A university is experimental by nature and a dynamic enterprise like the University of Edinburgh must take risks in pursuit of its evolving objectives. We have a mature approach to risk management, articulating our objectives and what might prevent or promote their achievement, which we consider together with any possible unintended consequences in our planning and decision making. This approach increases the probability of successful outcomes while protecting the values, reputation and sustainability of the University.
Risk management
The University aims to minimise its exposure to reputational, compliance and financial risk, while recognising that controlled risk-taking enables the University to take advantage of opportunities in the pursuit of research, education, knowledge exchange and innovation. This dynamic is
Risk Management Policy and Risk Appetite Statement
Process
The University operates a process for the identification, evaluation and management of risks at the Local (School and Departmental), Operational (College, Professional Services Group, and Major Programme) and Strategic (University) levels. These strategic risks are selected based on several considerations including their relationship to our strategic objectives and the United Nations Sustainable Development Goals, rating of likelihood and impact, their proximity to our stated appetite and the extent to which they may be representative of similar risks across the University. Strategic risks are recorded in the University Risk Register, where they are monitored and reviewed by the Risk Management Committee (RMC) throughout the year. The RMC tracks the implementation of risk management strategies, informs the University Executive and reports the Committee’s findings to the University Court’s Audit and Risk Committee. External benchmarking and horizon scanning help us consider emerging risks from across higher education, the wider public sector, and globally. Internal Audit supports this process and undertakes reviews of key risk areas and the risk management process according to a rolling audit plan.
Our Risks
The higher education sector in the UK is facing well documented risks, with a challenging existing funding environment made worse by falling international student recruitment. In turn, this introduces risk to our capacity to invest in capital and other substantial programmes. Our sector remains a target for international cyber-crime, something which has to be addressed in the context of our strategic imperative to remain globally networked with key partners and influential on the academic world stage. Student experience, including capacity to provide wellbeing support, continues to be a key thematic discussion for the sector. The University of Edinburgh, like its peers, wrestles with these risks among many. That said, at Edinburgh we have seen some risks recede; we are gratified that our work on a range of staff concerns means that there is no mandate for industrial action at the University for the first time since 2016. While labour market pressures continue to be a challenge in some areas, our enhanced support for international staff recruitment and retention, our talent attraction proposition project and the University-wide grade scale changes have had positive impact on our People risks. Our digital infrastructure replacement project made major advances in the stability and reliability of our IT systems, lowering risks to our digital estate. Energy prices and material costs remain high, but they have stabilized to bring some predictability to the costs of maintaining and developing our estate. Similarly, the previously uncertain impacts of addressing buildings affected by Reinforced Autoclaved Aerated Concrete (RAAC) have become clearer. While these costs are substantial, we are now able to plan and manage this remediation.
Looking ahead
The University is presently facing significant financial pressures, including challenges in attracting new international students in an increasingly competitive global market, rising staff and utility costs, the effects of inflation, and supply chain disruptions. Additionally, the persistent underfunding of Scottish-domiciled and other UK students exacerbates these issues. As our expenditure continues to outpace our income, we are implementing a range of measures to adapt our operating model and ensure long-term financial sustainability.
Polarisation of debate on wider social issues continues as an emerging risk, albeit one we believe we are managing effectively as we remain committed to upholding academic freedom and freedom of expression, including the right to engage in lawful protest. We express this commitment by facilitating an environment where students and staff can discuss and debate challenging topics free from intimidation and undue disruption, challenging as that effort can sometimes be. The coming year will see continued focus on maintaining our enviable reputation as a premier world research university as we seek to better define and manage risks to research funding and industrial and international partnerships, and pursue opportunities in emerging fields such as artificial intelligence. We remain optimistic that a new Exascale Supercomputer will be funded at the University of Edinburgh to support our world-leading work. We will seek to better quantify the risk posed by lack of supply and corresponding expense of student and staff accommodation ‘liveability’ in Edinburgh and potential impacts on our attractiveness to students (which could affect student fee income) and staff (affecting recruiting and retention, research reputation and salary expectations).
Teaching and Learning
Risk description: Student experience
No significant improvement in students’ satisfaction with their student experience.
Supports Strategic KPI 12: Student experience
Risk management: We recognise the significant improvements required in our student satisfaction survey results, which have the potential to damage our reputation, affect student recruitment and retention and ultimately challenge the UniversityÕs financial health. Accordingly, we are prioritising student experience in line with the objectives of Strategy 2030 with two large strategic programmes: Student Support Model and Curriculum Transformation, with underpinning improvement work.
Our Student Support Model is now in place and is being overseen and monitored via the Student Lifecycle Management Group (SLMG) and Colleges/Schools from September 2024.
We have continued implementation of Assessment and Feedback Principles and Priorities set in academic year 2022/23 with the establishment in January 2024 of the Student Experience Delivery and Monitoring Oversight Board, chaired by the Provost with membership including the three Heads of College. Its initial focus has been to monitor assessment and feedback turnaround times, and our revised Assessment and Feedback Strategy Group now oversees and supports the implementation of the wider Assessment and Feedback Principles and Priorities. In-year monitoring of progress continues via School Annual Quality Reports and Internal Periodic Reviews.
We are committed to improving student satisfaction as measured through the National Student Survey (as well as the Postgraduate Taught Experience and Postgraduate Research Experience Surveys). We will also monitor the success of our work, initially through student feedback via focus groups and pulse surveys and against our key performance indicator. While actions underway have promise, we recognise that positive impacts may take time.
People
Risk description: People
People risk linked to staff engagement, recruiting and retention, and wellness.
Supports Strategic KPI
5: Staff satisfaction
Risk management: Staff engagement has the potential to impact productivity, workplace relations and organisational effectiveness, recruiting and retention, and has a direct relationship to our students’ experience. After a challenging year, we are beginning to see improvement.
After successful national negotiations, we are very pleased to have reached agreements with our major unions, resulting in there being no mandate for a strike for the first time since 2016.
Our Talent Attraction project aims to bring focus on the University as an employer of choice and the many benefits there are to working here, differentiating us from other employers to make us more appealing to potential candidates. Focusing on what we can offer prospective employees will widen our pool and reduce dissonance for new recruits between recruitment and employment.
Internal initiatives such as our Grade Scale Review, ongoing work on associated operational plans overseen by the Staff Experience Committee (a standing committee of the University Executive) and enhanced financial support for international staff, covering associated UK Visas and Immigration costs, have also contributed to the management of this risk.
The University Initiatives Portfolio Board was established this year to support the implementation of major change programmes and projects. Backed by lessons learned from the recent challenging implementation of a major HR and finance management system, we will better support our staff though major change initiatives in the future and monitor engagement activity to ensure that we are doing so.
Social and Civic Responsibility
Risk description: Social responsibility and sustainability
Pursuit of our goals and objectives, associated with energy-dependent City Region Deal and data-driven initiatives. Limits also imposed by city and regional infrastructure will challenge achievement of our carbon reduction targets.
Supports Strategic KPI
16: Net Zero
Risk management: Having set ambitious targets to reach net carbon zero by 2040, we are challenged by having a large estate populated with buildings not all of which were designed with a carbon neutral agenda and the costs and technical challenges of decarbonising heat are significant. The energy-intensive nature of our world-leading research and our commitment to run national facilities such as supercomputers on behalf of the UK further increase our energy requirements, the decarbonisation of which is largely dependent on the national energy grid.
To address these risks, we continue to decarbonise the estate and improve metering and usage control of energy, optimising the performance of our laboratories and science activities. We have created a position of Director of Estates Net Zero and Carbon Leadership to accelerate our decarbonisation of the Estate, and an Estates Net Zero Programme Board. Our sustainable travel policy introduced a presumption against mainland UK flights and we are seeking to embed the concept of climate conscious travel across all of our travel activities. We are exploring how to use waste heat from our supercomputing facilities to heat our estate, have accelerated our plans to electrify heat sources and are working to refresh our climate strategy and raise our ambition levels, commensurate with the external challenges we face. Despite technical and financial challenges, we remain committed to our carbon reduction targets.
Research
Risk description: Collaboration with external partner
Exposes University to security-related loss of reputation, revenue, or to legal liability.
Supports Strategic KPI
7: Research activity
8: Research activity with industry
Risk management: As a global university, we will see our research having a greater impact as a result of partnership, international reach and investment in emergent disciplines.
Internationalisation, however, can expose the University to risks resulting from competing geopolitical interests. Edinburgh Global and Edinburgh Research Office coordinate the University’s response to the changing security and risk landscape across international collaboration. The Security and Risks in International Partnerships Group (SRIPG) coordinates implementation of the National Protective Security Authority (NPSA) ‘Trusted Research’, and Universities UK (UUK) ‘Managing Risks in Internationalisation: Security Related Issues in Higher Education’ guidance across the University. The group is chaired by the Vice-Principal International and includes all key stakeholders from relevant professional services and senior academic leads.
SRIPG meets quarterly and has raised awareness of responsible global engagement through messaging to key colleagues and by developing an action plan – shared by colleagues across the University Ð to address the key areas highlighted in UUK guidance and implement Trusted Research guidance. SRIPG provides regular reporting on these matters to the Risk Management Committee, Audit & Risk Committee and to University Court. Work to decrease this risk exposure will concentrate on improvements to better coordinate the security-related controls and oversight provided by our various offices responsible for international collaboration.
Core IT infrastructure
Disruption to basic network services.
Supports Strategic KPI
4: Efficient systems
Risk management: We are pleased to report that Information Services Group capital programme has completed a major replacement of core IT infrastructure this year, resulting in a reduction of our IT infrastructure risk.
Inclusion of core IT infrastructure replacement cycles within the Digital Estate plan will now help ensure ongoing refreshment of critical platforms.
Risk description: Information security / data breach
Compromise of University information.
Supports Strategic KPI
4: Efficient systems
Risk management: The University continues to face a significant level of online risk to our digital services, systems and data that underpin our teaching, research and operational activities. We are aware of the ever-changing scale and nature of this risk and continue to implement improvements to our technology and day-to-day processes to counter them. We continue to identify risks to key data-reliant activities, services and processes, mitigating these with resilient business continuity plans in case of a data breach. This risk will remain a key area of focus for the foreseeable time.
Concentration risk
Recruitment of international students diverges from our size and shape planning and fee income forecasting.
Supports Strategic KPI
2: International student diversity
Risk management: Increased global competition, a challenging global economy, changes to UK immigration policy, and concentration of demand from particular domiciles outside the UK and Europe, making us vulnerable to market swings and unfavourable geopolitics. This could result in reduced tuition fee revenue which would undermine University’s financial sustainability. Academic sustainability would be undermined if international recruitment shortfalls were to make some programmes unviable and/or impeded the research pipeline, while over-reliance on one region/sector creates vulnerability to foreign influence from particular source – countries, with potential academic freedom, freedom of expression, security and data integrity risks.
While across higher education the sector is facing greater risk, the University of Edinburgh has taken measures such as making earlier offers and pursuing our strategic enrolment strategy that have mitigated the risk. We are in a less vulnerable position than many of our peer institutions, but the balance of international student enrolment (measured by the ratio of largest international market to fifth and 10th largest overseas markets), particularly in postgraduate taught, remains an issue. We continue to work towards a better integrated, strategic enrolment model, and to engage with University Executive to define acceptable levels of reliance/diversification.
Finance
Failure to maintain financial headroom required to pursue strategic priorities and ensure financial sustainability in the face of increasing financial pressures.
Does not relate directly to the Strategic Performance Framework, however, Financial Risk Appetite is our EBITDA should be in the range of 7-9 per cent over our five year plan.
Risk management: The University manages its financial risk by not breaching its risk appetite as described in its financial metrics. A key metric is that our Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) should be in the range of 7-9 per cent to remain sustainable. We continue to be challenged to remain within this target due to a number of factors, including:
- Pay inflation and increase in employer’s National Insurance contributions
- The cost of internal initiatives to improve staff benefits and engagement, such as the Grade Scale Review
- Macro-economic issues including high inflation. particularly around utilities
- Challenges to international tuition fee income
The University has achieved an EBITDA below its 7-9 per cent target and the future financial and economic outlook is such that we will require careful cost control and strategic management of business operations. EBITDA achieved in 2023/24 does not impact on the requirement for the University to deliver against agreed budgets for 2024/25, including the need to identify cost reductions or increases to income to deliver the Court approved EBITDA budget for 2024/25.
Estate
The physical estate fails to meet the needs of the University (volume, condition, and accessibility).
Does not directly support a specific Strategic KPI, but is essential in our achievement of many of them, particularly 4, 5, 7, 12, and 16*
Risk management: During 2021/22, the University formulated a new Capital Plan, which was approved by Court in February 2022. This six-year plan covers the period 2021/22 to 2026/27 and:
- Is fully aligned with the University’s 2030 strategy
- Covers all capital expenditure for the University, including digital and equipment expenditure
- Enables investment in priority projects including those addressing volume, condition and accessibility requirements
- Is agile and able to respond to unforeseen emerging University capital needs
In addition, to strengthen the University response to the climate emergency and commitment to ‘Zero by 2040’ the post of Director of Estates Net Zero and Carbon Leadership is focusing on the de-carbonisation of the physical estate.
The Capital Plan is monitored and reported to the Estates Committee, Policy and Resources Committee and Court through the normal governance cycle.
*4: Efficient systems. 5: Staff satisfaction. 7: Research activity strategic. 12: Student experience. 16: Net Zero
Strategic Change
Scope, pace and complexity of change negatively impacts both project success and staff wellbeing.
Supports Strategic KPI
4: Efficient Systems, 5: Staff Engagement
10: Curriculum Transformation
12: Student Experience
Risk management: Implementation of major change initiatives is challenging for any organisation. The University has identified the requirement to manage and better coordinate the delivery of major strategic programmes, particularly in light of the lessons learned during implementation of a major new HR and Finance system called People and Money. The external review of People and Money, published in December 2023, made recommendations which are now being incorporated into the planning of Strategic Projects. The University’s new Initiatives Portfolio Board (UIPB) is now operational and has collective oversight of these projects. With the establishment of the UIPB, oversight of the whole portfolio has been established and prioritisation is taking place. All strategic projects will be monitored going forward. Particular attention is being focused on organisational capacity, resource management, increased engagement and understanding variations in practice across the University. Other initiatives such as implementation of the new Student Support model and Curriculum Transformation continue to progress, and lessons learned are being applied to ensure successful delivery.