Following adverse media reports in 1999, the Director-General of the DET referred two separate cases of alleged improper sexual conduct by teachers to the New South Wales Ombudsman. In both these cases, criminal charges against the teachers had been dismissed and departmental disciplinary charges were not proven; however, the Victims Compensation Tribunal (VCT) awarded compensation to the children who made the allegations. Thus, although the DET had cleared the teachers of the allegations, the VCT was satisfied that the involved children had been subjected to an act of violence and had suffered injuries as a result. The concern of the DET Director-General in referring the cases to the Ombudsman was that this outcome might reflect weaknesses in DET's internal investigation procedures. The Ombudsman's investigation involved examining the relevant DET files and interviewing senior departmental staff who had determined the disciplinary charges in the cases. Information was also obtained from the VCT, the Police Service, and the Department of Community Services. The investigation found that the rigid statutory disciplinary scheme that governed the DET's response to such allegations restricted its ability to respond quickly and effectively to concerns about staff. The primary recommendation is that the DET shift from the disciplinary scheme to a risk management approach. In contrast to a disciplinary scheme, a risk management scheme would give proper regard to the interests of all parties, whether students, teachers, or the DET; it is less formal, adversarial, and time consuming than disciplinary proceedings; it focuses on achieving constructive outcomes in contrast to punishing individuals; and it can produce more comprehensive management outcomes than a narrow disciplinary approach that applies legal tests to determine whether a limited range of punishments should be imposed. Appended scenarios