Organisations need to re-think approach to people risk

Airmic, the UK risk management association, has called on organisations to take a more integrated approach to managing people risk...

...and is encouraging risk professionals, human resource and benefits managers to work more closely together to manage people-related risks.

Managing Risk – The Human Factor, published today in association with Arthur D. Little, Willis Towers Watson and Zurich, warns that organisations are entering an era of unprecedented volatility with regards to people risk and the most successful organisations will be those which take a new and more sophisticated approach.

The guide is the first of its kind and presents a new perspective for managing people-related risks. Rather than creating a new risk category, it applies a people-centred view to show how a broad range of existing risks, traditionally treated as separate and managed by different processes can be integrated into a coherent framework.

It includes practical advice on how risk and HR professionals can work together to take people risk out of its siloes, and how risk professionals can add strategic value to an organisation’s employee benefits strategy.

When successful, the approach outlined in the report will provide new insights, offer additional opportunities to control risk and increase the value derived from risk management activities, the report says.

“Risk professionals have tended to think about people risk as risk to employees, whereas HR professionals tend to view it as the risk to the organisation from human factors,” comments Julia Graham, Airmic’s deputy CEO and technical director. “Both perspectives are equally important, so it was surprising to us how little interaction there is between the two functions. Risk and HR can really support each other and enhance the strategic value of their roles.”

Further comments:

Crispin Marriott, client relationship director, Willis Towers Watson, commented: “Organisations should think of their people as investors in their business, rather than assets. Employees choose to invest their human capital in the organisation, and they have choices about where to place that investment. Organisations need to attract that investment and make it grow. We are delighted to work with Airmic on this guide to demonstrate the important role risk and insurance professionals can play, in collaboration with colleagues in HR, to build an attractive organisation for its people.”

Rob Brown, director of customer and distribution management, UK, at Zurich Insurance Company, commented: “This Airmic guide is a timely and valuable resource as the growing popularity of international employee benefits programmes is demanding more collaboration between risk and insurance professionals and their HR colleagues. Risk management needs to be perceived as a value-added business partner to HR colleagues, assisting them to achieve their objectives by managing HR risk using similar tools and strategies that are employed in managing property and casualty risks.”

Tom Teixeira, partner within the Arthur D. Little Risk Practice, commented: “In most, if not all organisations, people represent both the biggest source of risk, but also implement and maintain the great majority of controls. If significant people risks sit outside the corporate risk profile then our understanding of our risk position is incomplete. Integrating these risks into our enterprise risk management approach gives a more complete and holistic risk profile, allows better risk aggregation and visibility of controls, and, most importantly, allows issues related to people to be identified and escalated to levels of management that are best equipped to manage the situation.”