Monday, January 16, 2012

Risk management and reputations: capsized cruise ships and mice in salads

Today, as stock markets opened, the share price of Carnival fell by 20%. I wondered if the directors and managers of the owners of Costa Concordia had listened to the Freakonomics podcast about A Mouse in the Salad.

The podcast recalls as case of a mouse being found in a salad at an up-market chains. It uses the case study to describe how companies deal with unfortunate incidents which pose a threat to their reputations.

The issue of reputational risk is not just a matter for shareholders and directors in the commercial world where brands are worth billions. Reputational risk can blow public and third sector organisations off-course too. Last year we saw the Metropolitan Police shaken at the very top by allegations.

Being prepared is always a good start when it comes to risk management. Too many organisations think that a periodic update of a risk register is enough. Contingency plans for specific situations as well as generic bad stuff should be in place. While media training may not be necessary for smaller organisations, leaders of all organisations need some support and guidelines in place for when necessary, especially if they might be unfamiliar with media glare. Having a link with PR agency for emergencies might come in handy as well as building up strong relationships with the media and other stakeholders in good times.

Listening to the Freakonomics podcast (or reading the transcript) highlights the importance of communication, transparency and ownership when things go wrong. The sooner that Carnival learn that, the quicker that their business will right itself.

Monday, January 09, 2012

Academies - converters in need of a hand?

Today’s Financial Times carries any article reporting that eight academies have had to be bailed out by the Department for Education in the last 18 months alone.

The article is not clear whether the eight academies were “converters” or longer established academies. What is likely is that many more of the 1500 plus academies will suffer financial problems in the next few years. Primaries without critical mass will be especially vulnerable unless they team up with larger secondaries or with the emerging schools chains.

While I personally believe in greater schools autonomy and choice, there needs to be a framework of greater support for academies. The Young People’s Learning Agency (and the soon to-be-Education Funding Agency under the wing of the DfE) is not set up provide the kind of support that the DfE’s old Academies Finance Unit aspired to provide. There are consultancies, accountancy firms and other service providers able and willing to help – normally for a fee. There is also self-help: academy finance directors and managers can get support at the academy finance directors' google group from their peers (many of whom have been in academyland for several years). Guidance can also be found in CIPFA’s new Effective Governance and Financial Management in Academies although a handbook can only take you so far however comprehensive and useful. CIPFA is also now offering a Certificate in Financial Reporting for Academies.

If local school commissioners were appointed – as suggested by the new head of OFSTED and Chris Cook of the FT – this “middle tier” between Whitehall and academies might offer some support. However, I suspect any such institutions be more a regulatory watchdog than a helping hand.

This all sounds very negative. Sorry. One thing that academies can do is seek out professional (legal, financial etc) with experience of coping with independence in a public or third sector setting. Last year I wrote to a local converter academy offering pro bona support – I did not even get an acknowledgement back.