Developing Risk Management as New Concept to Manage Risks in Higher Educational Institutions: A New Concept to Understand, Manage the Risks, and Protect Reputation in the Institution

Introduction

The higher education institutions undertake teaching, research and commercial activities across a diverse spectrum of disciplines, fields and environments. This diversity of activity creates many risks diverse and complex as well as a wealth of opportunities for the higher education institutions. Understanding and managing the risks associated with these activities and environments, and making the most of new opportunities, is challenging and critical to preserving and protecting the reputation of higher education institutions, resources, and standing in the local, national and international context. The University of Adelaide in risk management handbook recognized that risk management is an integral part of good governance and best management practice for an organization charged with responsibility for the advancement of learning and knowledge in higher education institutions.

To be success, an enterprise management is also impossible without risk management to address the risks faced by the company. Successful risk management allows for more secure business operations in terms of assets, activities and financial protection, as well as the improvement of services offered (Ruzic-Dimitrijevic & Dakic, 2014). Mentioned by the Department of Education, Training, and Employment that risk management plays an important role in helping organizations to understand the impact and manage the risks associated with the priority goal institutions. This helps them determine the appropriate control environment and balance of strategies to address the risks so that they can use their resources efficiently and effectively, and build an organizational culture that supports awareness, openness and responsiveness to change (Queensland Government, 2016).

Globalization challenges currently, it is deemed essential for a country to prepare a better quality for higher educational institution in national and international level (Pausits & Pellert, 2009). The facts showed that higher educational institution has been rapidly increasing in number from 2,566 in 2005 (Ministry of Education and Culture, 2012) into 4.327 higher education institutions with 5,454,688 students in 2015 (Directorate General of Higher Education, 2015). The rapid growth in the number of educational institutions and the number of students, however, is potentially the greater risk of educational resources and higher education reputation. This increased risk may come from inside and outside institution such as the demands and challenges to be able to meet the demands in domestic and global markets, even to continue to flourish as world-class education institution (Universities UK, 2012).

Risk management practices is recommended to face the risks increased on higher education (Tufano, 2011). URMIA (2007) explained that the risk management can be directly applied to institutions of higher education as an organization because they have a potential risk on levels of staffs and leaders. The higher education institutions can implement risk management as a culture in their environment in order to minimize losses and maximize their competitive advantage.

However, mentioned by Turano (2011), their risk management practices in higher education are significantly less developed than in the business world. This is because they do not understand about risk management in institutions. Yudianti and Suryandari (2015) also explained that the risk management was not very well understood by some of the higher educational institution’s leader in Indonesia. Currently, the Indonesian higher education institutions also face complex risks, and handling their risks seem less optimal. The question that emerged is how to overcome risks in universities to optimize the advantages and minimize the disadvantages of present and future risks. The main purpose of this article is to describe how the implementation of a risk management program as a new concept to understand and manage the risks associated with those activities and making new opportunities, is challenging and critical to preserving and protecting reputation, and resources at higher education institutions in Indonesia.