In this blog we talk about key strategies for mitigating people risk and present a table to demonstrate context. Operational Risk Software can be key to supporting this discipline.
Taken from: Mastering Risk Management
Creating the right risk culture will do much to reduce people risks. After that, the fundamental way of mitigating those risks is by effective controls. Controls protect the firm from risk, but also help to protect people from themselves, especially when times are difficult.
But there are other elements of people risk mitigation beyond internal process controls. Here we detail some typical people risk events, their probable causes and the methods by which those risks can be reduced.
Risk event | Cause | Mitigant |
Employee criminal activity; fraud; unauthorised activity | Lack of integrity, dishonesty | Healthy culture Employee selection Physical & technical security Security training |
Errors | Lack of competence Lack of training Poor process culture | Selection Training/development Healthy Culture Appraisals/assessment |
Employment law failures (hiring, firing, discrimination, health and safety etc) | Lack of training Lack of legal awareness and knowledge Poor people culture | Training/development HR policy and process Healthy culture Appraisals/assessment |
Poor (high-risk) business/transaction decisions | Inappropriate incentives Incompetent staff Autocratic top management/lack of challenge Poor risk culture | Remuneration policy Selection Training/development Healthy culture Governance Environment Risk policy and appetite |
Labour relations failures | Poor people culture Inexperienced managers | Healthy culture Training/development Selection Appraisals/assessment |
Loss (or lack) of personnel, talent | Poor people culture Inadequate remuneration Failure to recruit | Healthy culture Training/development Appraisals/assessment Retention Remuneration policy Selection |
Loss of intellectual property | Poor people culture | Retention Employment contract |
In our next blog we discuss Key People Indicators.
Mastering Risk Management by Tony Blunden and John Thirlwell is published by FT International. Order your copy here: https://www.pearson.com/en-gb/subject-catalog/p/mastering-risk-management/P200000003761/9781292331317
For more information about how Operational Risk software can help your organisation, contact us today on sales@risklogix-solutions.com
