IS YOUR governing body aware of the risks that your school faces and have you taken the necessary steps to minimise these risks?

A consideration of risk and associated controls is rapidly becoming one of the most important features of business life. There has been a recent focus on improving “corporate governance” in companies listed on the UK Stock Exchange. The directors of listed companies must now conduct an annual review of the effectiveness of the company’s internal controls and report publicly that they have done so.

This involves directors in considering key business risks and the internal controls set up to deal with them.

Schools are not businesses and governors are not company directors. And yet ... all governors have a legal responsibility to ensure that there is effective “governance” of their schools. Considering key risks and looking at ways to deal with them should be an essential part of the work of any governing body. Headteachers and senior school managers already focus on risk in their normal work but schools may not have a formal risk management programme in place.

Risk arises from many different sources. It may be as varied as a structural fire risk from old wooden stairs or danger to the safety of staff and children from unwanted intruders.

The most important element of risk is uncertainty. Planning against risk is aimed at examining how any risk will affect the operation of the school and the achievement of its aims and objectives.

Risks can be divided into strategic and operational risks (see table below).

Strategic risks tend to affect the achievement of the school’s objectives and its future plans as outlined in the school development plan.

Operational risks, however, affect the day-to-day smooth running of the school, but can be equally serious if not identified and controlled.

Governors cannot be concerned about every risk facing their school but they need to focus on key areas of risk. These will often be strategic but will include important operational ones such as those relating to the risk of financial loss or affecting the welfare of children and staff.

The first stage in a risk-management programme is to identify key risks and try to assess the likelihood of them happening and their potential impact on the school. For example, the risk of an unauthorised person being able to enter school premises could have a serious impact on the welfare of children.

While the children’s safety is by far the most important consideration for governors, the lack of security is also likely to create bad publicity for the school. This in turn could lead to potential parents favouring an alternative school that they perceive as more secure. It is likely that governors will be more involved at this first stage when risks are identified than at the second stage.

The second stage of risk management is to decide on action. This is more the realm of school management, although governors should be kept informed.

There are three main courses of action in dealing with risks:

Control: policies and procedures to minimise the risk. Management should consider the cost of any proposed controls and ensure they are commensurate with the risk involved. It is impossible to eliminate a risk. You can only minimise it.

Transfer the risk: taking out insurance policies is a good example of transferring risk to someone else. The cost of an insurance policy needs to be compared with the extent of any potential loss.

Accept the risk: some risks may be remote or not worth the cost of control. For example, there is a risk that a disgruntled child may throw a brick through the headteacher’s window, but it is hardly worth installing specially hardened glass to prevent this!

A risk-management report should be prepared annually for consideration by the governing body. Risk changes continuously - therefore the risk-management programme needs to be regularly updated. The report could look at potential risks, their likely impact, action taken to deal with the risk and who has been allocated responsibility for monitoring the success of any action.

But is this all just another set of time-consuming tasks for governors?

On the contrary, considering key risks can help governors to focus their limited time and energy on issues that are of vital importance to their schools.

As the Government seeks to impose ever-increasing responsibilities on governors, they will need to find new ways of prioritising their workload. The adoption of a risk-management strategy is a very useful tool with which to achieve this.

Elaine Horrocks is an internal auditor and vice-chair of governors at her local middle school