RISK-BASED BUDGETING IN HIGHER EDUCATION: AN INTEGRATIVE CONCEPTUAL FRAMEWORK OF ISO 31000 AND COSO FRAMEWORK

Abstract

This study aims to develop a conceptual framework for risk-based budgeting in higher education institutions as a strategy to strengthen governance, efficiency, effectiveness, and organizational performance. The study is based on the fact that budgeting practices remain predominantly administrative and based on historical data, which has the potential to result in misaligned program priorities, inefficient use of resources, and low effectiveness in achieving performance goals. The study employs a conceptual literature review using an integrative approach through an analysis of regulations regarding risk management and performance accountability, SNI ISO 31000:2018, the COSO Framework, and various empirical studies on risk management and governance in higher education institutions. The analysis was conducted through concept identification, theoretical synthesis, and the integration of previous research findings to establish conceptual relationships between risk management, program priorities, budget allocation, efficiency, effectiveness, and performance outcomes. This article proposes a mechanism for translating risk into budget decisions through the integration of two complementary layers of governance. The ISO 31000:2018-based risk-informed allocation layer is used to translate the results of risk identification, analysis, and evaluation into the basis for determining program priorities, risk responses, and resource allocation. Meanwhile, the COSO Framework-based budget execution control layer is used to oversee the implementation, monitoring, and accountability of the budget to ensure it remains aligned with risk priorities and performance targets. The results of these controls and monitoring then serve as feedback for updating risk assessments and budget decisions in the subsequent period. Thus, risk-based budgeting is not only a control instrument but also a strategic mechanism that links risk information to the quality of budget decisions to support the achievement of the university’s objectives in a sustainable, transparent, and accountable manner.