Case Study: Beginning A Global ERM Program At NYU

After gaining approval from senior management to roll out an ERM initiative, Liebowitz's first step was forming a risk-management committee for the university.

"I took the compliance-oversight committee and managed to get half of the meeting time as the risk-management oversight committee—that was phase one," Liebowitz explains.

The committee initially wasn't familiar with risk management. "For them risk management was insurance," he says.

After getting schooled on the discipline's broader scope, the committee approved a risk-management plan and framework and then helped Liebowitz develop a tool to evaluate and capture the university's many risks.

"The key was the tool had to be simple, where an average person could use it and understand it—and a board member or senior manager" could grasp the implications of the results very quickly, he says.

The next phase was to collect data. "Because we have a very large international component, I needed to have an international incubator site and a couple of domestic departments working on it, too," says Liebowitz, whose NYU has students, faculty and staff all over the world, including campus locations in China, Singapore, London, Buenos Aires, Madrid, Prague, Berlin and Paris. 

OFF TO FLORENCE

The initial overseas site ended up being NYU's campus in Florence, Italy, which has "all the pieces of a larger university, but it's much smaller," he says.

The first week in Florence was a focus on education in risk management, with sessions, for example, on how to use the evaluation tool. "We sat with a group of senior managers and came up with a very long list of risks," he says.

Liebowitz recommends starting with this group approach because "you get to see and understand how the perception of one department's risk assessment impacts another department. We want to know if there is an effect, upstream or downstream, of that department's identified risk."

After this group session, he met with the risk owners individually. In these meetings they created a heat map of every identified risk "and they picked the one they wanted to work on," Liebowitz says. "I gave them some education on what tools they can use to assess and mitigate risk, and they're working on that right now."

The next step will be to roll out the program at a second international campus, which will be a little larger.

ERM'S PAYOFF

Back in New York, the program is fully operational in NYU's finance and treasury-operations division, "and we are moving into our main core of operations—including facilities, planning and development, real estate and housing," he says.

It's evident the program is paying off, "because now we're being asked to look at new projects," he says. "It's being embraced as a tool that can be used to accurately develop new business models and new ventures."

For example, he notes that in the process of developing new campuses, people are beginning to look at things from the risk perspective "and identify roadblocks that would keep the new venture from achieving its goals."

With the program, he says, participants are picking up problems that wouldn't be identified under a normal risk assessment. "Eighty-five percent of them are non-insurable issues—really operational risk. Reputational risk is probably the biggest issue sitting out there."

Liebowitz points out that he is not a facilitator and not the owner of the risk. Rather, his colleagues now "understand this is part of the way they should do business and they need to build it into their business thinking—that ERM is not a project; it is a change in the way people do business."

As an added bonus, when credit-rating agencies visit—and ask if the university has an ERM program, how robust it is and if they can have a demonstration of how it works—"I can show them an enterprise-risk program that is working," he says.

"I can demonstrate what we have done. We can show them a list of the top-10 risks that can affect this organization. My job is to identify those issues that could prevent this organization from meeting its goals"—and this program is definitely helping him achieve that, Liebowitz concludes.