People risk management
Find out how managing people risk across five key pillars can build business and human resilience.
Our People Risk research looked at the individual people risks with the most power to disrupt business, to identify the top 25 people risks across five pillars of people risk management.
Critical to mitigating these risks is recognizing that while people are an organization’s most important strength, they can also bring significant risk.
Instead of reacting to unfolding events, HR and Risk must now collaborate to mitigate people risks linked to health and safety, ESG and the future of work. This requires putting a proper foundation for risk management in place, including proactive measures to protect employees.
See below for our People Risk research highlights and download the full report for detailed insights on managing people risk.
The five pillars of people related risks in an organization
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Health and safety
The vast majority (87%) of organizations say health and safety risks to employees pose the biggest threat to their business. Due to the ongoing risk of communicable diseases, including pandemics, and need to mitigate rising cases of heart disease, cancer and mental health issues. As well as workforce exhaustion, with increasing workloads, constant change and poor work-life balance increasing risk of burnout.
- Implication: Invest in benefits that manage health risks to boost human resilience and business resilience
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Governance and financial
The management of compensation, employee benefits and retirement plans is seen as the second biggest threat to business. People risk factors include administering plans fairly and prudently and the increasing cost of health, risk protection and wellbeing benefits. As well as the risk of misaligning benefit and other HR programs with regulatory requirements, tax, labor and human rights and employment law.
- Implication: Oversee all types of rewards to avoid costly errors and reputational damage
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Accelerated digitization
Accelerated digitization gives rise to some of the people related risks in organization businesses are most concerned about. These range from cyber security and data privacy to the impact of automation and AI on employees. Which is set to see 85m jobs become obsolete by 2025. Giving rise to skills obsolescence and misalignment of HR and business strategy if workforce planning and reskilling doesn’t keep pace.
- Implication: Consider the impact of digitization on employees to prevent future problems
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Talent practices
Human resource risk management linked to talent practices includes strengthening employee value proposition to attract and retain employees. As well as risks and inequalities linked to the changing nature of work. Ranging from people working more virtually and across different time zones to zero-hour contracts. Succession planning, conduct and culture and talent mobility are also people risk factors for this pillar.
- Focus out what employees most value to increase your ability to secure future talent
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Environment and social
Organizations are feeling pressure from customers, investors, employees and regulators to ensure profit does not come at the expense of society or the planet. Related people risk factors include progressing environmental targets, improving working conditions and driving diversity, equality and inclusion. Supporting employees with catastrophic personal life events is now also seen as important to managing people risk.
- Apply an ESG lens to investments, working conditions and employee benefits
People Risk Report 2022
People risk management barriers
People risk management for employee benefits
Administering employee benefits, pensions and compensation is the second biggest individual people risk, after cyber security and data protection. Which is also linked to employee benefits due to the huge amount of personal data involved in administering employee benefits.
Without careful governance, and a deliberate strategy, employee benefits plans are unlikely to succeed at supporting business resilience. Even so three fifths of businesses (59%) don’t have effective governance for insurance and benefits. While just two in five (42%) have a benefit cost containment strategy in place. Falling to less than one in three (31%) employers in the United Kingdom.
Instead, with employee health benefits increasing at two and a half times the rate of inflation, cleaver employee benefits design is essential. This should not only look at optimizing spend by reducing health risks, but also securing the best deals from insurers.
A clear governance approach for benefit and insurance program design, delivery and financial decisions will also reduce costs and risk. Think about establishing a formal governance process, including defining roles and responsibilities for making benefits design, administration, communication, HR technology and insurance decisions.
People risk management ideas to get you started
Identify risks to boost business resilience
Create multi-year people risk management strategies
