The concept of risk management is generally focused on the protection of assets and the profits of corporations, but what is overlooked is the fact that most risks are ultimately of people failings, whether at a strategic, managerial or operational level. As is commonly known, people are often cited as the greatest asset of a corporation. But just as risk presents opportunities or threats, so are people, who can also be the greatest potential liability.
Human behavior is inherently complex, unpredictable and inconsistent. Even the best people make errors, but there are inevitable slips and lapses that can cause disruptions in the workplace.
People are essentially honest and they do not come to work to defraud or steal. But there are many aspects of their personal environment that will affect their reliability. Times of personal change such as bereavement, marital breakup, health problems and threats to income may lead to criminal behavior.
Then there are problems in the workplace that can be categorized as risky behavior such as sexual harassment, and releasing proprietary information.
At any rate, because personal circumstances change from day to day, assessing exposure is no easy task. People risk is often caused by poor management and organization within the workplace, as well as the culture of the firm.
The human resources department is often considered as a cost center in the past but in the present post-pandemic times, their role is now to support the firm’s long-term goals and concerns itself with the longer-term people issues, matching resources to future needs and looking at structure, quality, culture, values and commitment training and development for both new and existing members of the staff including job rotation. At a higher level, leadership should be developed within the firm and this can be done by arranging senior executives to undergo training involving people skills such as coaching, communication, conflict management, counseling, motivation, performance evaluation and time management.
In conclusion, good people risk management calls for choosing the right people and making sure that they know their role and the importance of their job, giving them opportunities to develop and learn, paying them according to clear and transparent performance criteria. In addition, giving them regular feedback and dialogue with their superiors and making sure there is effective internal communication. The foregoing steps will ensure that people risks are being successfully managed and mitigated.
The author is a risk management consultant and Editor of Insurance Philippines magazine.
Image credits: Teerasan Phutthigorn | Dreamstime.com