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    June 2013

    The Long-Term Impact of the Freeh Report

    As a risk management and governance report, the Freeh Report stands out for providing guidance, reflection, and a road map for administrators and trustees as they consider ways to improve communication, establish accountability, and reduce risks. And Penn State (PSU) has made great strides since the report was first published, strengthening security to protect minors, improving the structure of the board, conducting training on the Clery Act, and making a significant commitment to train the entire PSU community on abuse awareness.

    The important and lingering question is: What does the Freeh Report mean for all of higher education? Using the enterprise risk management (ERM) framework (identify risks, assess the impact and likelihood, develop a plan, and measure and report) to look at risks, the Freeh Report identifies at least four risks for most institutions:

    • Minors on campus
    • Compliance, including training requirements (Clery Act, Title IX, etc.)
    • Communication between the administration and governing boards
    • Whistleblower/fraud reporting

    And although not addressed specifically in the report, I'll add crisis response as a risk.

    Each institution needs to develop its own mitigation strategies for these risks. Unless there is a high degree of comfort that these risks are being thoughtfully addressed, I suggest taking time this summer to take stock and develop and implement plans to reduce these risks.

    Many colleges and universities have made progress on many important issues since the release of the Freeh Report, but more can be done. Here is my list of 10 things every campus member can and should do to keep the positive suggestions from the Freeh Report alive:

    1. Tone at the top cannot be underestimated. It matters how department heads, senior administration, and the board act. People are watching our actions.
    2. Communication upward to the president/chancellor and board can be strengthened and more candid. Recent news events continue to reveal that presidents and boards are "protected" and kept out of the loop on important information.
    3. Monitoring emerging risks is never done. We need to stay alert to the next potential risk without overlooking ongoing issues.
    4. Everyone is a risk manager, not just the person who buys insurance and holds the title. We all have a personal responsibility to take risks seriously.
    5. Acknowledge the decentralized nature of higher education and plan accordingly by setting up teams to address cross-institutional issues.
    6. Establish a process to accept and investigate tips from the community.
    7. Look out for vulnerable populations who may need special attention, such as students with disabilities, minors, foreign students, and first generation and economically disadvantaged students who may not be able to advocate on their own behalf.
    8. Encourage training on applicable laws for vendors operating on campus (food service, facilities, etc.) in addition to staff and faculty.
    9. Question sacred cows. Institutions may be sacred but not any one person, activity, or tradition is.
    10. Think about what you want your legacy to be and act to uphold these standards.

    I am speaking to business officers on the long-term impact of the Freeh Report on two occasions this month. Based on feedback from my first talk at the NACUBO Accounting Forum, business officers are increasingly focused on the role of tip lines, ownership of risks, communication upward, and their role as leaders within their institutions. What is on your institution's priority list, and how has the Freeh Report shaped your thinking about risk and governance? 

    By Janice M. Abraham, President and CEO


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