American Higher Education institutions are increasingly vulnerable to diverse risks that require robust protective measures. Some of the key challenges currently faced by these institutions include declining enrollment numbers, high faculty and staff turnover, cybersecurity threats, and more.
Our “Significant Risks Facing Higher Education” report focuses on some of the most significant risks—and drivers of those risks—facing American colleges and universities over the next one to three years. The list is not meant to be exhaustive; rather, the risks covered are those that most institutions should at least consider or address more vigorously.
Our perspective is driven by our below definition of risk vs. risk driver and is informed by a variety of stakeholders whose viewpoints range from operational to strategic.
Risk: Defined as a state of uncertainty where the answer to "Did the risk occur?" can be a binary yes or no, with some possibilities being undesirable outcomes.
Risk Driver: Continuous factors, often referred to as "trends" that influence the likelihood or impact of a risk or a risk that could influence another risk's likelihood or impact.
"All risks can be risk drivers, but not all risk drivers can be risks."
Source: Deloitte Analysis
Risk of faculty and staff attrition
Faculty and staff attrition, whether voluntary or involuntary, exposes institutions to loss of expertise and institutional knowledge, which can create knowledge gaps and undermine quality and efficiency. High attrition increases recruitment and training costs and further diverts resources from other priorities.
The percentage of full-time, exempt staff members who left their jobs nearly doubled over two years—from 7.9% during the academic year of 2020 to 2021 to 14.3% during the academic year of 2022 to 2023.
High turnover tends to diminish morale and engagement among remaining faculty and staff, who may feel overburdened and insecure in their jobs. Persistent attrition can damage the institution’s reputation and make it less attractive to prospective faculty, staff, and students. It can also be a symptom of other, perhaps deeper, problems.
Risk of attrition drivers:
Inadequate remote work opportunities
Lack of career-advancement opportunities
Uncompetitive pay and benefits
Strategies to help mitigate risk of attrition:
Promoting work/life balance
Enhancing compensation and benefits
Fostering professional development
Improving workplace culture
To further combat these risks, we see U.S. colleges and universities increasingly adopting enterprise risk management, which instills a broad approach to risks by replacing siloed practices with integrated ones. As a result, senior leaders, risk management professionals, and boards of trustees gain a panoramic view of risks and their interrelatedness, and they can develop more integrated and effective approaches to identifying, mitigating, and managing risk.
Significant risks and risk drivers that stakeholders in institutions of higher education should consider.
Significant Risks Facing Higher Education:
Significant Risk Drivers to Higher Education:
Evolution in Department of Education regulation
Decline in U.S. population growth
Over-dependence on tuition for revenue
Declining student mental health
Evolving demand for program offerings
Lack of institutional agility in decision-making
Deferred maintenance
Politicization of higher education
Read the report: https://www.deloitte.com/us/en/Industries/government-public/articles/higher-education-issues-and-enterprise-risk-management.html