The Importance of Risk Management

The Importance of Risk Management 2560 1707 Balance Point Team

For organizations who weren’t focused on risk management, issues arising from the pandemic were an eye opener. Employers were forced to reduce headcount, accommodate remote work, adopt new technology, interpret new laws, and protect the health and safety of their workforce. 

With little time to prepare, these new responsibilities resulted in new risk scenarios no one could have anticipated. Here are just a few examples:

  • A Richmond-based foodservice company was accused of discriminating against African-American employees for COVID-related terminations and furloughs. 
  • A class action suit was filed against a California-based supermarket after employees claimed they were cheated out of pay for having to wait for mandatory COVID screenings before clocking in.
  • A Vegas-based magazine publisher had to address harassment claims after its executive director exposed himself to remote employees on a business Zoom call.
  • A nursing home in New Jersey was heavily fined for failing to provide protective equipment to employees after a nurse died of COVID days before she was to retire. 
  • A Russian hacking group calling itself Evil Corp is capitalizing on the naivety and number of newly remote workers by targeting their Wi-Fi networks.

Risky Business

Health crisis or not, risk is inevitable and permeates all areas of business. When it comes to human resources, there are risks associated with all facets of the employee life cycle, from hiring to separation. 

Hiring

From the job descriptions to offer letters, there is a lot that can get you in trouble. Problems can arise from things like discrimination in the recruitment process or making a bad hire as a result of failing to accurately screen applicants.

Compensation

Employers can find themselves in hot water for violating pay equity laws, misclassifying employees as exempt from overtime, misinterpreting leave laws, or utilizing payroll or timekeeping solutions that are prone to errors.

Benefits

How you administer your benefits program can open you up to risks related to who has access to confidential information and how you inform employees about their eligibility.

Engagement

If you are not actively nurturing your workforce, disengagement can lead to low productivity and high turnover.

Training and Development

Organizations run into issues when they fail to conduct mandatory training, properly train managers, or implement programs without analyzing the needs of the organization.

Separation

There is a lot to consider when an employee leaves from wrongful termination, retrieving company assets, preparing the final paycheck and paperwork, and administering COBRA. 

Take the Army’s Lead

Risk management should be an important part of any business plan regardless of industry or size. The goal is to identify areas of risk and develop strategies to mitigate it. 

“This We’ll Defend!” The official motto of the U.S. Army is a reminder that risk lurks everywhere. The Army’s no-nonsense approach to risk management is one that you should mimic for your organization:

  • Identify the Hazard – Answer the question “what can go wrong?”
  • Assess the Hazard – Determine the likelihood and severity of the risks
  • Develop Controls and Make Risk Decisions – Consider the most appropriate resolution strategy for each identified risk
  • Implement Controls – Assign responsibilities, and communicate and train those involved
  • Supervise and Evaluate – Monitor the risks and the effectiveness of your plan; make revisions as necessary

Knowledge is Power

The best way to mitigate risk within your organization is to get ahead of it. Be prepared by educating yourself on the latest laws and keeping up on the trends and threats that may affect your business. Our Risk Mitigation Hub can help. It’s an online destination for resources and insight to help you manage risk and protect your business. 

Explore the hub

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