According to a 2018 study on risk management, 68% of respondents said that business leaders don’t understand how advanced threats can hurt their enterprise. Risk management is an important part of protecting both a company and its employees and Human Resources departments play a large role in this as they help develop risk management plans and monitor going risks. Here are several ways HR professionals help minimize risk in the workplace.
What Is Risk Management?
Risk management is the task of minimizing potential threats or issues that could arise in a project or workplace. Many Human Resource departments develop risk management plans that are regularly updated to stay up to date with company policies as technology continues to advance.
Areas of Risk Management
Risk management can be identified in nearly every aspect of a company. From the moment a candidate is interviewed for a position to when one exits the company, everything in between must be reviewed for risk management. Here are some areas in the workplace in which risk management can be used.
Compensation and Benefits
Financial abuse, such as embezzlement, can be a threat to compensation and benefits. Some instances of embezzlement could include company credit card embezzling, cash skimming, or computer embezzlement. Ways to mitigate these risks include identifying who has the final authority for signing off on financial transactions. HR could also add protocols that require multiple signatures on financial agreements to add extra witnesses on sensitive material.
Hiring discrimination is widely known and taken very seriously as it’s also illegal. Hiring discrimination is described as not hiring a candidate due to their race, sex, religion, color, national origin, age, or disability. To avoid this, HR can educate the company’s recruiters, hiring managers, and other parties involved in the hiring process.
Occupational Health and Safety
HR plays a big role in keeping the office a safe and clean working environment. Due to guidelines in place by the Occupational Safety and Health Administration (OSHA), companies must meet these standards to maintain operation. HR’s duty is to make sure the workplace is safe for employees as well as to keep the employees up to date on safety training and certifications. They must also ensure that the proper protective equipment and clothing are being used for the job. To further protect their employees and the company, they must continue to maintain these policies and procedures to make sure they aren’t forgotten or overlooked later.
For new employees, orientation and training are important for them to understand how the company operates. Without these in place, new employees may need more supervision as they aren’t familiar with the company’s workflow, which can harm efficiency. HR must develop a performance management system to establish clear expectations of what the company asks of its employees. This allows managers and supervisors to express individual accountability to their coworkers, helping them meet their goals and evaluate their performance.
How employees are expected to conduct themselves with each other is what HR is popularly known for. HR’s role here is to provide the company with an employee handbook outlining how employees should treat each other. HR can introduce these principles to new employees during their orientation and onboarding. The onboarding process explains what the company’s values are and what is to be expected of the new employee. It’s here that HR has the opportunity to outline each procedure as well as policies that are in place. A clear and detailed onboarding phase for a new employee can help them enter their role with little to no hassle and loss to productivity. After the onboarding phase for new employees, annual training is conducted by HR to keep all the employees up to date with safety protocols and other certifications.
Employees leaving companies pose a great risk for the company’s assets and security. Without a standard protocol in place, a former employee can leave holding onto company equipment such as hardware, computers, or other irreplaceable items. Former employees can also leave with the knowledge of passwords and other access codes to sensitive information. Adding protocols to change passwords and other information after an employee leaves helps minimize this risk. Exit interviews are also a great way to help the company improve in the future. Providing an exit interview for an employee lets them explain issues that they found in the company that management may have overlooked.
Risk Management Assessment
Risk assessment is broken down into two areas: analysis and prioritization. The process of risk assessment is exactly what it sounds like, identifying actions or events that could be a risk to an employee, project, or company.
These techniques can be used to identify potential risks:
- Cost Risk Analysis – A review of risks and uncertainties that can influence a company’s expenditures.
- Schedule Analysis – A review that identifies issues or challenges that can arise when planning a project.
- Reliability Analysis – A measurement used to find the reliability of a project using statistics.
- Decision Analysis – An approach to weighing options in important business decisions.
This is used to measure the severity of the risk and how it should be handled within the protocol.
Risk Management Control
Risk control involves risk management planning, risk resolution, and risk monitoring.
Risk Management Planning
There are several things to keep in mind when handling risk management planning, including:
- Risk Avoidance – The elimination of hazards that can disrupt a project or company.
- Risk Transfer – The moving of a potential risk from one party to another.
- Risk Reduction – The process of reducing risk for a project or within a company.
These steps are needed for risk resolution:
- Research – Study and analyze the potential threat to the project or company.
- Accept – Ask if the risk is avoidable or not and anticipate when the risk may take place.
- Reduce – Minimize the potential risk and be proactive with it as to not have it repeat.
- Eliminate – Detect the risk and solve it before it becomes a larger issue to the project or company.
To stay on top of these risks, HR can monitor these risks by tracking and following up with employees to mitigate these risks. Like the workplace, the risk management plan should always be up to date and comply with the present-day standards.
Parties Involved In Risk Management
Risk management can be quite an involved task within an organization. Depending on the size of the company, a committee or team may be formed to properly handle this. The HR department and leadership may develop the risk management plan but it can be carried out and monitored by the risk management team. But, it’s not just this team’s responsibility to carry out this plan.. All employees within a company should follow the management plan laid out by HR and enforced by the risk management team.