You have /5 articles left.
Sign up for a free account or log in.

Risk management is viewed as a central component of the strategic management of successful organizations. It involves more than addressing risk exposures and plays a significant role in terms of maximizing the competitive advantage of organizations.

The increasing complexity of the higher education environment is forcing institutions to operate amidst a litany of challenges such as financial austerity, competition for students and faculty, and heightened external scrutiny. Risk management practices can ostensibly assist higher education institutions (HEIs) to achieve their missions and visions, improve their institutional standing, meet the challenges they face, and help them make more rational strategic decisions.

In a hotbed of risks, HEIs today should seek mechanisms by adapting the principles and practices of risk management. However, Risk Management concepts have arrived only recently to higher education and the response has been reluctance and critique.

Research Context and Design

Currently, more than 130 PHEIs operate in Ethiopia. They are mostly for- profit institutions owned by individuals, families and shareholder companies although nonprofit institutions belonging to religious institutions and nongovernment organizations also exist. Altogether PHEIs account for more than 110,000 students, comprising 15% of the national enrollment. PHEIs in Ethiopia operate amidst a host of risks that can affect their operations and threaten their existence. Understanding the pattern and trends of these risks is paramount to ensuring the survival—and advancement—of these institutions. 

The study that produced this article was conducted to explore, identify and analyze the nature and types of risks faced by Ethiopian PHEIs from the perspectives of academics within the sector. The study made use of both survey questionnaires and interviews as primary data generation tools. The interviewees were presidents and vice presidents of PHEIs. Of the 160 respondents, 20% held a bachelors degree, 65% a masters degree and 15% a PhD.  Thirty-two percent of the respondents had 1 to 5 years of work experience while the remaining had more than six years. 

Major Findings

The study revealed five major risks faced by Ethiopian PHEIs. These fall into the areas of teaching and learning; financing; infrastructure and resources; research and outreach; and policy and regulation.

With regard to teaching and learning, faculty turnover appears to be the biggest problem that besets the PHE sector, followed by shortage of experienced staff. Lop-sided staff profile is another risk conceded. Many PHEIs are still far behind the national standard set by the Higher Education Relevance and Quality Agency (HERQA) as 30% PhD, 50% Masters and 20% bachelors. Low academic quality, hyper commercialism, competition for students, ill-qualified staff and the inability to attract and retain talented faculty were also identified as the sector’s Achilles heel.

Financial limitations in PHEIs are usually manifested in a number of adverse ways that hinder institutional viability including inadequate physical and ICT infrastructure, inability to pay qualified personnel, and limited institutional growth. Most Ethiopian PHEIs lease buildings unsuitable for educational purposes. The escalating cost of materials and building stands at the top of the risk list which PHEIs acutely grapple with. The issue of excessive reliance on tuition came second on the list of risks. Admittedly,excessive dependence on student tuition could certainly jeopardize the operation of the private sector at any point in time, especially in times of dwindling enrollment. The obvious lack of sufficient, sustainable and reliable funding to the sector is palpable and hampers the growth of the sector.

The other serious risks identified were limited participation of staff in, and lack of funding for, research and outreach. Previous studies in this area have also indicated a lack of a research culture in PHEIs and hence their poor contribution to knowledge production. 

On the other hand, issues with regard to links with community and employers were not considered serious issues for the sector. This may be an indication of the sector’s reasonable participation in these areas.

Risk in terms of policy and regulation is a result of the sudden policy shifts, followed by a perceived lack of government support to the sector.  This may not be surprising given the sector’s limited control over these matters as well as its previous experiences with unfavorable government policies and actions. A double standard—that presumes to discriminate against the private sector and prompts unfair competition between public and private institutions—has also been identified as another serious risk.


The study has illustrated the magnitude of the risks that the Ethiopian PHE sector is currently grappling with. The findings revealed the multitude of risks the sector faces in virtually all spheres of operations. Understanding these risks and their magnitude is vital and must be addressed by the government, and other stakeholders.

There is a compelling need for responsive policy, developed in close consultation with PHEIs and pertinent stakeholders to help avoid threats to the sector. Unless existing risks are systematically mitigated, PHEIs may find it increasingly difficult to achieve strategic objectives and maintain organizational health. Changes in this direction will not only help the private sector to thrive but also advance the government’s strategic interest in expanding access to higher education through non-public avenues.

On the other hand, a strained private sector burdened with risks can be easily derailed from discharging its endeavors responsibly. The danger of the sector succumbing to these hovering risks and subsequent consequences for multiple stakeholders—students, parents, and businesses alike—is imminent. Thus, it is vital to embrace risk management as a matter of paramount urgency and importance to the private higher education sector in Ethiopia. 

Next Story