Enterprise Risk Management (ERM) adoption and implementation in higher education (HE) environment differs from the for-profit environment (An Example)

ERM adoption and implementation are necessary for every setup of an organization. But, the task is challenging and it needs to employ sequential and systematic risk management strategies. ERM implementation may vary with the organization. And here we'll discuss how its implementation differs in two environments, one is in non-profit HE and the other one is business which exists because of its profit motives. Some of the varying aspects of consideration are:

1. Motive: ERM adoption and implementation in any for-profit organization like that of LEGO are done to adequately increase the company's growth rate by creating and managing the identified risks. Taking risk while having its perceived knowledge improves resilience. The growth of any company or organization is volatile and as per Mark L. Frigo and Hans Læssøe (2012), LEGO adopted it as a part of its strategy and attained growth more than ever. They made bigger investment risks by ERM adoption in their financial planning process and even prepared for uncertainties. While ERM's adoption and implementation in HE environment vary completely in its motive. More of the motive for ERM adoption in a not-for-profit environment is the positive credit rating to have a better reputation as per Anne E. Lundquist. While a for-profit organization's motive is inclined towards financial goals, ERM's implementation in a not-for-profit environment can be considered having more ethical implications.

2. Strategy: Since the motive of ERM adoption in HE is more focused on reputation maintenance, the strategic direction employed here varies from that of the corporate sector. AS per Mitroff, Diamond, and Alpaslan's (2006), in HE, ERM is less developed and is employed to minimize losses due to the risks posed like that of crises and crimes. While in for-profit organizations, ERM's strategic direction enables and even empowers the organization to take bigger risks in real-time to attain higher profits.

3. Direction: The direction and approach of adopting ERM in a for-profit sector are more likely to create a model that can enable the organization to take bigger risks by making huge investments and gain maximum profit from the same. But, ERM in HE sector is still developing and the focus mainly revolves around creating a model based on best practices. Also, they focus on keeping the organizational and functional structure unaltered. Mission success and good governance are what is aimed at with ERM in HE. As the variety, type, frequency and volume of risk differ in both the types of organizations, the strategic models need to be customized.

4. Individual risk: While the risks in a for-profit organization are more constrained regarding financial risks, the responsibility and the people affected are collective. Whatever be the result, it will affect all the population. So, the result gets distributed among all the individuals associated. But, in HE, the risks like that of crimes can put any individual at risk while keeping all others unaffected. So, the ERM strategies laid need to consider safeguarding individuals associated with the organization.