Everyone understands RAG ratings. Red is bad. Green is good. Amber is somewhere in between. Simple.
Except it isn't. Not really. Because the moment you start using RAG ratings to assess something as complex as a school's institutional health, those three colours carry a lot more weight than a traffic light. The thresholds are different for every metric. The implications depend on context. And an all-green report can be just as misleading as an all-red one.
So let's talk about what these ratings actually mean in an IRIS5 report, and how to read them properly.
Red doesn't mean failing
Red means this metric needs attention now. Not next term. Not when the budget cycle comes round. Now.
A Red rating is triggered when a metric crosses a threshold that indicates near-term risk. The specific threshold depends on what's being measured. For staff cost ratio, Red kicks in above 80% -- at that level, you've got almost no margin to absorb income shocks. For cash reserves, Red means below 30 days of operating runway. For governance, Red might mean board meetings consistently failing to reach quorum or a risk register that hasn't been updated in over 12 months.
Red doesn't mean your school is failing. It means one specific area has reached a point where inaction carries real consequences. Schools get Red ratings on individual metrics all the time. What matters is what you do about it, and how quickly.
Amber means watch this closely
Amber is the rating people pay the least attention to, and it's arguably the most important one. Red forces action. Green gives comfort. Amber sits in the middle and often gets filed under "we'll keep an eye on it."
In IRIS5, Amber means the metric is trending in the wrong direction, or it's sitting in a range where deterioration over the next 6-12 months could push it to Red. It's not a crisis today. But it might be by Christmas.
Think of Amber as a six-month warning. Staff cost ratio at 74%? That's Amber. It's not critical, but if income drops or you add one more post, you'll cross 80% quickly. Enrolment down 4% in your entry year? Amber. One bad year is a blip. Two bad years is a trend. You want to act while it's still Amber, because acting on Red is always more expensive and more disruptive.
The most expensive problems in schools are the ones that sat at Amber for two years while everyone agreed to monitor them.
Green doesn't mean ignore it
A Green rating means the metric is in a healthy range. That's good. But it doesn't mean you can stop paying attention.
Green metrics still need annual review. Conditions change. A Green staff cost ratio can become Amber in one year if you lose 15 students and don't adjust staffing. Green enrolment figures can mask underlying problems -- total numbers may be stable, but if your entry year is shrinking and your exit years are growing, the pipeline is weakening even though the headline number looks fine.
The purpose of a Green rating is to tell you that right now, this area is in good shape. It's not a guarantee that it'll stay that way. Treat Green as a baseline to protect, not as permission to look away.
Thresholds vary across dimensions
One of the things that makes RAG ratings tricky is that the Red/Amber/Green boundaries aren't the same for every metric. They can't be, because the metrics measure fundamentally different things.
In the financial dimension, the thresholds are based on sector benchmarks and risk modelling. For staff cost ratio, the thresholds differ by school type: for-profit schools reach Red above 80% (Amber 65–80%, Green below 65%), while not-for-profit schools are benchmarked more generously — Red above 85%, Amber 70–85%, Green below 70% — reflecting the structural difference in how surplus is used. Cash reserves below 30 days is Red. Between 30 and 90 days is Amber. Above 90 days is Green. These numbers come from established patterns in school financial distress.
In the governance dimension, the thresholds are more qualitative. Does the board meet regularly and reach quorum? Is there a functioning risk register? Are committees properly constituted? Are there term limits and succession plans? The RAG rating here is built from a composite of yes/no indicators and frequency measures, not a single number.
In the enrolment dimension, context matters enormously. A 5% decline in total enrolment might be Red for a small school of 200 students (that's 10 students, but it's a big hit to income). The same percentage at a school of 1,500 might be Amber -- still concerning, but the financial impact is proportionally smaller. IRIS5 adjusts its thresholds based on school size and structure.
In the AI Exposure and Opportunity dimension, the thresholds reflect policy maturity. No AI policy at all? Red. A basic policy that covers students but not staff? Amber. A policy that covers all five key areas (student use, staff use, data handling, academic integrity, procurement)? Green. This dimension is newer, and most schools currently land in Red or Amber. That's expected -- the field is still maturing.
Why an all-green report might be a problem
This sounds counterintuitive, but hear me out. If every single metric in your report is Green, there are two possible explanations. One: your school is genuinely in excellent health across all five dimensions. That does happen. Congratulations.
Two: the assessment didn't go deep enough. The documents provided were incomplete. The questionnaire responses were optimistic. The thresholds used were too generous.
An all-green report should prompt a question, not a celebration. Ask: were the right documents uploaded? Did the questionnaire responses match what the documents showed? Are these thresholds calibrated for a school of our size and type?
In practice, most schools have at least one or two Amber ratings. That's normal and healthy. It means the diagnostic is working properly and finding areas for improvement. A school that's Green across the board either has no weaknesses or hasn't looked hard enough. We'd bet on the second option nine times out of ten.
How to read a RAG dashboard properly
When you open your IRIS5 report, resist the urge to scan for Reds and ignore everything else. Here's a better approach.
Start with the Ambers. These are your highest-value findings because they're still fixable at relatively low cost. Identify which Amber metrics are trending toward Red and prioritise those.
Then look at the Reds. For each Red metric, check whether leadership's questionnaire response aligned with the document analysis. If leadership already knows it's a problem and has a plan, that's very different from leadership rating the same area as "good."
Finally, question the Greens. Not all of them -- but any Green rating where your gut tells you it should be Amber deserves a second look. Trust the data, but also trust your knowledge of your own school. If something feels off, check the underlying documents and see whether they tell the full story.
RAG ratings are a starting point for conversation, not the end of one. The colours get you oriented. The detail underneath them is where the value lives.