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Higher education institutions are facing enormous challenges, some caused directly by the pandemic and others that have been brewing for years. To meet them, a risk management strategy in today’s evolving higher ed landscape requires agility, adaptability and thorough preparation.
Change Management on Campus and Pandemic-Related Exposures
When COVID-19 began to spread across campuses, higher ed officials had to move quickly. New procedures were rapidly adopted to restrict who had access to buildings, strict cleaning regiments were adopted, capacity maximums in on-campus buildings were lowered, social distancing requirements were enforced, and mask mandates were enacted.
The demand for services at on-campus clinics also increased, leaving nurses and providers struggling to meet students' needs. Institutions learned how to manage these issues, including how to ensure ready availability of necessary PPE and sanitation equipment.
Pandemic-related occupancy reductions for on-campus housing had a sizeable economic impact. Dorm rooms that were once at double, triple, or quadruple occupancy had to be cut back to comply with social distancing and sanitation protocols. This significantly dropped housing income even as the expenses of keeping those facilities open remained the same.
Revenue streams were also impacted as difficult decisions had to be made about hosting live events/external conferences on campus, and whether to continue contracting third-party services when students were no longer on campus.
Lessons Learned, Enterprise Risk Management
Most institutions were not prepared for the pandemic. However, those who were able to move quickly and adapt mitigated the most severe impacts of the sudden changes. Moving forward, higher ed officials must plan ahead and make decisions about potential future catastrophic events.
The pandemic revealed new exposures and risks, the impact of which will help leaders make informed decisions based on quantifiable metrics, such as expense to income ratios.
Leaders must institutionalize change management procedures and document effective decisions so that if disaster strikes again, they will be ready.
Contracts and language must be scrutinized in a new light to recognize and avoid potential losses. Many institutions faced lawsuits from students' families, upset that they had to pay full tuition fees when campuses were closed. Though these suits are unlikely to result in payouts, schools can work to avoid future claims by updating tuition contracts and clearly communicating what is out of their control and why tuition fees are still necessary (professor salaries, building maintenance, etc.).
On an organizational level, COVID-19's repercussions proved that risk management officials and governance can no longer operate separately. Executive leadership must coordinate with risk management to ensure mission-impacting exposures and losses are minimized or eliminated. Colleges and universities should develop a well-crafted enterprise risk management program that elevates risks to senior leadership when necessary, understanding that institution-wide changes can only be made at the highest level.
Accumulation and Management
Hardening insurance markets are creating additional challenges in higher education. Underwriters are requiring more data and raising benchmarks for insureds to demonstrate they are a quality risk, especially for Cyber Insurance. Institutions must make sure they have proper security protocols and controls in place as hackers have identified educational institutions as soft targets. Reported cyber-attacks and subsequent insurance payouts are continually driving rate increases.
Simultaneously, Management Liability rates are rising, especially for EPLI, D&O policies. These rate increases are primarily influenced by improper hiring and firing practices. To minimize claims, thorough documentation of processes is needed. The insured must demonstrate that they are fully compliant with equal protection, equal opportunity and anti-discrimination laws, and that their workplace can in no way be considered hostile.
To prepare for policy renewals in this hard market, institutions must gather all relevant data early, keeping it organized and accessible. They should also work closely with brokers and advisors to understand shifting underwriting needs, finding new ways to tell their schools’ story to present themselves as a high-quality risk.
Student health remains a key focus and concern for higher ed leaders across the country. Many university presidents consider students’ mental and behavioral health the most pressing issue facing their institutions. This concern is exacerbated by the need for mental health care and the availability of therapists and psychiatrists nationally. Throughout the pandemic, quick adoption of new technologies and telehealth options expanded the capacity of on-campus health providers, proving again that agility and swift adaptation is essential in times of crisis.
Higher Education in 2022
Risk Strategies works closely with colleges and universities, serving as specialist advisors. We have firsthand experience with major issues impacting the education sector. Throughout 2022, Risk Strategies Education experts will be sharing in-depth insights and recommendations on the topics above. We look forward to having you join us.
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