Risk management and the mitigation of risk. How much time have you spent thinking about this? Risk management are the processes we use to ensure a safe and secure learning environment for students, staff, and the general public. Further, it represents fiscal stewardship of taxpayers’ dollars by minimizing losses or claims against the district. As a result, those district staff who are responsible for risk management work to identify and analyze various exposures and then take actions to avoid, reduce, prevent, or even transfer risk.
First, we must define risk. Risk is the product of the probability that an outcome will occur (the frequency) and the consequences of that outcome (severity). If the occurrence is certain and negative, this is not risk. This is a cost. It is simply unavoidable. However, if the occurrence is uncertain and negative, this is risk. Applying this working definition, risk management focuses on minimizing uncertain negative consequences. The industry-standard process involves four steps: 1) Identify new risks, 2) Develop a program to manage risk, 3) Evaluate risk, and 4) Revise risk management program. The process is fluid.
Effective risk management requires effective and responsive organization, formal policies, documented and practiced procedures, information management, fiscal control, and communications. Smaller districts may find that risk management falls to the superintendent and administrative team. Larger districts often have risk management departments and dedicated personnel. Since there are various types of risks, there are various approaches for risk control. The typical spectrum of risk controls moves from: assuming exposure, transfer exposure, mitigate exposure, prevent exposure, and avoiding exposure.
Applying what we have learned, a district might think about a possible hurricane as a risk. How the district plans for a hurricane depends largely on where the district is located (some are geographically more likely to experience this event). This is true for floods, tornadoes, and virtually any unexpected weather event. Some districts may consider a risk management pool. Some might take out insurance. Others might assume the risk if there is a very low probability of occurrence. The Texas freeze of 2021 is a good example of assumed risk.
The past several years have pushed many of us to think differently about risk management as it relates to COVID. As is usually the case, hindsight provides the clarity we didn’t have at the onset. Many districts were thrust headlong into the COVID crisis and did not have the time to step back and create a risk management plan to deploy. For Victoria ISD, there was a “lightbulb moment” for us when we began separating risk management as a “strategy” versus risk management as a “tactic.” Throughout COVID, many boards became more involved in tactics rather than strategy, and this seems to lead to even greater exposure as a result. Governance is hard work and requires great focus. When the governance role begins to take on administrative responsibility, the net effect is less focus on good governance, and this is where danger sneaks in.
Risk management as a strategy
Part of the work of risk management is most assuredly strategic. Before we jump into COVID, it might be easier to look at some examples we are all familiar with and have historically managed successfully. All districts in Texas have safety and security plans, and school safety is very much a part of risk management. As you think briefly about all aspects of safety, which might be considered strategic? These are the things that should occur in the board room at the Governance level. Hopefully, the first thing you thought about was board policy. If so, pat yourself on the back—the policies related to safety and security outline the governance prerogative and duty of risk management. You also may have thought about your safety/security board committee. This, too, is a governance function. This would involve the document that is your safety and security plan. Somewhere in that plan is probably a pandemic response plan, a point we will revisit later in the article. When the Board of Trustees approves the plan, it is a governance and strategic function. We have all heard the mental picture of board work and administrative work as “dance floor” and “balcony.” Governance takes place on the balcony. A good way to differentiate between the floor and the balcony is whether you are looking or listening. You look from the balcony and listen from the floor. Governance is looking at the policy and the plan and the risk and advising. You can look at your agenda, and you should find governance. It comes through action items or perhaps the consent agenda. Perhaps you have thought about the budget and allocation process as it relates to safety and security. When the trustees approve the budget, it is a function of strategy and governance.
Another great example is insurance. School districts maintain several insurance policies, and all have a strategic aspect. The trustees are provided a policy recommendation, review and ask questions, and approve the policy as part of their work. As mentioned above, the board approves the budget. The framework of policies related to insurance is also germane to the work of the board.
Apart from COVID, it is quite easy to think of risk management within the governance function. As we turn our attention to the pandemic, think for a moment about “the work” that has come before the board. Are you confident it has been governance oriented and strategic? We suspect many might be questioning themselves at this point, and this is always a good thing. Three rules for success as a governance team member are to speak your mind, question your mind, and learn from the consequences. We are learning organizations by our very definition! One of the ways we share with new trustees during orientation to know the difference between governance and administration is to demarcate between “customer complaints” and “owner concerns.” There is not always a clear line, but experience, open dialogue with the superintendent, and open dialogue at board meetings allow for greater clarity.
Risk management as a tactic
Risk management is also a tactic, which falls within the realm of administration. Purchasing and installing security cameras is a tactical approach to student safety. The number of school resource officers is a tactical decision (although some may try to make this strategic, it is not). Listening and responding to threats is tactical. Running safety drills is a tactical process. In short, everything it takes to bring the policy to life and action is tactics, which is an administrative function.
To revisit the insurance example from above, the tactics are all the work the district does leading up to the board recommendation. As the cost of health benefits continues to rise, it becomes more challenging to provide employees with good benefits at a sustainable price for the employee and the district. Multiple factors must be considered when deciding what employee benefits plans to offer. Are the price and coverage competitive with the market? Does the broker/agent have a solid market presence and a good reputation? What level of support is available from the broker/carrier? Would the plan really be a benefit to the employee? These are all tactical decisions that need to be made to ensure employees have access to quality care at an affordable price.
Let us now pivot back to COVID. One tactic many of us put forward was lunch table dividers. Some districts provided them, and others did not. It was a tactical decision. We chose to replace several of our water fountains with bottle-filling stations, another tactical decision. Providing hand sanitizer to the classrooms, the Clorox 360 cleaning schedule, seating charts, the list goes on and on. These are the easy ones, though, and just to lay the groundwork for a few others.
How did your district handle spectators and seating at sporting and fine arts events? We recall reading articles about districts that had board-level discussions on this topic. Is this related to student and community safety? Of course, it is. Is this a strategy or a tactic? One could easily argue both sides. As a strategy, the decision would need to be universal for all and not case-by-case (football with different rules than fine arts, for instance). In the instances we are aware of, the trustees took on a more tactical role. This happened largely because of the differentiation point between customer complaints and owner concerns. If several people have commented, the savvy trustee knows to step back from the situation and ask the wonder question(!). The wonder question, of course, is whether this is something to be sent to administration to address or does it rise to board action?
Graduation is another example. If a board engaged in a decision about whether to hold graduation in person or virtually, they were likely in the tactical field. For those reading this and thinking they had no choice but to make it a board conversation because of the community pressure, we will offer something to consider near the end of this article to keep the conversation strategic moving forward. Perhaps you also found yourself listening more than looking. Or perhaps you found yourself trying to handle customer complaints. These moments throughout the pandemic are our opportunity to grow as governance leaders or school administrators.
Sometimes in life, we have takeaways, and sometimes in life, we have leave-behinds. We hope you have some takeaways from this article about what risk management is, how to think about it, and various approaches. We also hope you can take away those great things happening in your district regarding risk management. When we look at our long history of risk management, we see a rather clear line between the governance and administrative functions related to risk management. Perhaps you also have some leave-behinds or things you will think differently about moving forward. How a district handled graduation, games, or other events might be an example. Of course, we have skirted one big issue, which we want to address here and offer something for consideration.
Although it is a heated topic, we need to briefly examine mask decisions. Regardless of the outcome of the decision or your personal stance, we want to focus on the process and who got to make what decision. Some districts found trustees making mask decisions. Other districts left mask decisions to the administration. For those districts that brought the decision to the board table, it appeared many chose a tactical path. As a tactical matter, it was specific to a short period of time, specific to one event (pandemic), and a response to safety. To be sure, the pressure from the community was immense, but in these moments, we must trust ourselves to rely on great governance to see us through. This should give us pause to examine how this might have been handled strategically as a case study for future decisions. The cleanest route would be to have a board conversation at the safety and security committee to reexamine the pandemic response plan and consider language that states, “any time student or staff attendance drops below XX%, the district will implement a mandatory XX day period whereupon masks shall be worn indoors at all times” or language to this effect. The owner's concern here is safety, attendance, and the ability to keep schools open and functioning. This would find trustees looking into the horizon and asking if future pandemics might occur and, if so, what policies should be in place to help mitigate risk. It would also potentially open the door to masking during a severe flu outbreak. This route would have found the trustees taking a strategic approach to the conversation, while still allowing the administration the tactical tools to deploy.
Again, this one incident offers great learning opportunities for all of us, regardless of our role as governance team or administration. As Maya Angelou wrote, “Do the best you can until you know better. Then when you know better, do better.” We hope one of your key takeaways is to remember when you start receiving lots of customer complaints, take a moment to reframe the conversation to determine if it rises to the level of owner concern. If so, turn to your policy and your team to find the governance path.
Quintin Shepherd (email@example.com) is the superintendent of Victoria ISD; Greg Bonewald (firstname.lastname@example.org) is the superintendent of the Wimberley Independent School District; Sherri Hathaway (email@example.com) is the risk manager for Victoria ISD.