Over recent months we’ve all become far too familiar with how workforce health and wellbeing along with other people risks impact business resiliency. Research from the BSI found that people risk is the number one cause of disruption for businesses, but it was ranked only fifteenth by risk managers.
Many people risk impacts have become immediately clear during COVID-19, ranging from lower output due to business process disruptions and difficulty securing needed workers.
Others like being seen as disorganized or indifferent to employees’ and customers’ needs, safety violations and privacy violations are longstanding.
Effective enterprise risk management can help preserve hard-earned reputations, sustain productivity, and maintain market share.
When COVID-19 started to spread widely, companies searched for solutions to mitigate threats to their people and operations. Those with risk management plans that addressed pandemic directly or adapted to it generally responded quickly; others have had a more difficult time.
By and large, efforts to better protect employees have fallen to HR departments who in many cases have served as amazing heroes.
In part, this is a natural consequence of the role that human resources plays in employee hiring, firing, and management, but it is also a by-product of the intense focus in the risk world on property and casualty threats.
And while human resources managers have made great strides in building employee engagement programs and introducing benefits, what is rapidly becoming apparent in the pandemic environment is that workforce well-being must become a higher priority on the risk management agenda.
Organizations that do not manage people risks face severe consequences. The World Health Organization (WHO) estimates that between 4% and 6% of global GDP is lost annually due to work-related health problems. The average staff turnover for a company with no benefit plans is 157%. And companies that cannot retain key employees underperform competitors by as much as 11%.
Businesses that fail to tackle people risk may face:
To address people risk, businesses need to break down silos and encourage risk managers to work with HR, and bring the discussion into the C-suite. Companies should place people risk firmly on the management agenda, view it holistically, acknowledge its linkage to other risks, and manage it accordingly.
Businesses that understand people risks and manage benefits plans judiciously can better achieve their business objectives, and minimize unplanned costs and brand damage.
COVID-19 has made it clear that there’s nothing more critical to the health of a business than the health of its people. Managers should ensure this stays at the top of the agenda in the years that come.