The past few years’ events have shown a marked shift in the role that society requires businesses to play. Firms that don’t support diversity, equity and inclusion or that neglect to tackle climate change face reputational risk, legislative challenges and even falling share prices.
Given this backdrop, it’s hardly surprising that environmental and social threats are top of mind for boards. Many organizations are considering what they stand for and how to communicate these commitments. Simultaneously, risk managers are under increasing pressure to map, analyze and mitigate core people-related challenges.
Human Resources (HR) departments have a significant role to play. Business responsibility starts at home, and firms must ensure their employment practices reflect their external statements on issues. Those failing to do so risk a backlash from stakeholders — including investors, consumers, the media and, of course, employees.
At Mercer Marsh Benefits (MMB), we have created a framework that breaks environmental and social risks into five core areas. These are the challenges that HR, risk teams and boards must embrace if they want to maintain their business’s health and reputation.
The most significant risk for firms that do not tackle environmental and social risks is reputational. Organizations cannot attract talent or customers if they are not making strides to support a diverse workforce or if their benefit plan is missing essential coverage.
Across the world, companies use benefits to build a competitive employee value proposition, meet commitments to unions and deliver tax-effective compensation. But ultimately, benefits can help mitigate risk for employers and their workforce. Using the people risk framework, business leaders can examine policies, benefits and insurances through the lens of each of these five key threats to ensure they ultimately support business success.