Weighing up the odds

1st June 2001 at 01:00
Foot and mouth disease has highlighted the need for a review of risk management in rural colleges. Neil Merrick and Ian Nash report

Foot and Mouth disease has taken its toll on agricultural colleges. At least three have had to slaughter animals and nine, including every college in Wales, have closed or cut courses since the recent outbreak.

But some of the nation's most spectacular gardens have also been closed. Capel Manor College gardens in north London, which normally brings in an annual income of pound;120,000 a year, is one of them.

While finance directors tried desperately to gauge the impact of the disease on finances, curriculum managers counted the cost of lost studies. A survey by one local learning and skills council has revealed that in Cumbria alone, 4,000 students have had their learning disrupted or stopped.

And the problems will not disappear when the outbreak ends:student recruitment for next year is down, and apprentices have been laid off.

For Roger Bennett, principal of Askham Bryan College, on the outskirts of York, it all points to the need for a radical rethink in the way college management should be planned - using a system of "risk management" devised by industry.

When the college of agriculture and horticulture launched a Higher National Diploma in animal management last September, it could not have predicted that within six months Britain would be in the grip of this crisis.

The college farm was closed to the public, and staff were put on constant alert. Any outbreak near the college, would have put a halt to the prestigious qualification and the entire animal management programme. It would have incurred huge cost to the college.

The disease has not reached the area, but staff have watched anxiously as the daily count of new cases nationally rose sharply then slowly fell, never knowing whether a fresh outbreak would hit them.

Askham Bryan is insured against infectious diseases and would be compensated for any animals lost, but this cover does not extend to consequential loss of business revenue resulting from foot and mouth disease.

Before launching the HND, college managers conducted what seemed to be a thorough assessment of risks. Next time, says Dr Bennett, foot and mouth will have to be built into the equation.

After the risk assessment, governors approved a new pound;250,000 centre that will give Askham Bryan the best animal care facilities in the region. "We took a strategic decision to invest in new resources," says Dr Bennett.

Watching foot and mouth affect other parts of the country has not deterred colleges such as Askham Bryan from launching animal-based programmes in future. Effective risk management does not mean avoiding risks; it is about weighing up the hazard and assessing the possible consequences.

Peter Marples, education partner at business advisers KPMG, says a foot and mouth outbreak has to be seen as a remote risk.

"You try and divert risk through insurance, or put as much in place as you can to manage it," he says.

Increasingly, public and private sctor organisations are looking to promote a culture of risk management and employees from the chief executive downwards must be made aware of risk, he says.

Dr Bennett chairs his college's six-strong risk management group of directors and managers. Senior staff are encouraged to "cascade" the risk culture down to employees, and all staff have a risk assessment role written into their contracts.

A business risk-management strategy developed over the past two years has identified seven risk areas, including governance, finance, management and business systems. In each area, hazards are prioritised. Priority one risks - the most likely and most damaging - are those that would render the college insolvent. Priority two - or medium level - risks include the failure to hit recruitment targets. Failure to maintain teaching quality is a priority four risk as the college has done well in inspections.

Last year, prior to the inception of the Learning and Skills Council, the Further Education Funding Council urged colleges to develop risk management, yet few have gone as far as Askham Bryan in developing such a business-risk framework. Consultants in this area have said that the college is at least "two and a half years ahead of the game", Dr Bennett explains. He adds: "Risk management is under-developed in Further Education - and that's putting it kindly."

However, it seems the sector is keen to learn - a fact indicated by the response a series of seminars run by Dr Bennett; so far, more than 140 colleges have attended.

Peter Marples believes that the public sector is ahead of the private in certain areas of risk management - because of attempts in recent years to enshrine a culture of openness and accountability.

One area that many organisations find difficult is control of their own reputation.

"Many things happen around you which are beyond your control, or which are very difficult to manage," says Mr Marples.

Askham Bryan insists on signing agreements with partner colleges in case its reputation suffers as a result of the failure of another organisation.

Dr Bennett says: "It's all very well having a partnership culture, but it can lead to problems if you hook up with the wrong partner. We won't go into any alliances on a gentlemen's agreement."

Terry Simister, chairman of the Institute of Risk Management, says public sector organisations approach the roblem in the same way as private firms, although they are slightly more restricted in the way they can finance or avoid risk.

"The policy of identifying, evaluating and controlling risk is the same whether you are running ICI or a local authority," he says.

Colin Rose, associate director with Marsh, an insurance brokers, says that those colleges that can show that they are managing their own risks are likely to pay lower insurance premiums. But that is not the only reason for having a risk strategy.

"You make an insurance claim after an event has occurred," he says. "Risk management is about trying to avoid the event occurring in the first place."

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