By: Maria Castillo Diaz mcastillodiaz@clements.com
International schools are a key growing market, especially with the number of international schools around the world expected to double over the next 10 years. Currently, there are more than 9,300 international schools, educating 5 million students and employing 47,000 teachers worldwide.
Most international schools opened to educate students of embassy staff, journalists, NGO employees, technicians, and corporate expatriates. Recently, many of these schools have begun educating local children of wealthy nationals who want their kids to attend such schools so that the experience participating in the global markets.
The Clements Worldwide Risk Index measures the impact of different risks on international schools, paying particular attention to actual reported losses versus top concerns. Clements Worldwide uses this information to advice schools on protective policies that could have a significant effect on losses and overall operations.
In addition to the results for all 108 schools that responded to the survey, Clements has broken out some key data by region to enable schools in that region to further assess risks that may be more relevant to them.
Property Damage and Fleets Top Costs for Schools in South America; Political Unrest Also a Top Loss
The top categories for losses in South America are property damage and losses related to vehicle fleets. Other leading causes of losses are political and labor unrest, including riots and strikes; disease; personnel medical needs; and kidnap and ransom.
Fleet and auto-related accidents also are one of the top costs for all international schools, including those in Africa, but it’s also an area that is often overlooked. According to a report by Clements Worldwide, 58 percent of respondents indicated that risk management capabilities, structure and accountabilities need to be overhauled for fleet management.
In addition to spreading and outbreaks of disease, these schools also have to deal with the rising cost of healthcare. Healthcare is always a large expense, and it’s getting more expensive as the schools’ revenues do not grow. Quality mental health counseling is also often needed for people working in a country outside of their homeland in high stress professions.
Political Labor Unrest, Changes in Legislation, Natural Disasters Top Concerns for Schools in South America In regard to expected political unrest, 62 percent of South American schools said currency challenges were expected over the next 6 to 12 months (compared to 41 percent for schools overall – see chart below). Meanwhile 58 percent said disruptions from elections or political environment are expected during the same time frame. Other high ranking areas are civil unrest or labor strikes (54 percent) and demonstrations related to economic downtown (46 percent)
Natural disasters are the third top concern for schools in South America, and the top overall concern for schools in general. Natural disaster can lead to expatriates leaving a country and voiding their payment obligations to schools. The schools, however, are obligated to pay salaries, which can impact profitability, and even its ability to stay open.
Among the arrangements schools in South America are making to prepare for incidents caused by natural disasters and climate change are developing new procedures and emergency plans, which was cited by 65 percent of schools. Other steps being taken are considering adaptions to buildings and to improve preparation; examining insurance solutions and developing contingency plans for relocations.
New Legislation Affects Schools Another major concern for schools in South America is changes to legislation and regulation. Overall, such changes are second-highest rated concern for international schools, and it’s tied for third in South America. It’s a broad category covering anything related to the cost of complying with laws and regulations. That can include underlying corruption. Adhering to laws and regulations can be difficult for schools, because most do not have an officer dedicated to helping them understand and comply with regulations.
One big factor is a regulation known as the European Union General Data Protection Regulation (EUGDRPR), adopted in April 2016. Organizations need to follow the regulation beginning May 25, 2018. Even many International schools that aren’t in the European Union have to comply, because the regulation applies to organizations throughout the world that process personal information of European Union citizens, including students and teachers. There are many other regulations international schools have to meet in today’s global world.
When asked what types of legislation risk they’re expecting in the next six to 12 months, 54 percent of schools in South America answered increased bureaucracy for business processes. Also highly cited were local business practices making it difficult to conduct business, and unclear legislation affecting business operation, with half of South American school citing those as concerns. Other areas of concern include new capital and currency controls (27 percent) and local compliance related to insurance and finance (23 percent).
Lawsuits and Liability
Another important risk area is lawsuits and liability, with 38 percent of South American schools dealing with lawsuits and liability in the past six months. To illustrate how international schools are affected by lawsuits and liability, consider that 30 percent of international schools worldwide have dealt with lawsuits and liability within the past six months.
Abuse and molestation is the primary cause for lawsuits and litigation, with the source being school employees, or staff from service providers, including cleaning personnel, bus drivers and security. With more awareness and support in schools, more children are reporting incidents. Schools are initiating programs to prioritize prevention and risk management, but claims are not going away anytime soon.
Other causes of lawsuits and litigation include injuries that occur when playing sports or even during a science experiment. A bad experience with a school nurse may also lead to a lawsuit. Some parents even blame the school when their child doesn’t get into the college of his or her choice. Societies around the world are becoming more litigious with lawsuits being filed even in developing countries. Reexamining coverage and limits is critical, as Clements is seeing higher settlement amounts as well.
For more information about the Clements Worldwide Risk Index or international risks facing schools, contact Clements Worldwide today at +1.202.872.0060 or 800.872.0067 or e-mail request@clements.com.