Today's subject matter expert
The COVID-19 crisis underscored the importance of human capital, including an organization’s effectiveness in mitigating human capital risk.
From poor pandemic preparedness to the need to focus on issues arising from the work environment and climate change, we recently asked organizations in Asia to rank a list of 25 people risks according to their likelihood and severity impact.
HR and risk managers in Asia unanimously agree that cybersecurity and data privacy, pandemics and other communicable diseases, and administration and fiduciary risks are the top three people-related risks. But prioritizing these immediate threats may have come at the expense of support for employees. These potential blind spots, if left unchecked, could significantly affect any company’s ability to attract and retain the right people they need.
1. Employee Health and Well-being: Suboptimal employee well-being affects business resilience, and so it is surprising to find this threat only ranked #18 on the list, along with similar risks such as mental health (#20), workforce exhaustion (#23), and work-related illness or injury (#25).
The changing nature of work, for one, contributes to stress, anxiety, and work-related illness and injury. In turn, these lead to absenteeism, reduced productivity, high employee turnover, increased benefits spend, legal liability, and even reputational damage. Companies can look at making some adjustments to their work operating models to better fit work around the lives of their employees. Looking at employee well-being holistically strengthens the overall business resilience.
2. Skills obsolescence: This risk, ranked #12 in Asia, is about gaps in workforce skillsets due to rapid digitization, automation and lack of upskilling and re-skilling. Our report revealed that HR and risk managers also diverge in their perception on this risk – risk managers have given this a higher rating (#6) compared to HR managers (#17).
If not addressed well (when employees are no longer able to keep up with accelerated digitization), organizations may face unmet business goals and challenges in attracting talent. Improving analytics capabilities will greatly help companies transform the workplace and identify critical skillsets for future resiliency.
3. Conduct and culture: Ranked #19 by HR and risk managers in Asia, threats to organizational culture if ignored, can affect an employer’s branding and reputation. Organizations that have a low tolerance of misconduct, could end up encouraging behaviors that are misaligned to corporate values. This is detrimental in the long run.
It is worrying that less than half of the organizations in Asia currently have mitigation measures for this risk and only half of them have plans to invest in this area in the next 1 to 2 years. Breaking the silos within organizations and re-aligning senior leadership vision with priorities to build an inclusive work environment are good initial steps.
These blind spots show that there is more work to be done on mitigating people-related risks. Companies should start thinking about reviewing people risk priorities backed up with data and analytics, and aligning HR and risk managers’ views on key organizational threats. Taking a holistic approach and exploring innovative ways of putting risk resources together, and espousing a transformation towards a more open risk culture will positively impact the business.
If you have any questions, get in touch with us today!