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

Our global survey of over 2,300 Human Resource and Risk Management professionals identified five pillars of people risk. Highlighting the extent to which enterprise risk management is evolving to encompass people, purpose and profits.

  • 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

  • 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 

  • 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

  • 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

  • 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

Download People Risk, resetting priorities to manage risks for workforce and business resilience. For insights on the biggest people risks facing organizations today and how to mitigate these to create a more sustainable business.
Download the report

People risk management barriers

Our people risk research also explored the barriers to addressing people related risks in an organization, across each of the five pillars. The main obstacles were as follows:

More than two-fifths (43%) of businesses said difficulty changing personal behaviors is the main barrier to addressing health & safety risks. A similar number (39%) see changing personal behavior as the biggest barrier to mitigating talent risks, such as adapting to the future of work. One in three (36%) said personal behavior also hinders tackling social & environmental risks.

Organizational complexity is a top barrier for every pillar when it comes to people related risks in an organization. It’s also the main barrier hindering progress in addressing governance and financial risks. As businesses continue to grow, risks are ever more present across traditionally siloed work areas and can result in inconsistent and rigid behaviors. Many are struggling to define who is responsible for owning both risks and mitigation efforts, leading to gaps in addressing these.

One in three businesses see lack of skilled resource to tackle risk as a main barrier addressing accelerated digitization and environmental and social risks. It highlights the extent to which individuals with cybersecurity and ESG credentials are in demand across all industries and many businesses are only just starting to tackle these emerging risks.

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

Review workplace and job risk and industry risk factors to understand where the greatest people risks are. Look at your employee data analytics to identify risks, or blind spots, and review benefit eligibility to see if any groups are being excluded or put at risk. 

Create multi-year people risk management strategies

Instead of just reacting or responding to immediate threats, look ahead to future risks. Be this AI, future of work or environmental risks. Create clear multi-year strategies and hire people for skills, and not just jobs, to secure the skills needed to address future risks.

Take a preventative approach to people risk management

Instead of paying to resolve problems when they arise, mitigate risk and cost with preventative strategies. Look at the underlying causes of people risks, such as cyber risks, loss of talent and absence, and take steps to mitigate these.
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Download the full people risk research report for more insights.
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