Penn State Scandal Sharpens Focus On Reputational Risk

Ann McClure's picture
Monday, January 2, 2012

As Pennsylvania State University faces litigation alleging the school failed to prevent a former assistant football coach from sexually abusing children, reputational damage is top of mind for risk managers at educational institutions.

When a college's reputation is damaged, it can adversely affect student recruitment, alumni donations and even federal funding, experts say.

Awareness of educational institution reputational risks has been rekindled as Penn State faces unlimited legal liability in civil litigation. The first civil lawsuit was filed Nov. 30 alleging that the university knew of and failed to prevent former assistant football coach Gerald A. Sandusky's alleged child sexual abuse dating back to the early 1990s.

Reacting to the allegations, university trustees removed legendary football coach Joe Paterno and President Graham Spanier. Two other officials also stepped down. Mr. Sandusky retired before the scandal broke.

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