Within an independent school the responsibility for managing risk rests with the Board of Governors. Should a risk materialise such as breakdown in safeguarding or financial mismanagement, there is no doubt that questions will be raised regarding the governance and risk management processes. The responsibility of the Governors is to seek assurance that all principal risks are managed effectively.
One major, but often overlooked, dimension of strategic risk is a failure of the ‘business as usual’ control environment, being the realisation of one or more risks that under normal circumstances should have been within the school’s control. Where the risk mitigation control is applied ineffectively the school becomes exposed to risk automatically.
Governors often fail to put in place suitable arrangements that enable the reporting and monitoring of the core controls that protect the school from the majority of business as usual risks. This is where assurance becomes a key element of the Board’s risk management approach.
Assurance goes to the heart of the work of any Board. The provision of education involves risk, and being assured is a major factor in successfully controlling risk. Having the right assurances gives confidence that risks are being controlled effectively, or, conversely, highlights that certain controls are ineffective or that there are risks where no assurances are being provided.
A Board Assurance Framework brings together in one place all the relevant information on the risk to the Board’s strategic objectives. It is an essential tool for Boards, but like all tools it needs to be used with skill and diligence.
What is a Board Assurance Framework?
The HM Treasury Guidance on Assurance Frameworks (2012) defines an assurance framework as:
An assurance framework is a structured means of identifying and mapping the main sources of assurance in an organisation, and co-ordinating them to best effect.
...Or more simply put, do we really know what we think we know?
The development of Board assurance arrangements should be a logical extension of an independent school’s existing risk management arrangements. It is important therefore that you are satisfied with how your Board, finance and sub-committees and external reviewers understand and implement risk management, and that you maintain an informed engagement with the risks and opportunities that you face. If these arrangements are effective they will help you to understand the process and control environment, and help you answer the core questions:
- what do we want assurance over? and
- how much assurance do we need?
Developing and maintaining Board assurance arrangements is not, and should not be, a separate activity, but rather an embedded tool of management. As a natural extension of risk management, it would be reasonable to incorporate your Board assurance policy and procedures into your risk management documentation, therefore ensuring that risk, control and assurance identification and monitoring processes are considered as a single, not disparate, set of activities.
For more information on how to formulate a Board Assurance Framework for your school please download RSM’s Board Assurance: A Toolkit for Independent Schools