Our risk assessment system covers all higher education institutions. This is an annual process that draws on the information that we routinely collect.
Our Institutional Risk Review (IRR) process allows us to closely monitor a number of areas in the higher education sector, including:
- strategic direction
- governance and management
- students and quality
- research and knowledge transfer, and
We take account of all the latest available data, information and engagements with universities. This includes considering any risks to universities’ likely failure to comply with the Financial Management Code, and whether the impact of this may lead to sustainability concerns over that period.
From the IRR process, we classify institutions according to three risk categories: low, moderate and high risk. This process ensures that, if required, we can engage further with institutions to monitor and understand the management and monitoring of risks that we have noted through the process.
We define an institution as ‘high’ risk when, our judgement, on the basis of the available evidence, an institution has failed or is likely to fail to comply with the Financial Management Code over the short to medium term, and the impact of this leads to sustainability concerns over that period. ‘Short to medium term’ is the five-year period covered by the latest financial forecasts supplied to us.
A ‘moderate’ risk means that an institution has failed or may fail to comply with the Financial Management Code over the short to medium term, but the impact of this does not lead to sustainability concerns over that period.
These risk ratings do not necessarily represent a negative statement about a university as they may also be made where, for example, a university is driving major strategic change through a planned course of action that includes some degree of recognised, controlled risk.
In September 2019, we concluded that:
- Two universities were assessed as at high risk
- Five universities were assessed overall as at moderate risk
- One university was assessed overall as at low risk
Statement of Intervention
Our Statement of Intervention describes the range of ways in which we might respond to help institutions resolve difficulties and manage risks. We might intervene if the interests of students, the reputations of the higher education sector or the wider education sector need to be protected, or to safeguard public spending. We will be required to intervene when an institution has failed, despite reasonable time and support, to satisfactorily address serious issues, or where an issue is sufficiently serious that more immediate action must be taken.