People can be a company’s most valuable asset if well-managed, but also represent a significant risk. Defending, equipping and motivating this critical asset requires human resources (HR) and risk management to break down silos and collaborate. To address the inherent risk posed by human capital, a human resources/ employee risk assessment must be considered.
A human resources risk assessment aims to identify the potential risks that employees pose to a company. It involves assessing the risks associated with employee behaviour, and adhering to applicable employment laws regarding hiring and dismissing employees, workplace behaviour and working conditions. Furthermore, your company should conduct a human resources risk assessment to determine whether your practices and procedures align with recommended best practices. Moreover, it would be best if you put in place a plan for preventing and minimising risks in the event they are identified.
Supervised financial institutions (SFIs) are required to perform robust risk assessments. Risk assessments should include human capital risk if these are to be considered thorough and well-designed assessments. Earlier articles by this author have explained how risk assessments should be structured, as they aim to identify any hazards in the workplace, assess the risks and subsequently control them. But this article will only focus on several human resources hazards that companies should consider. These hazards can be grouped into health and safety, talent practice, environment and social, and governance and finance.
Health and Safety
Mental Health - A high level of anxiety, stress, depression and/or addiction can affect well-being, productivity, benefits spending and the employer’s brand.
Dissatisfaction – An employee’s work-life balance issues, change fatigue and ever-changing company priorities tend to cause tiredness, high staff turnover and decreased productivity. Wellington Hepburn, the past president of the Bahamas Society of Human Resources Management (BSHRM), noted this state as “employee dissatisfaction” during his presentation entitled ‘Help! I’m stuck on my job’, at the SHYFT into FOKUS conference held this past weekend.
Talent practices
Talent attraction, retention and engagement - The absence of talent pipelines, employment value propositions and growth opportunities necessary to keep and motivate the workforce could be detrimental to a company’s goals.
Workplace evolution - In innovation and workforce management, flexible working, technology adoption and a growth mindset pose new challenges.
Environment and Social
Labour and employee relations - The grievances of employees, and perceptions that the company is uncaring, all contribute to increased operational costs, poor customer experiences and social responsibility problems.
Diversity, equity and inclusion - Employees, customers and others risk reputational damage without a truly inclusive work environment.
Governance and finance
Due to a lack of controls or expertise, inadequate benefit plan design, financing, vendor selection and management, poor decisions can be made. This results in high costs, liabilities and commitments.
Conclusion
In short, your company may find the above useful to understand the forces and risks. HR and risk management teams can use this information to discuss the implications of not acting now in board meetings and with business leaders.
• NB: About Derek Smith Jr
Derek Smith Jr. has been a governance, risk and compliance professional for more than 20 years. He has held positions at a TerraLex member law firm, a Wolfsburg Group member bank and a ‘big four’ accounting firm. Mr Smith is a certified anti-money laundering specialist (CAMS), and the compliance officer and money laundering reporting officer (MLRO) for CG Atlantic’s family of companies (member of Coralisle Group) for The Bahamas and Turks & Caicos.
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