How Can Schools Assess Our Risk Appetite?

by Barbara Barron | Posted December 3rd, 2025 | Subscribe to this newsletter

Any school looking at a big project, like a capital campaign, needs to understand their risk tolerance or, said another way, their appetite for risk.

I’ve long wondered about how best to assess this tricky and nuanced concept. I see it when a Board needs to decide if and how much debt to assume towards a big capital project. Or invest in top notch advancement people toward realizing big dreams.

Some Boards I worked with are very risk-averse, others less so. Naturally, this impacts their fundraising goals and strategies. But how can schools get into this important and complex subject? I recently talked with a firm that specializes in this work. They are Scarlet Oak Consulting, and the principal is Alanna McKee. She generously shared her process with me in an interview.

Here is an excerpt of that conversation:

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An Interview Excerpt with Alanna McKee

Barbara: Alanna, thanks so much for talking with me today about your work with school (and association) Boards. What is the basis of your work around risk assessment?

Alanna: Thanks for the opportunity to share, Barbara.  We believe schools need to shift the way they view strategy. Instead of focusing solely on having a strategic plan, schools need to build a culture of strategic leadership. Part of that means developing a culture of innovation and risk taking, but that’s easy to say and hard to do. As it stands, many organizations only innovate when their backs are against the wall. 

Barbara: Let me guess: fear? 

Alanna: Yes… Fear of change. 

Barbara: Ah yes! For all of us. I’d say that’s true in both our personal and professional lives.

Alanna: True. And let’s be clear: as we think about innovation (and therefore change) there are “no-go” areas. Areas where the Board or leadership are not comfortable with risk taking. For most schools, I’d argue that any risk to the safety of a student is a no-go. But other areas are less clear. It’s an important part of our process to tease those out. If you’re going to innovate, there will be consequences. We need the Board to understand their limits to risk taking. Are we willing to make parents unhappy? What about inconveniencing teachers?  Are we willing to change established ways of doing school like, say, redoing the schedule or sunsetting a cherished tradition?

Barbara: Tough choices. So, once we know what we’re willing to innovate and what’s off limits, what’s the next move towards understanding our risk appetite?

Alanna: An essential question we pose is: “How much risk are you willing to assume in pursuit of your strategic objectives?” That framing shifts the conversation back to the mission and goals of the school. We need to have a holistic understanding of how risky or risk averse the Board is within the context of the school’s strategy. And I need to add here that this is not a one-and-done exercise. It needs to be an ongoing conversation at the Board level and, ideally, among the administrative team because as our operating environment changes, our risk appetite is likely to change with it.

Barbara: What else?

Alanna: We need the Board to understand how much they are willing to invest in strategic opportunities. We look at the school’s quarterly operating expenses against reserves to identify available funds for investment. Let’s use your example of a school considering a capital campaign that might require assuming some debt. We ask: “What level of strategic investment are we willing to invest towards this potentially high-impact activity in pursuit of our mission?”

Barbara: Essentially, how bold are we willing to be to meet the moment? That includes risk and possible reward.

Alanna: Exactly. Once the Board can express its risk appetite in qualitative ways, we need them to express it in quantitative measures. We might shift to an exercise where we have the Board rate themselves on a risk appetite scale. 1 is Cautious & Reactive and 5 is Bold & Proactive, with Balanced & Strategic in the middle. But it’s never a static position. A Board might be Bold and Proactive for one project but Cautious & Reactive with another. That rating may change in response to different data or threats like admission dips or changing political winds.

Barbara: Not everything carries the same weight.

Alanna: Right. Let’s also remember that getting your Board to become more comfortable with risk requires a shift in culture. A tool we find useful, is “The Change Curve” by Elizabeth Kubler-Ross. Sound familiar?

Barbara: The author of the five Stages of Grief or Loss?!

Alanna: Yep! Turns out there are parallels to how we deal with grief and change. Fascinating stuff. In the end, all change is hard. And organizational change is ultimately individual change. It needs to be a thoughtful process.

Barbara Sounds like yours is just that: a thoughtful, intentional process. Alanna, thanks for much for sharing this with me. I’m sure my readers will also find it thought-provoking. And generative!

Wishing you all the best!

______________________

Alanna McKee is the Principal and Founder of Scarlet Oak Consulting, a strategy consulting firm serving independent schools and associations with passion and purpose.

As they say: We transform the way independent schools and associations strategize, lead, and operate to build resiliency and impact.

Here’s how to find them.

https://www.scarletoakconsulting.com

The Change Curve:

https://www.ekrfoundation.org/5-stages-of-grief/change-curve/

Barbara Barron
[email protected]

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BARBARA BARRON is one of the most respected and highly sought-after independent advancement professionals in the country, having worked with dozens of schools in every corner of the United States.

She has raised over $20 million for schools where she served as the Director of Development. Barbara is a New York Times bestselling author, speaker, and presenter who currently advises dozens of schools in various capacities. She is considered a thought leader in the world of advancement, with her writing widely shared by professionals in development offices worldwide.

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