The Importance of HR Risk Management

HR risk management focuses on analyzing the risks that employees of an organization pose to the business. HR risk management addresses risks related to inadequate employee management, employees’ behavior, or risks related to the certain ways that human resources use to hire and sack employees.

The primary focus of the HR risk management is to closely follow the work of all employees, from part-time interns to upper-level managers, in order to identify, evaluate, mitigate, and prevent risks in a timely manner. Risks coming from employees are the most difficult to manage, and many organizations struggle to plan or prepare for them. Therefore, HR risk management should be taken into consideration in all cases. 

The Relation between Human Resources Management and Risk Management

In order for people to understand the relationship between HR management and risk management, they must first understand the role of HR. An effective Human Resources Department helps employees to accomplish career goals.

That being said, HR is responsible for staffing, employee motivation, employee training, and several other activities conducted with the intention to accomplish the vision and mission of the organization. An HR Department that fails to successfully fulfill the responsibilities mentioned, makes the organization more vulnerable toward risks. In addition, the organization will not be able to take full advantage of its employees and their contribution. 

To successfully integrate HR risk management and HR management, the HR manager must possess and demonstrate capabilities regarding leadership, communication, evaluation, training, and so on. A close relationship of HR with risk management will result in a better and more effective risk management. 

HR Risk Management Plan

HR risk management should be an integral part of all businesses, regardless of their size or industry. Nowadays, HR professionals need to have a risk management plan in order to help their organizations in monitoring and preventing potential risks.

In case a possible risk arises within the organization, a well-prepared risk plan helps the organization mitigate the risk and minimize its impact. Hence, a proper HR risk management plan enables HR managers to deal with the employees involved in the organization’s risks, manage the employees within the organization, and also make adequate hiring decisions. 

Even though each organization has its own rules, procedures, and policies which they follow when creating a proper HR risk management plan, it is important to pay attention to the following: 

• Compliance and regulations: Each HR Department should be aware of different laws and regulations that their organization and employees should comply with, as organizations may cause noncompliance without being aware, and possibly face lawsuits too. As such, it is essential for the HR department to be aware of all local laws and regulations and ensure that all employees comply. 
• Evaluate the onboarding process: When welcoming new employees, HR should allocate some time to obtain feedback from new employees regarding their experience on the onboarding process as well. If new employees experience a confusing onboarding process then it might be difficult for them to understand the important tasks that they could be involved in. In addition, managers should share their opinion in a way that makes the new employees feel welcomed within the organization. 
• Leadership: In some cases, employees leave their workplace because of their managers. Therefore, it is the duty of the HR representatives to ensure that managers are doing a good job in leading and guiding their employees, as this would prevent several problems. 
• Build a clear company culture: HR should identify the main characteristics and behaviors that contribute to an unfriendly work environment and communicate them to all employees, to make them aware of the behaviors that may overwhelm the work environment. 
• Develop a proper recruitment plan: In order to hire proper employees, HR should take the time to plan for it. Hiring new employees in a rush may present potential problems in the future. 

Applying Risk Management Techniques to HR

When dealing with risks in an organization, there are several points to follow.

The table below shows some of the main HR activities, the potential risks that these activities may carry, and what considerations should be taken into account. 

HR risk management greatly contributes in keeping the organization and its employees happy and on track with the business objectives. Therefore, it is important to focus on managing risks regarding compliance, hiring process, and employee growth, to organizational success. 

The following paper elaborates more on the importance of human resource risk management within an organization. 

PECB’s ISO 31000 Risk Management training course and certification provides you with the necessary competencies to understand, establish, and maintain effective risk methodologies which help organizations identify, mitigate, and prevent possible risks. 

The ISO 31000 Introduction, Foundation, Risk Manager, Lead Risk Manager, and Transition training schemes are also included in the PECB brochures. Hence, the candidates can learn more as to what these trainings include, and how they can get equipped with an ISO 3100 Risk Management certification. 

Additionally, the following article explains more regarding “Why ISO 31000 is Important to Organizations Nowadays?”. 

For more information regarding the PECB ISO 31000 training course and certifications, contact us at marketing@pecb.com.