People Are a Business Asset – Are You Managing the Risks?
People are at the heart of businesses and the phrase “our greatest asset is our people” is a popular statement. As with other assets, people are vulnerable, and risks to their wellbeing or performance need to be managed. Managing the human factors that could harm your business is a key aspect of effective governance and can reduce organisational disruption and increase operational efficiencies.
What is people risk?
People risk can be defined as the financial and other impacts on an organisation that arise as a consequence of things that happen to, or because of, its people. These can be categorised as follows:
Gradual: Increased absenteeism, reduced productivity, employee disengagement, and cultural and demographic change.
Critical: Death, injury, and illness; potential for concentrated loss of life.
Strategic: Succession and talent acquisition issues, employee attrition/turnover, reliance on agency staff, and increasing recruitment costs.
Legal: Potential for prosecutions and fines, employee theft/fraud, and reputational damage.
Technical: Data breaches, claims inflation, and insurance premium increases.
The impact of people risk is often exacerbated by the fact that the above are normally managed through different parties across human resources, finance, IT, legal, and compliance teams. However, taking a more comprehensive approach can help better manage this risk within your organisation.
This may include:
- Reviews of all policies and procedures that impact people.
- A fresh look at employment engagement and reward strategies.
- An examination of your risk financing methods and whether these are optimal.
- Reviewing disaster/event risk management procedures.
For example, you should consider whether your health and safety, occupational health, and wellbeing policies link together and how these fit with any income protection and/or rehabilitation schemes. Protecting the wellbeing of employees, getting them back to work quickly if they are injured or ill, and ensuring their income is protected in the meantime can improve engagement, loyalty, and performance – and reduce costs for you.
Ask yourself whether your reward and motivation schemes simply reflect financial results, or whether they encompass desired behaviours and compliance with standards.
It is also worth considering whether the financial impact of a disaster is reflected in group life, personal accident, and employers liability aggregation limits, and if there is any potential for duplication – or gaps – in your insurance cover.
Taking a comprehensive rather than disjointed approach to managing people risk can:
- Reduce organisational disruption and increase operational efficiencies.
- Protect employees and their families from the impact of negative events.
- Provide a win-win outcome for both employees and the organisation.