KEELE UNIVERSITY
Corporate Risk Management
Risk Appetite 2012
1. Institutional Risk Appetite Statement
The University has a responsible approach to risk management, seeking to recognise and
manage exposure to risks. In pursuit of achieving its strategic aims and academic mission
the University will, therefore, accept a degree of risk, commensurate with the potential
reward. The risk that the University is willing to take will be within agreed tolerances for risk
appetite agreed by Council for key risk areas specified in the University’s Risk Management
Policy. Assessments of risk will be considered with particular attention to the impact of the
risk on the core activities of education and research.
2. Risk Appetite Thresholds for Projects/Activities
The following risk appetite thresholds have been defined in the evaluation of risk in
projects/activities within the designated key risk areas identified in Section 3.
Appetite Threshold
Low Risk Appetite
Description
The University is willing to proceed with a portfolio of activities
providing that the exposure is not greater than either:

Finance 0%-1% of turnover as an investment or liability
Or two of the following:



Medium Risk Appetite
Staff resource No more than 10 days of senior staff time
(grade 9 and above) over and above everyday operational
business or
Reputation Likely to have some negative local / regional
damage to reputation or
Finite land resource Consider change of use for existing
infrastructure but not new development
The University is willing to proceed with a portfolio of activities in
pursuit of achieving strategic aims providing that the exposure is not
greater than either:

Finance 1%-5% of turnover as an investment or liability
Or two of the following:



High Risk Appetite
Staff resource No more than 25 days of senior staff time
(grade 9 and above) over and above everyday operational
business or
Reputation Likely to have significant negative local / regional
damage and or some national damage to reputation or
Finite land resource Consider change of use for existing
infrastructure and limited new development on areas of the
estate where it is permitted
The University is willing to proceed with a portfolio of activities in
pursuit of achieving strategic aims providing that the exposure is not
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greater than either:

Finance 5% - 10% of turnover as an investment or liability
Or two of the following:



Staff resource No more than 45 days of senior staff time
(grade 9 and above) over and above everyday operational
business or
Reputation Likely to have significant regional or national
damage to reputation or
Finite land resource Consider change of use for existing
infrastructure and significant new development on areas of the
estate where it is permitted that may impact on heritage areas
of campus
3. Key Risk Areas and Risk Appetite Thresholds
The table below provides an overview of the key risk areas of activity at Keele and the risk
appetite threshold assigned. In cases where a project straddles more than one key risk area,
and the appetite in these areas is different, judgement will be required to balance the relative
proportion of risk for each key area with the differing appetite.
Key Risk Area
Financial Health
Risk Appetite Threshold
Low
Rationale for Risk Appetite
 Keele’s performance against HEFCE
financial PIs is in the lower quartile and is
being monitored;
 Limited financial reserves: recent negative
discretionary reserves and poor
performance of investments;
 Pension and other liabilities.
Investments
Low / medium
Education and
student experience
Medium/High
 Investments intended to bring secure longterm financial return
 High risk investments are more likely to
result in losses to the capital sum
 Losses have to be recognised within the
accounts and the measures required to
compensate for these could jeopardise core
activities given the limited financial reserves
 Will be subject to further risk assessment
under new investment managers
 Key strategic aims associated with future
financial security and academic mission/
Keele’s distinctiveness relate to this area;
 Core business of the University accounting
for c.70% of income (direct and indirect
income) so appetite should be higher than
for other non-core activities – an approach
taken by other Universities.
Research and
Enterprise
Medium
 Core business of the University accounting
for c.20% of income (direct and indirect
income).
 Spread of activity across the University
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Development and
Commercial
Activity
Low/Medium
Partnership and
external
collaboration
Medium
4.
means the risk is spread along with the
potential impact of relatively higher risk
projects.
 Current exposure to high risks means some
caution should be applied: KPD, borrowing
from AWM for new development site,
volatility in commercial environment.
 Range and number of potential projects
currently under consideration (e.g.
Hawthorns, Hotel, IC5) means that the
appetite should be set lower to ensure the
collective risk is limited for this area.
 Keele’s mission in terms of the local subregion means some risk should be taken for
the greater public good;
 Volatility of local partnership organisations
and structures, as well as limited financial
and staff resources at the disposal of the
University means that some caution should
be taken to limit risk appetite.
Considering the Risk Appetite
To ensure that the University has a balanced portfolio of risk, when considering the appetite
for individual projects undertaken within the above risk areas, reference should be made as
to whether there is more than one project to consider in the round. In cases of a number of
projects, the appetite for individual projects may need to be lowered to ensure that across all
of the projects in a given risk area the appetite is not exceeded.
It is expected that all new activity will be supported by a robust business case. In the
exceptional circumstances that Council is asked to approve a project proposal that is beyond
the threshold of risk appetite assigned, the business case must demonstrate a substantial
financial return that is commensurate with the risk involved.
It may be necessary to review projects on a routine basis to ensure that they are still
operating within the agreed risk tolerances. Where the key indicators, such as financial risk,
have changed to the extent that a project would move to a higher risk category then further
approval to continue should be sought.
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