Regulations passed in 2000, updated 2005, imposed on Governors a statutory duty to manage risk by:
- Identifying the major risks to the assets of the charity, and
- Devising systems to minimise those risks.
The most obvious risks are those that can arise from falling pupil rolls, poor credit management, inadequate financial controls and fraud, defective health and safety systems, an unexpected disaster, or an event causing significant harm to the School's reputation.
But there are also some less obvious risks such as:
- Operating with a governing instrument that has not been modernised for many years and that may contain inadequate powers;
- Mistaking the powers that are available when the School is incorporated on the 'corporate trustee' model;
- Operating without the benefit of limited liability;
- The risk of personal liability if governors have granted unauthorised scholarships or bursaries to the child of a governor;
- Other ultra vires acts, such as receiving an unauthorised benefit from the trust, which governors may not realise would be a breach of trust;
- Lack of prudence in selecting professional advisers, who advise negligently;
- Operating tendering procedures that put a tenderer at unlawful disadvantage;
- Inadequate monitoring of potential overcharging by external caterers;
- Insufficient training of staff resulting in uninsured discrimination claims, or unsafe recruitment practices;
- Incorrect application of charity property, funds, chattels or other rights that are permanent endowment;
- Unfavourable catering, computer, construction, or other contracts whose terms have not been sufficiently checked or negotiated;
- Loss of the School's intellectual property rights to use its badge/logo/name;
- Loss of a pupil's right to apply for a patent due to staff error;
- Incorrect management of TUPE risks, when they arise;
- Liability or legal expenses insurance that does not respond as expected.
Further aspects of risk management include ensuring:
- that new governors receive an effective induction and that all governors receive sufficient ongoing training;
- that there is an appropriate and agreed division of responsibilities between governors and executives, and between the executives themselves;
- that each committee of the governors has been given a clear remit and terms of reference;
- that the responsibilities of the Clerk to the Governors have been settled;
- that Governors undertake a sufficient strategy review from time to time;
- that their procedures are in accordance with modern standards of corporate governance;
- that due account is taken of the public benefit requirement in charity law.
Our Governance and Risk Management Team headed by partner, Barney Northover, has an established track record of assisting governors to meet the necessary standards of corporate governance and carry out governance reviews, in the following ways:
- We have written useful checklist documents that will be made available at the initial stages;
- We will lead or facilitate your strategy review, if asked to do so;
- We can advise on new governance structures and management re-organisations;
- We can provide a full consultancy on all of these matters.
The legal disciplines involved in work of this nature include charity law; company law; and employment and discrimination laws but perhaps of greater importance we offer an unrivalled knowledge of this sector and hands-on experience of this type of consultancy.
