Imperial in 2019–20 | Annual Report and Accounts 2019–20
MANAGING RISKS The Office for Students, our regulator, defines risk as “the threat or possibility that an action or event will adversely or beneficially affect an organisation’s ability to achieve its objectives.” Our College risks are developed as risks to the delivery of our strategy and our risk management framework supports identification of risks across the College, promoting the use of risk as a decisionsupport tool for Imperial. In developing our College risk profile, we consider both top-down and bottomup threats and opportunities alongside external factors and influences. We frequently discuss and review our significant risks throughout the academic year through our governance framework with oversight and assurance from our Internal Auditors. Our external auditors form part of our overall assurance framework, providing assurance over financial reporting.
The Higher Education (HE) sector has navigated significant uncertainty for some time and while last year’s priority themes of Brexit, Pensions and Climate Change remain important, COVID-19 has created unprecedented challenge and opportunity adding a new dimension to all risks.
Our current significant College Risks are summarised, including reflection on the context of COVID-19:
Enablers COLLEGE RISK FINANCIAL SUSTAINABILITY We are unable to generate sufficient funds, both short-term and long-term, to maintain our position as a world class academic institution. This includes both generating sufficient income to fund attractive salaries and sufficient unfettered cash flow to support our capital expenditure programme. The COVID-19 pandemic has increased this risk in the shortterm through students deciding to defer their studies and in the long-term through potentially accelerating a move to new educational models. INCOME DIVERSIFICATION We remain over-reliant on the fees generated by international students and postgraduate courses to fund the short falls in our research funding and our capital programme. The COVID-19 pandemic has increased this risk through reducing our ability to travel in support of our fundraising activities; the cash generated by our property assets; the returns from our Endowment.
14
RISK MANAGEMENT APPROACH Work had already started prior to the crisis to improve the operating cashflow of the university through both reducing costs and increasing revenue. This work is overseen by the Finance Task Force (a sub-committee of the Finance Committee) and is on track to date despite the impact of COVID-19. We are also now starting conversations as part of our overall strategy on how the nature of higher education may be affected by the crisis and how we take advantage of this opportunity.
This remains a key risk for the university. We are still not resilient enough to deal with a major drop in demand from foreign students. In part we are hampered by our success in delivering our mission as the continued growth of the core university increases the amount of diversified revenues we need to generate. The Advancement division is focused on increasing philanthropy through its systematic approach to building relationships with alumni and other potential donors. The Related Ventures portfolio continues to market our commercial real estate, against adverse market conditions, and the Enterprise division our Intellectual Property.
