Our extensive research and examination of the Bicentennial Strategic Plan for Indiana university has lead us to the conclusion that implementing a risk management system is in the best interest of Indiana University. Should you need any additional information or have any questions concerning the enclosed document, please contact us. Sincerely, Recommendation to Implement ERM System at Indiana University Advanced Managerial Accounting Lecturer: Condoled White Submitted by: EXECUTIVE SUMMARY Purpose of Report Our report demonstrates the importance of adopting an Enterprise Risk Management (ERM) system at Indiana university (10).
As long as the University remains a going concern, it will face numerous risks. Although implementing an ERM system requires additional human and capital resources, the benefits of successful implementation far surpass the expenses. By understanding risk management, the University will be better positioned to capitalize on certain opportunities that other institutions do not recognize. As a result, effective ERM systems enable growth and innovation, giving the University a competitive edge.
Findings and Conclusions After analyzing II-G’S Bicentennial Strategic Plan and latest financial statements, e conducted a risk assessment of the university using four risk categories. These categories include strategic risks, operational risks, financial risks, and hazard risks. Among each risk category, we identified four risks and evaluated the impact and likelihood of each risk. Incorporating ways to mitigate or respond to these risks, should one occur, will enable II to uphold its principles of Excellence and Carry-out its mission Statement. Recommendation As a result of our report, we strongly recommend that II adopt an ERM system.
To implement an effective ERM system, we suggest taking the allowing steps: 1) Outline benefits II wants to gain from implementing an ERM system, 2) Evaluate current risk management system to understand what is in place, 3) Contact similar universities to survey their risk 4) Build ERM system around defined central management processes, goal. Define most important goals first, and then expand on goals, 5) Explain goals and importance of the system so employees are actively involved, and 6) Report progress of implementation often to constantly update and improve the ERM system. Table Of Contents Introduction…….
Along with 1 95 years of achievement, the University is faced with risks and opportunities. In conjunction with goal and strategy setting for the coming years, Indiana University should adopt an Enterprise Risk Management system to provide assurance of future success. ERM is a method of planning, organizing and controlling the activities of an organization to reduce the effect of risk on any future achievements. This report will outline the importance of ERM implementation using four categories: strategic, operational, financial, and hazard.
Using The Bicentennial Strategic Plan for Indiana University, we have identified specific points in the plan, which led us to recommending implementing an ERM system. CONCLUSION After extensive research on all’s Bicentennial Strategic Plan and the most recent financial statements, we have come to the following conclusions: 1 . Academic reputation, faculty leadership, student life, and the global economic condition are all risks that could hinder Indiana university ability to achieve its strategic goals and objectives. 2.
Managing Indiana University can be greatly affected by losing sight of some of its main operational practices. These include technology, customer satisfaction, on-campus remonstration, and resource allocation. 3. Indiana University faces large risks through interest rates, credit risk, donations, and research funding grants. The University must mitigate these risks to stay in a position of financial stability. 4. It is the responsibility of Indiana University to keep its students safe from the risks of hazards such as terrorism, natural disasters, construction around campus, and drug and alcohol use.
The following chart identifies each risk within its risk category and which level of impact and likelihood it would have on Indiana University. By identifying and mitigating these risks, Indiana University can continue to uphold the Principles of Excellence. RECOMMENDATIONS upon consideration of the conclusions of this report, we offer the following recommendations for Indiana University to preserve its promise of upholding the principles Of Excellence: 1 . Outline the benefits II wants to gain from implementing an ERM system. 2.
Evaluate current risk management system to understand what is in place. 3. Contact similar universities to survey their risk management processes. 4. Build an ERM system around defined central goal. Define the most important Laos first, and then expand on goals. 5. Explain the goals and importance of the system so employees are actively involved. 6. Report on the progress of implementation often to constantly update and improve the ERM system. FINDINGS AND DISCUSSIONS We conducted a risk assessment after analyzing all’s Bicentennial Strategic plan and latest financial Statements.
The risk assessment defined four risk categories including strategic risks, operational risks, financial risks, and hazard risks. Within each risk category, we identified four risks, assessing the impact and likelihood of the risks. Strategic Risk Strategic risks are institution-wide risks that have the potential to affect II on multiple levels. In order to achieve the goals set out by Chic’s Bicentennial Strategic plan, the risks identified need to be carefully monitored. Although strategic risks include a broad range of topics, we believe a few risks merit special attention.
These include risks related to reputation, quality of faculty, health/safety of students and global economic conditions. Reputation As defined in Ilk’s Strategic Plan, the vision of the university is to be the preeminent institution of higher education in Indiana (Bicentennial Strategic Plan, 2014). In order to achieve this goal, the University needs to constantly monitor the risk of Its academic reputation being tarnished. As II has spent nearly 200 years building its reputation as a distinguished university, the likelihood of this risk is low. However, the potential impact is high.
If prospective students feel the University no longer delivers a high-quality education, attendance rates will sharply drop. In order to maintain its reputation, II needs to constantly improve curriculums, teaching methods and overall learning environments. Quality of Faculty The academic performance of II students largely depends on the quality of occult. Employing exceptional professors leads to a superior education and gives II a competitive advantage. Recruiting top talent for classroom instruction and research studies is essential for achieving all’s priority of creating a community of scholars.
Historically, II has been successful at creating this community and is at low risk of a change in the near future. If this priority is neglected, it has the potential to have a medium impact on the university. Although Icily has other selling points to convince students to attend, a decline in the quality of faculty will directly impact the quality of dents. This could lead to a decrease in rankings, reputation, and prestige. Health and Safety The health and safety of students is essential to create a community that can thrive both academically and personally.
Scandals related to sexual assault, suicide, and violence can quickly change the publics opinion about whether II is a respectable institution. In addition, a focus on students’ mental and physical health will ensure they reach their highest academic potential. Scandals and epidemics related to student health and safety have a low probability of happening, but can have a high impact on academic reference and II-G’S overall reputation. Global Economy On a broader scale, the volatility of global economic conditions poses a risk to IL’.
If the overall economy is performing poorly, financial constraints will lead to fewer students pursuing higher education. As one of Chic’s main priorities is offering an affordable education, responding to the overall economy while maintaining low tuition rates is an important task. Although the economy is currently stabilizing, there is always the possibility of a financial crisis, as exemplified in 2008. However, we believe this risk only has a medium childhood to occur due to Chic’s dedication to diversification and recruiting students from countries all over the world.
The potential impact of this risk is also medium as it could lead to a decrease in attendance rates, but only to a certain extent Regardless of the economic climate, many students will still be able to pursue a college education. Governments offering student loans and grants will help reduce the effects of a declining economy. Operational Risk Operational risks for II are uncertainties within the campus that will affect the University’s daily operations. Many operational risks can be prevented through risk assessments.
Our report analyzed four operational risks that Indiana University will face including technology, customer satisfaction, transportation, and resource allocation. Technology Technology is one of the largest components of all’s operating system. The technology risk has a medium likelihood to occur with a high impact. Technology consists of technology infrastructure, database management, security, and privacy. Failure with any of these aspects of technology will cause significant difficulties for the university . Asana institution for higher education, II is responsible for the confidentiality of students’ information.
Viruses or breaches could cause data to be lost or exposed. These events will lead to a decreasing reputation, student satisfaction, and profitability for the University. Customer Satisfaction Customer satisfaction poses an operational risk for the University. Poor customer satisfaction will lead to decreases in enrollment in future years. Without enrollment, the University will fail to operate. Additionally, according to the Principles of Excellence, high quality of student life is deemed necessary to provide an outstanding higher education experience. As a result, customer satisfaction has a high impact.
Since the University has maintained an outstanding reputation throughout its history, the likelihood of campus- wide dissatisfaction is medium. Transportation Transportation may also affect the quality of student life. II provides on- campus transportation in order to facilitate student needs. However, operational risks may occur if the transportation system is not properly managed. We determined the likelihood of this risk to be medium . Although II has a large transportation system, it has a proven history in effectively managing its process. One component of this risk is the safety of students.
II must prepare an Emergency Response Plan to mitigate safety issues as they occur. The impact of the transportation risk is medium. The consequences of transportation failures would likely only lead to minor injuries and extra workloads for the university. Resource Allocation As Indiana University has several campuses, resource allocation and budgeting among different campuses is a concern. To ensure each campus is up to the standard of IL], it is important to effectively distribute resources. Each campus is in a different phase of its development, meaning each has different needs.
Effective resource allocation has a high impact on the success of each campus and the university as a whole. Without the necessary resources, campuses will be unable to uphold the Principles of Excellence. Since the University sets its budget each year, the likelihood of miscalculating resources is medium. Inefficient resource allocation would set campus development back one year, but adjust could be made the following year to correct the issue. Financial Risk Financial risks are risks that affect profitability and efficiency. As educational funding is often ran on tight budgeting, it is important for II to maximize the alee of its finances.
Mitigating financial risks will be crucial for II to fulfill its Strategic Plan of becoming the worldwide leader of education and research. Some of Us most threatening financial risks involve interest rates, credit risks, donations, and research funding. Interest Rates Interest rates are constantly fluctuating. Exhibit 1-1 shows the fluctuations of U. S. Treasury notes since 2007 (Wall Street]urinal). Due to the variability in interest rates, we rated this risk as having a medium likelihood. It is important for II to keep tabs on interest rates because they have a high imp
University. Interest rates affect both student loans and scholarship interest rates rise, students are less likely to afford the student Lola necessary to attend II-J. This could especially affect students who pi state tuition. Additionally, interest rates affect how the school invest capital. As noted in Sis’s financial statements, much of its scholarship comes from earning interest on investments of its scholarship fun interest rates are low, II will not gain adequate return on the invest its scholarship funds, causing fewer incentives for qualified student the University. Credit Risk
Having a good credit rating is necessary for organizations to expand Organizations with bad debt reputations will find it challenging to r for new projects. Although credit risk is a risk that II should be awe determined that it has a low likelihood of impacting the University. Financial statements show an impressive debt to equity ratio (2013 Financial Report). With relatively low accounts payable, it appears II unlikely have issues paying off its debt. A major reason IL] has low payable is because many of its renovations are funded by donation Although IL] is not likely to have credit risks, it would be highly imp aced these risks.
Without proper funding to renovate and expand facilities, II will fall behind its global competition in education and Donations Donations are a vital component to the success of II-J. As shown in statements, IL] receives millions of dollars in donations every year ( Financial Report). As donation rates have continued to increase, HTH likelihood that II will face risks concerning the amount of donation and corporations have shown their willingness to donate to IL’, but important for the University to maintain this support. A lack of don would have a high impact all’s Strategic Plan.