What is risk management in HR? - HR Future helps people prepare for the Future of Work and is South Africa's leading print, digital and online Human Resources magazine.

What is risk management in HR?

The only sure way to avoid risk in nonprofits would be to lock the doors and put up a closed sign in the window.

Risks are inevitable and organisations have a moral and legal obligation to attend to the safety and well-being of those they serve, those who work for them and others who come into contact with their operations. This is known as "Duty of Care."

Organisations need to look at all the risks throughout their entire operation and incorporate risk management into all planning and decision-making. However, the specific focus of this section is risk management as it applies to HR activities.

Applying risk management to HR

HR Activity

Potential Risk

Potential considerations

Compensation and benefits

Financial Abuse

Who has signing authority?

How many signatures are required?

Are there checks and balances?

Hiring

Discriminatory practices

Was a complete screening completed on potential applicants?

Hiring unsuitable or unsafe candidates

Were provincial human rights laws observed?

"Wrongful" hiring

Is there a set probationary period?



Were promises made to the candidate that cannot be honored?



Did the employee sign off on the policies and contract of employment before being hired?

Occupational Health and Safety

Environmental

Do we provide safe working conditions and do we conduct safety checks regularly?

Personal injury or death

Do we provide adequate training for staff?



Do we ensure the use of appropriate clothing and safety equipment?



Do we have adequate policies, procedures, and committee in place?

Employee supervision

Abuse

Do we provide sufficient orientation and training?

Reputation in the community

Do we provide adequate supervision (especially for activities that occur off-site or after hours)?

Release of personal information

Do we have a performance management system in place?



Are personal information protection guidelines followed?

Employee conduct

Abuse

Do we have clearly written position descriptions for all positions?

Reputation in the community

Do we follow up when the parameters of the job description are not respected?



Do we provide thorough orientation and training?



Do we provide an employee handbook?



Do we have comprehensive policies and procedures?



Do we provide ongoing training about our policies and procedures?



Do we retain written records of performance issues?



Do we ensure that organisational valuables are secure?



Do we have cash management procedures?



Do we have adequate harassment policies and procedures?

Exiting employee

Property Do we retrieve organisational information and equipment that a dismissed employee used (especially from home)?

Reputation in the community

Do we ensure that all access codes, passwords, etc are de-activated?

Compensation

Do we conduct an exit interview?



Do we record lieu time and vacation balances?

When developing a risk management plan for your HR activities, there are a number of areas to focus on. This general list will get you started but it is very important that all organisations identify and evaluate the risks unique to their own organisation.

The risk management process

Risk management is a cycle. That means that it is not something that gets checked off a "to do" list but it is a continuous activity. Having a risk management process means that your organisation knows and understands the risks to which you are exposed. It also means that your organisation has deliberately evaluated the risks and has strategies in place to remove the risk altogether, reduce the likelihood of the risk happening or minimize harm in the event that something happens.

At a very basic level, risk management focuses you on two fundamental questions:

What can go wrong?

What will we do to prevent the harm from occurring in the first place and in response to the harm or loss if it actually happens?

Identify the risks

The very first step is to identify the risks. Ask yourself what can go wrong. Every activity of an organisation poses a risk so brainstorm and document the risks.

Consider both the general risks (that could happen to any organisation) and the risks specific to your organisation.

Risks can be:
- Abuse that is either one-time or ongoing (physical, emotional, psychosocial, sexual, financial)
- Personal injury
- Medical
- Environmental
- Property
- Financial
- Reputation/goodwill
- Other

Assess the risks

If you have done a thorough job of identifying risks, you may end up with a long (and overwhelming) list.

The next step is to assess each of the risks based on the (1) likelihood or frequency of the risk occurring and (2) the severity of the consequences.
Using a risk map to plot the likelihood of occurrence and the severity of the consequences will help you prioritize your next steps.

Develop strategies for managing risks

Consider the most appropriate risk management strategies for each identified risk:

Avoidance - Stop providing the service or doing the activity because it is too risky.

Acceptance - Some risky activities are central to the mission of an organisation and an organisation will choose to accept the risks.

Modification - Change the activity to reduce the likelihood of the risk occurring or reduce the severity of the consequences. Policies and procedures are an important part of this risk management strategy because they communicate expectations and define boundaries. Learn more about writing policies and procedures.

Transfer or sharing - Purchase insurance or transfer the risk to another organisation through signing a contractual agreement with other organisations to share the risk (for example, having a contractual agreement with a bus company to transport clients rather than staff driving clients).

Implement

When you have decided which risk management strategies will be the most effective and affordable for your organisation, practically outline the steps and who is responsible for each step in the risk management plan.

Communicate the plan and ensure that there is buy-in from all who are involved in the organisation (staff, volunteers, clients, other relevant stakeholders).

Provide training for all organisational staff and volunteers so they understand the rationale of the risk management plan as well as the expectations, procedures, forms, etc.

Monitor

Consider the following questions and document any changes to the plan:

Is your plan working?
Have your risks changed?
Have you expanded or reduced your programs and services?
Are changes or updates required?
Are staff and volunteers following the risk management plan?
Do they need re-training on the details?
Do we need to better communicate the plan?

Who is involved in the risk management process?

Risk management is a large and important undertaking. There must be commitment from the board to commit the financial and human resources. In larger organisations, a risk management committee, team or department may be formed to handle the risk management process. In smaller and medium sized organisation, the responsibility for developing and implementing a risk management process will likely fall on the executive director. However, paid staff, volunteers - and potentially clients and other stakeholders - will be very helpful partners in identifying risks and developing effective strategies to deal with the risks. Once the risk management process is in place, everyone in the organisation has a role to play from identifying risks to following policies and procedures to completing forms and reports.

This article appeared on hrcouncil.ca.

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