How to Manage People Risk

Stealing office supplies is a common form of people risk that management tends to overlook.

Stealing pens and notepads. Sustaining injuries on the job. Not showing up for work often. And aging---that's right, growing older. These are just a few examples of people risk---one of the hardest risk types to quantify and manage at any organization. It's an area of human resources (HR) executive management often neglects. Bill Leisy of Ernst & Young says this lapse can raise all sorts of financial and reputation-related issues for an organization in the long run. If a company's senior executives, HR managers and finance managers get together and proactively address people risk, they "can drive sustainable, positive business results," Leisy said in an Ernst & Young release. "But if not managed properly," he added, "these issues may cause significant damage." Curbing people risk involves foresight and planning to make sure its impacts are minimal.

Things You'll Need

• Time
• Reports citing instances of people risk at your organization
• Funding from top management
• Contingency plans

Instructions

Managing People Risk

1. Set aside time to review all instances of people risk at your organization filed during the past year. Request these reports from HR, which oversees all employee issues and should have a record of reported instances. These reports should provide a fairly statistical overview of the types of people risk that are most common at the organization. Remember: Not all instances of people risk, such as white-collar theft, are reported. Talk to administrative assistants in each division. They generally keep tabs on supplies, from software to notepads to pens. Ask them if they've noticed supplies running out often. Take notes on what they say. Ask if other incidents of theft have also occurred.

2. Prepare a report of your findings. Include the statistics gathered from the HR reports as well as the information gleaned from your interviews with the administrative assistants. Be sure to factor in an estimate for the amount of people risk that may go unreported based on the information gathered during your interviews.

3. Determine how much funding you will need and what concessions management must make to address each area of people risk---from theft to injuries to absenteeism to aging. Include that in your report. Make sure to also include a contingency plan, or a strategy that can help management identify, modify or prevent the effects of people risk, which will minimize spending in an effort to curb people risk in the future.

4. Offer strategies that tackle each area of people risk prevalent at your organization and that reduce or eliminate the odds of it occurring or reoccurring. Include these strategies in your report. If an aging workforce is a risk your organization is facing, offer suggestions on what can be done to make sure the employee pool isn't drained after a number of employees retire. The suggestion may be hiring younger workers.

5. Present your report and findings to senior management.

6. Request that management and HR work closer together during the employee recruitment process to make sure hired candidates have the right skills, competencies, attitude and background for the job to curb or minimize the potential for people risk.

7. Speak with division managers about the incidents of people risk experienced at the organization. Share the findings of your report along with any recommendations from senior management on implementing strategies that reduce or eliminate instances of theft and work-related injuries, for example.

8. Have the division managers implement the strategies to begin managing people risk in each division.

References

• NineMSN: "Human Factors: How to Manage People Risk in Your Business"
• Purdue University Department of Agricultural Economics: "Planning for the Unexpected: Human Resource Risk and Contingency Planning"
• Ernst & Young: "Research shows managing 'people issues' extends beyond Human Resources Identifying HR risk areas can help drive business improvement"