Risk Insider: Paula Vene Smith

Does ERM Fall Apart in Volatile Times?

By: | March 15, 2017 • 2 min read
Paula Vene Smith directs the Purposeful Risk Engagement Project (PREP) and is a professor at Grinnell College. Paula consults on risk in higher education, and has written Engaging Risk: A Guide for College Leaders. She can be reached at [email protected]
Topics: Education | ERM | Risk Insider

Today’s headlines in higher education report high uncertainty and rapid change. Campus controversies erupt over free speech, prospective foreign students express newfound reluctance to study in the United States, and research funding is threatened in science, arts, and humanities. Even the principle of evidence-based decisions, fundamental to the academic enterprise, is questioned by national leaders. Do these times call for a new look at risk?

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Colleges and universities only recently started to see value in developing a way to identify, evaluate, and address risks at the institutional level. By the time Enterprise Risk Management began to take hold on campus, most businesses and government agencies had already established systems of ERM. Realizing it wouldn’t work simply to replicate standard ERM frameworks, academic leaders developed their own systems based on shared governance and sustaining their mission.

The new presidential administration has issued statements, directives, and orders on issues from immigration policy to transgender rights; nearly all have implications for the academic realm.

But in recent months, uncertainty in academic decision-making has risen steeply. The landscape for higher education and for nonprofit organizations grows harder to navigate. The new presidential administration has issued statements, directives, and orders on issues from immigration policy to transgender rights; nearly all have implications for the academic realm. What happens to ERM programs assailed by so much change?

While this question affects any organization that practices ERM, it looms largest for those with fledgling and new programs—and that includes most academic institutions, especially the smaller ones. I’ve noticed three ways academic institutions are responding to these times of intensified uncertainty:

  • “Things right now are too volatile to do ERM.” Struggling to manage stepped-up risks in their own areas, administrators stop making institutional risk meetings a priority, and ERM goes on hold;
  • “Same old ERM.” The system proceeds on auto-pilot, without reference to the current political situation. A quarterly meeting of the ERM Council looks like the same meeting held a year and a half ago. Each risk owner summarizes what’s happened since last time and says, “We’re still working on it.” No one wants to acknowledge a new climate.
  • “Wait, let’s re-evaluate.” A risk leader makes the group face a new reality. The meeting agenda is rewritten; risk owners are asked to directly address potential and recent changes in the legal, political, and cultural environment.
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This third approach enables new, crucial questions: How can we protect access for students whose immigration status makes them vulnerable? How does the rise of bigoted speech in the public sphere affect campus discourse? How might we respond to changing legal interpretations of Title IX?

Such adjustment to new circumstances should occur naturally as part of ERM. But in practice, people are so accustomed to their routines that unless it is given a name, even very large-scale change can be minimized or overlooked until it’s too late. Neither “ERM on hold” nor “ERM as usual” represents a wise option. Risk leaders should address big change head-on. Only then can Enterprise Risk Management—especially if newly established and still fragile—continue to drive good institutional decisions.

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Pinnacle Entertainment’s VP of enterprise risk management says he’s inspired by Disney’s approach to risk management.
By: | November 1, 2017 • 4 min read

R&I: What was your first job?

Bus boy at a fine dining restaurant.

R&I: How did you come to work in this industry?

I sent a résumé to Harrah’s Entertainment on a whim. It took over 30 hours of interviewing to get that job, but it was well worth it.

R&I: If the world has a modern hero, who is it and why?

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The Chinese citizen (never positively identified) who stood in front of a column of tanks in Tiananmen Square on June 5, 1989. That kind of courage is undeniable, and that image is unforgettable. I hope we can all be that passionate about something at least once in our lives.

R&I: What emerging commercial risk most concerns you?

Cyber risk, but more narrowly, cyber-extortion. I think state sponsored bad actors are getting more and more sophisticated, and the risk is that they find a way to control entire systems.

R&I: What is the riskiest activity you ever engaged in?

Training and breaking horses. When I was in high school, I worked on a lot of farms. I did everything from building fences to putting up hay. It was during this time that I found I had a knack for horses. They would tolerate me getting real close, so it was natural I started working more and more with them.

Eventually, I was putting a saddle on a few and before I knew it I was in that saddle riding a horse that had never been ridden before.

I admit I had some nervous moments, but I was never thrown off. It taught me that developing genuine trust early is very important and is needed by all involved. Nothing of any real value happens without it.

R&I: What about this work do you find the most fulfilling or rewarding?

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Setting very aggressive goals and then meeting and exceeding those goals with a team. Sharing team victories is the ultimate reward.

R&I: What is the most unusual/interesting place you have ever visited?

Disney World. The sheer size of the place is awe inspiring. And everything works like a finely tuned clock.

There is a reason that hospitality companies send their people there to be trained on guest service. Disney World does it better than anyone else.

As a hospitality executive, I always learn something new whenever I am there.

James Cunningham, vice president, enterprise risk management, Pinnacle Entertainment, Inc.

The risks that Disney World faces are very similar to mine — on a much larger scale. They are complex and across the board. From liability for the millions of people they host as their guests each year, to the physical location of the park, to their vendor partnerships; their approach to risk management has been and continues to be innovative and a model that I learn from and I think there are lessons there for everybody.

R&I: What is the risk management community doing right?

We are doing a much better job of getting involved in a meaningful way in our daily operations and demonstrating genuine value to our organizations.

R&I: What could the risk management community be doing a better job of?

Educating and promoting the career with young people.

R&I: What have you accomplished that you are proudest of?

Being able to tell the Pinnacle story. It’s a great one and it wasn’t being told. I believe that the insurance markets now understand who we are and what we stand for.

R&I: Who is your mentor and why?

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John Matthews, who is now retired, formerly with Aon and Caesar’s Palace. John is an exceptional leader who demonstrated the value of putting a top-shelf team together and then letting them do their best work. I model my management style after him.

R&I: What is your favorite book or movie?

I read mostly biographies and autobiographies. I like to read how successful people became successful by overcoming their own obstacles. Jay Leno, Jack Welch, Bill Harrah, etc. I also enjoyed the book and movie “Money Ball.”

R&I: What is your favorite drink?

Ice water when it’s hot, coffee when it’s cold, and an adult beverage when it’s called for.

R&I: What does your family think you do?

In my family, I’m the “Safety Geek.”

R&I:  What’s your favorite restaurant?

Vegas is a world-class restaurant town. No matter what you are hungry for, you can find it here. I have a few favorites that are my “go-to’s,” depending on the mood and who I am with.

If you’re in town, you should try to have at least one meal off the strip. For that, I would suggest you get reservations (you’ll need them) at Herbs and Rye. It’s a great little restaurant that is always lively. The food is tremendous, and the service is always on point. They make hand-crafted cocktails that are amazing.

My favorite Mexican restaurant is Lindo Michoacan. There are three in town, and I prefer the one in Henderson as it has the best view of the valley. For seafood, you can never go wrong with Joe’s in Caesar’s Palace.




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]