Risky business: identifying your potential people-related risks
17 April 2014
We’ve all read stories in the papers about bullying in the workplace and absenteeism, where often the focus is on the ‘victims’. But the consequences of not managing these types of risks are potentially severe for the organisations involved.
People-related risks can be particularly difficult for a large company to quantify and manage, whether it’s managing the behaviours of over-exuberant managers, bullying in the workplace, absenteeism, employee fraud, general health and safety, or the risks associated with international business travel into new territories.
So how do you identify the people risks that could affect your business and make sure the right processes are in place to manage them? You need foresight, planning, proper governance and engagement from across the business. HR might write the staff hand-books, set the policies and the tone of the organisation, but in most companies the business managers will be responsible for managing people risk in the day to day operations.
Understand where the risks lie
You can start to build a statistical overview of the most common people risks by using appropriate KPI’s and carrying out an assessment of the way that the company measures the level of risk in the business. Some sectors have invested in relatively sophisticated monitoring to help them measure specific types of people risk; health and safety in the construction sector for example, or rigorous IT monitoring across the financial services sector.
Spreading like wildfire – technology’s impact on risk
The ongoing advances in technology, combined with a greater demand for flexibility in the way people work is changing the relationship between employers and employees. In our recent PwC report on Corporate Resilience, we talked about how the multiple and increasing number of ways that we can communicate with each other in the digital age have led to a wildfire type effect in the speed and reach of our ideas, information, and opinions. Unlike face-to-face conversations and day-to-day interactions that can be held in real-time, communication across many organisations in the online world is instantaneous. It reaches across continents and cultures and is so often received without any intuitive context. So this means that your company has to work harder than ever to contain this type of activity and the risks that it creates, particularly if you operate in a highly regulated environment and have a global brand and reputation to maintain.
Reporting and governance around people risk
We’re seeing the issues of ethics, integrity and building trust becoming more and more central in everything that most listed companies do. These are the values that they report in their annual statements and, for many, will be aligned to corporate responsibility and governance processes. Standards of transparency and in measurement and reporting practices for people risk vary enormously across the sectors and in different industries.
Risks in a diverse workforce
People risks aren’t limited to your core employee population. The risks associated with the people that come into your business on a short-term or temporary basis can seriously undermine your ability to manage and control your exposures to, say, risks such as bribery and corruption. When contractors have become an integral part of the business and are under your direction, control and supervision then how do you manage the risks associated with the fact that these workers aren’t actually employed by your organisation. How do you handle situations where they may not be working with the same code of ethics and obligations that your employees are expected to adhere to?
These are just some of the hidden people risks that many companies fail to identify and address. If you have any other people-related risk issues you’ve come across in your business, please do get in touch.