Businesses are failing to identify ‘blind spot’ people risks new findings show
Companies risk increased costs placing undue pressure on productivity and profitability
London, 28 September 2022 – In analysis of its global study of 2,594 HR and Risk professionals, the Mercer Marsh Benefits (MMB) 2022 People Risk Survey indicates that UK companies risk increased costs, leading to pressure on productivity and profitability, if they neglect to address ‘blind spot’ people risks.
'People Risk' can be categorised as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events in the context of operational risk. MMB’s data identifies Cybersecurity and data privacy; Administration and fiduciary; and Pandemics and other communicable health conditions as the top three people risks identified by HR and Risk professionals. However, further analysis of MMB’s data shows that many companies are overlooking significant people risk ‘blind spots’.
“The cost-of-living crisis is dominating the political agenda and has rapidly become a pressing problem for employers. It presents a whole new set of people risks to organisations, including those still grappling with the impacts of COVID-19,” said Nick McMenemy, Partner and MMB Consulting Leader UK&I.
“While people risk is becoming a more important agenda item for leaders, its importance is diminished in our survey findings. In our analysis, people risk is still not high enough on the board agenda; there is a lack of alignment on what the most important people risk issues are; and businesses fail to identify ‘blind spots’ issues that can prove to be detrimental in the long term.”
As an example, MMB’s data identifies the people risk associated with cybersecurity and data privacy as the number one threat for many organisations. However, due to a lack of strategic planning, there is often little that HR can do to mitigate the risks and influence how to address cyber risks.
“This is because cybersecurity and data privacy are often seen as the remit of the Chief Information Officer or IT Manager, not HR,” said Mr McMenemy. “This is despite the fact that every hack or data breach involves a human element — and therefore needs some type of HR response.”
MMB’s analysis identifies five areas of people risk that have a low priority among HR and Risk professionals, despite posing a significant threat.
“More than half of employers believe we are entering a more unstable period of employee relations — driven by falling wages, a cost-of-living crisis and a tight labour market,” said Mr McMenemy. “The great resignation is also affecting leaders as well as general staff and the impact on the business is greater when a key person leaves than when an entry-level employee resigns. An added threat comes from an expected rise in merger and acquisitions, which can affect business continuity.
“Our research shows the eight in 10 employees have experienced burnout. High stress levels can lead to increased staff absences due to sickness, lower productivity and worsening mental health. In turn, this adds to the workload of other employees.
“Most organisations are spending more to address these and other challenges, but they cannot keep throwing money at the problem — particularly as economic issues place budgets under scrutiny. Organisations should be looking at multi-year, multi-pronged cost containment strategies instead.”
One of the most glaring vulnerabilities the report found was that fewer than three in 10 (28%) companies can confidently say they have a competitive employee value proposition, including reward practices, in place. This omission can only become more significant going forward, given the current pressures on pay.
As the cost-of-living crisis becomes more of a threat and the war for talent continues, MMB’s People Risk Report suggests organisations should adopt a more comprehensive approach to people risks. This involves recognising the interconnectivity of people risks and more work across teams to tackle problems more effectively.
“These risks are interconnected,” added Mr McMenemy. “Making it vital for all elements of the business to work together, from HR and Risk Management teams, to use data to create plans and policies to guard against the next big risk event, which may be just over the horizon.”