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The top ten operation risks for 2017 identified by risk practitioners in the business sector are worth taking note by school officials. That’s because school officials run the single largest business enterprise in Texas, staffed by 700,000 employees in addition to many contractors. It’s reasonable to state that most school officials in executive management would agree that two or more of the tops risks are current concerns or should be targeted in 2017 for risk analysis and improvements to reduce risk.

The top 10 operational risks identified by risk practitioners adapted to a public school context are as follows:

1. Cyber risk and data security. Ranging from laptop thefts to cyberattacks, it’s obvious why this has been one of the highest-ranking areas in recent years. Cyberattacks have been growing and mutating into new and insidious forms, including new developments involving compromised financial services apps on mobile devices. Data security issues have also involved inappropriate access of or use of confidential student and staff data.
2. The increasing pace of changes in rules and regulations means school officials have smaller timeframes to implement changes to local policies, procedures and processes. Also, the increasing complexity of certain regulations combined with greater levels of monitoring activities have exposed some districts to higher levels of financial penalties for noncompliance.
3. Outsourced arrangements need to be actively monitored and managed regardless of the outsourcing firm’s pledge “to take care of the district.” Contractual service providers are not exempted from many of the rules and regulations that apply to public school entities, and noncompliance by service providers can result in significant refunds required by school districts.
4. Geopolitical risk. The recent sweeps of illegal aliens on school property in the past week has caused a sense of panic for many students and school officials across the nation, especially in the majority-minority public school population in Texas. Increased truancy levels will adversely impact average daily attendance-based state aid revenue levels, and will cause financial distress for some school systems.
5. Conduct risk. Conduct risk can involve a wide range of violations of policies and procedures, ranging from inadvertent omissions to intentional acts. There are many reasons why school officials need to consult with their district’s attorney to ensure due process is followed in all instances involving employee misconduct.
6. Organizational change. Ongoing changes in policy directions following the appointment of Betsy DeVos as the new secretary of the United States Department of Education point to future organizational changes. Increased administrative tasks in public schools in addition to reorganizations have resulted from changes in statutory provisions enacted by the Texas Legislature and rules implemented by the State Board of Education.
7. IT failure. Cloud computing has been one of the most important technological advances in recent years that has provided various benefits in addition to new types of risks. Risks have included serious performance issues involving service disruptions on test days in several states that resulted in serious consequences at state and local levels of the public education system. Issues in this area are also underscored by significant IT failures involving software conversions and upgrades in a few districts.
8. Financial transactions and sanctions compliance. Risks connected to noncompliance with rules and regulations range from transactions with disqualified vendors involving federally funded programs, in addition to expanded state and federal disclosure and reporting requirements connected to bond issues. Noncompliance in these areas have resulted in significant consequences to a few public school systems, including refunds questionable expenditures and accreditation-related sanctions.
9. Risks related criminals, including organized crime rings, attempting to comprise various financial transaction systems installed by school districts have raised risk levels to new heights. Technology-aided schemes combined with the increased speed of processed financial transactions have provided more opportunities to potential perpetrators of financial crimes.   
10. Physical attack. This risk is clearly highlighted by attacks on teachers by students and disgruntled parents in a few districts.

Increasing complexity and operational risks obviously compete with school officials’ efforts to maintain their primary focus in improving academic results and graduation rates. Be sure to thank your local school officials for their service in the public school system in Texas. The future of Texas depends upon the success of public school educators and students, and adequate resources to support programs, activities services that meet the higher demands and expectations of all stakeholders.  

To read the Risk.net article Top 10 operational risks for 2017, click on the link below.
http://www.risk.net/risk-management/operational-risk/2480528/top-10-operational-risks-for-2017

Want to learn more about operational risks and assessing risk levels? Consider signing up for the course Auditing 210, Operational Auditing, on Friday, March 3, 2017, during TASBOFEST, TASBO’s 71^st Annual Conference.  You will also find learning sessions and other courses of interest in the conference schedule.
To sign up, click on the link below.
https://www.tasbocon.org/attendees