establishing the framework of the Risk Management Program through the Risk Management Statement and the Risk Management Policies and Procedures, with the help of all stakeholders. In doing so, a charter school board will enable the charter school to navigate its risks successfully.
Cindy Wilkerson, Risk Manager, California Charter Schools Association
cindyw@charterassociation.org
|
|
|
