Home' Independence : Independence Vol 38 No 2 Oct 2013 Contents VOL 38 NO 2 OCTOBER 2013 INDEPENDENCE 59
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Who has responsibility for the oversight
and management of the risk framework
A key governance responsibility of the
school Board or Council is firstly to
ensure the risk framework is established,
and then to subsequently maintain
oversight of its implementation. In
turn, it is the responsibility of the
Principal to ensure the risk framework is
implemented throughout the school.
The Committee of Sponsoring
Organisations of the Treadway
Commission (COSO 2009) highlights
four areas that contribute to Board
oversight with regard to enterprise risk
1. Understand the entity's risk philosophy
and concur with the entity's risk
2. Know the extent to which management
has established effective enterprise risk
management of the organisation
3. Review the entity's portfolio of risk
and consider it against the entity's risk
4. Be apprised of the most significant
risks and whether management is
While the Board and Principal have clear
roles in oversight and implementation of
the risk framework, it is important that
all school staff both understand and take
appropriate responsibility in managing
The process to establish, implement
and monitor a risk framework should
commence with a discussion between the
Board and the Principal in order to:
Establish shared understandings about
Develop an agreed approach to
Create a schedule of associated tasks
to ensure effective implementation and
monitoring of the risk framework.
Our advice is to allow time to get to know
the school's risk environment and carefully
consider the risk appetite of the organisation.
It is important that risk management does
not become an unnecessary barrier to
opportunity and growth.
Often when Principals and Boards are
presented with ideas and proposals,
the immediate reaction is to discuss the
uncertainties and risks. What impact
might the proposed activity have on
school finances? Does the proposed
activity involve travel to new destinations?
Are there any safety concerns associated
with the activity?
Prudent practice suggests that a risk
assessment of the proposed activity be
undertaken and include consideration of
how the proposal fits with the school's
risk appetite as documented in the risk
appetite statement. This encourages
a balanced response, which allows
questions such as: Does the proposal
offer an opportunity not yet explored by
the school? If the level of risk is within
the school's risk appetite, then where can
school outcomes be improved? Could
the implementation of the proposal
lead to stronger long-term financials
through greater student numbers, better
academic performance through improved
engagement and new learnings and/or an
improved reputation from greater public
awareness of school activities?
Boards and Principals must avoid falling
back on risk management as an excuse to
avoid tough decisions. A risk framework
is therefore one of the best supports to
have in place to ensure organisational
decision making remains strategic.
Don Walkley is Executive Director of the
Australian Institute for School Governance
(instituteforschoolgovernance.com.au). He has
also been Principal of an independent school.
Sean McGing is Director of McGing Advisory
& Actuarial (mcging.com.au). He also has five
years' experience as member of a secondary
Australian Securities Exchange (ASX) Corporate
Governance Council (2010) Corporate governance
principles and recommendations.
Australian Standards (2009) AS/NZS ISO
31000:2009 Risk management -- Principles and
Chartered Secretaries Australia (CSA)( 2009)
Enterprise risk management.
Committee of Sponsoring Organisations of
the Treadway Commission (COSO) (2009)
Effective enterprise risk oversight: The role of
the board of directors. Available at http://www.
CSM (2009) Risk & board expectations. Creative
School Management, 26(6).
Maqsood, T. (2011) Presentation on AS/NZS ISO
31000: 2009 - Risk Management - Principles and
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