Enterprise Risk Management

The ultimate responsibility for each individual people risk varies considerably between companies and suggests that there is a lack of standardisation of roles and responsibilities for managing the numerous people risks across organisations. In order to effectively manage and mitigate these risks, there is a need for greater clarity around accountability and stronger cooperation across organisations.

The Five Pillars of People Risk report found that:

Only 5% of businesses have the same stakeholder for all health and safety risks, across mental health, workforce exhaustion, non-communicable health conditions, communicable health conditions and work-related illness or injury.
Most firms have at least 3 stakeholders who are ultimately accountable for employee health and safety. Our experience is that these departments manage these risks with little to no collaboration at all.

Case Study: Employee Health and Safety

The following is a structure we have seen in a mature organisation that genuinely wants to support their workforce with regards to illness and injury:

They employ a Workers’ Compensation Manager to look after work related illness and injury.
They have Departmental managers & IR managers looking after Personal Accident and Sickness Insurance attached to Enterprise bargaining agreements.
They have an HR team looking at employee wellbeing and the managers’ Salary Continuance Insurance scheme.
There is a WHS Manager employed to prevent workplace injuries and illness.

Whilst the intent of this organisation is commendable, this approach exposes the business to inconsistencies, duplications, gaps and inefficiencies, as these departments are operating in siloes.

This “siloed” approach is also commonly exhibited within individual people risks, such as when managing responsibility for work-related illness and injury. In some organisations, work related mental illness and injury might be the responsibility of HR, whereas physical illness and injury might rest with occupational health and safety instead. This disconnect and inconsistency increases the likelihood of fines, penalties and prosecutions under WHS legislation for failing to effectively control these “foreseeable” risks.

How can organisations mitigate people risks more effectively?

By working together to identify and prioritise key people risks, pooling budgets and resources, organisations can more effectively manage these risks and better protect their people.

However, this cannot be achieved without the active engagement and commitment of an organisation’s C-suite to adopt an enterprise-wide risk mitigation strategy that is driven from the top down. This will require organisations to take a step back and look at people risk holistically, understand and define the outcome they wish to achieve, and take a strategic approach to people risk management. This will prove to be more effective than having multiple internal departments and stakeholders who are working in siloes and competing for finite resources and budgets.

This strategic approach will involve:

defining the people risk(s) to be managed,
understanding the business impacts of these risks through reviewing and analysing data,
developing targeted risk mitigation plans,
agreeing and allocating the resources to implement these plans and,
monitoring and reviewing the progress against defined goals and targets.

Breaking down departmental siloes and defining clear roles and accountabilities for the delivery of this strategic plan is absolutely crucial for this strategy. This will ensure the effective collaboration between HR, risk managers, occupational health and safety, and finance; and this will be owned and driven by the organisation’s Senior Executive.

By implementing this clearer, strategic approach, organisations will be able to more effectively contain costs - reducing leakages and ensuring that every dollar is spent effectively in a way that truly benefits employees and serves the business.

MMB can work with various stakeholders across organisations to complement and extend the people risk management capabilities our clients already have. If you would like to learn more, speak to your broker at MMB or contact us here.

This webpage is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein.

Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors.

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Enterprise Risk Management

Case Study: Employee Health and Safety

How can organisations mitigate people risks more effectively?

The Five Pillars of People Risk Report - Australia

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