HKUST Annual Report 2018-19

Reputational Risk In line with the University’s global vision to be a world-class international university at the cutting edge in all targeted fields of pursuit, there is a robust governance framework to govern the academic, research and administrative related processes. The framework is essential to ensure full compliance with government regulations and upholds the standards expected of a publicly funded institution. The University undergoes periodic exercises such as Research Assessment Exercise (RAE) and Quality Assurance Council (QAC) audits to ascertain and uphold the standards of academic and research excellence. Financial Risks As a public university, key funding for administrative services, campus development, academic and research related activities is mainly provided by the government. Apart from public funding, there are also non-government funding sources from the self-financed academic programs, donations and investment in the financial markets to support the University’s development and activities. In light of the societal issues in Hong Kong, the University is expected to face substantial challenges inmanaging the budget for the coming year. There will be significant pressures on the income generated from operating activities due to uncertainties of student enrolment and other factors. At the same time, higher expenditures will be incurred for enhanced campus security. For non-government funding sources such as donations, the University may also need to come up with a contingency plan of depending more on investment returns to finance operational needs. A team of professional external advisors and investment managers is engaged to assist in the investment portfolio management. Risks arising from investment in the financial markets are mitigated by a diversified investment strategy with acceptable risk and return objectives approved by Council. Information on financial risks and relevant mitigating plan is published in the University’s financial statements. Operational Risks The University aims to develop an exemplar of best-in-class standards, practices, and operations, as an agile and effective organization. To achieve the objective, the University strives to provide an inspirational and sustainable campus to work, study and live in. Management has planned risk mitigating activities for the development and renewal of campus facilities, IT system network, safety and sustainability of University environment. There are also continuous efforts to attract and retain best administrative talents as well as streamline administrative processes to develop best-in-class practices. The University has also implemented measures to tighten campus safety and security, such as campus access controls, Graduated Security Response Plan and others. The societal issues have impacted the recruitment of faculty members and students, especially those from overseas. Management exerts efforts in attracting and retaining faculty members through various supporting measures. By recruiting high caliber academic leaders in applied research, achievement of the University’s strategic objective in becoming a power for innovation and entrepreneurship could be accelerated. Management upholds and promotes the University’s core values of inclusiveness, diversity and respect to provide assurance to prospective and existing students that the campus is a safe environment for teaching and learning for sharing, dialogues, and intellectual stimulation.