GREETINGS FROM URMIA!

1. GREETINGS FROM URMIA! Gary Langsdale University Risk Officer The Pennsylvania State University

2. A little about my Uni • University Park Campus • 8 million sq. ft. of janitored floor surface • 3 million gallons of water, in and out, daily • 106,000-seat football stadium with 35,000 parking spaces • 43,000 newly-away-from-home 18-21 year-olds • 16,000 faculty and staff • 15,000 beds in 56 residence hall buildings • 12,000 farm and research animals (not counting lab rodents) • 3,091 fire extinguishers • 1,700 licensed motor vehicles • 300 elevators • 31 mi. paved roads, 23 mi. walkways • 2 hotels/conference centers, and… • One nuclear reactor • Multiply these statistics by 21 other campuses throughout the State, including a 600-bed teaching medical center and a two-campus law school. US$4.2 billion of annual turnover.

3. Does this sound familiar? • New governor elected November 2010, on a platform of fiscal conservatism. • In his first budget proposal, April 2011, he suggested a 50% cut in funding to higher education institutions. • Eventually settled for a cut of "only" 15%. • Funding has not been restored ever since then.

4. Oh, THAT Penn State • Oh, what a mess! • Former well-respected football assistant coach accused, then convicted, of sexual assault on teenage boys over a number of years. • Thirty-two known victims, alleging harmful conduct beginning in 1980's until he was brought under criminal investigation in 2008. • Why is the University so enmeshed in this - obviously not in the course or scope of his duties? • Answer: allegations that the President, CFO and Athletic Director conspired to hide abuse when they first became aware, in 2001.

5. What happened next? • Sandusky, and CFO and Athletic Director, are criminally charged on 7 November, 2011. • On 9 November, Graham Spanier - University President of 15 years, and Joe Paterno - head football coach of 55 years, are sacked by University Board of Trustees. • That evening, students riot over firing of Paterno. • In the following week, University Trustees hire Louis Freeh (former federal judge and head of US FBI) to independently investigate. • Alumni upset at firing of Paterno, demand resignation of all 32 University Trustees. • Freeh gathers 13 terabytes of data, issues report of several hundred pages in July 2012, containing 119 recommendations.

6. What has Penn State done, since then? • Implemented 80+% of Freeh recommendations; estimated that will be at 95+% by July 2013. • Four primary Policy changes, forming legs of a stable platform to support activities involving minors: • -- Policy on minors on campus or elsewhere in sponsored activities • -- Policy on background checks for employees and volunteers • -- Policy mandating the reporting of known, suspected or reported child abuse • -- Policy on access to University recreation facilities. • Appointed staff specifically designated to catalog youth activities, monitor compliance with policy, and provide a resource for improvement and best practices.

7. What else? • Hired first Chief Compliance Officer. • Implemented Governance reforms of Board of Trustees. • Risk manager now required to report at each of the Board Audit & Risk Committee's four meetings each year. • Various Board committees assigned oversight of fifteen risks. • Hired Ken Feinberg to mediate with victims. • Six Trustees have been replaced by election. • Six lawsuits filed by alleged victims, to date. • One whistleblower lawsuit filed by another former assistant coach. • University has accumulated expenses of $60 million to date. • Primary general liability insurer has denied coverage to the University.

8. Lessons learned • First tragedy was that these young men were victimized. • University did not foresee or respond adequately to the intense national and international media firestorm. • Social media made things considerably worse, spreading unfounded, contradictory and ridiculous "thoughts". • University culture now significantly more transparent. • However, has perhaps become more risk-averse to avoid second-guessing. • Good news is that the Risk Management & Privacy Office is now a "victim" of our success. • Strongly suggest that you read Chapter Ten of the Freeh Report (recommendations section) to see how your University might measure up.

9. Other Issues • Guns on campus. • Business continuity planning for your risk & insurance management department. • Student and employee mental health and behavioral threat management. • Unusual research endeavors, both as to subject and location. • ERM now gaining significant traction across higher education in the U.S., will receive boost from recent publication of a book on the Board's role in managing risks.