HR and risk professionals must work together to mitigate people risks

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Marsh Mercer Benefits’ People Risk 2022 Survey indicates skills obsolescence, particularly in digital transformation and cyber management, is a top people risk.

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06/10/2022 |
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When HR and risk professionals work together, they can mitigate people risks linked to cyber threats, changing legislation, safety and the future of work according to Mercer Marsh Benefits (MMB’s) People Risk 2022 report. The report surveyed 2,594 HR and risk professionals in 25 countries in order to capture attitudes towards the greatest people risks facing organizations and the challenges those organisations face in mitigating these risks.

Grouped under five main pillars, the survey assesses risks across health & safety; governance & financial; accelerated digitisation; talent practices; and environmental & social. What the survey demonstrated is organisations can no longer simply react to unfolding events. Instead, they should build on the lessons learned from the pandemic and put in place a strong foundation that will allow them to thoroughly anticipate and mitigate risks. Critical to this is building on the trust established between the risk function and human resources, so they work together to manage people risks.

Primary statistics from the survey indicate:

Health and safety risks are a serious threat to businesses according to 87 per cent of respondents

The management of compensation, employee benefit and retirement plans is becoming increasingly complex and difficult and 59 per cent of organisations do not have effective governance for insurance and benefits

Skills obsolescence, where businesses struggle to develop, acquire or retain the skills for digital transformation or cyber management, is now a top people risk with one in two C-suite leaders believing accelerated digitisation is important

The changing nature of work is now the fifth biggest people risk with 43% of leaders thinking their employee value proposition needs improving (or do not know how effective it is)

Organisations are under pressure from customers, employees and investors to address inequalities, remove disparities and combat climate change, yet one in five (20 per cent) organisations do not have a plan in place to advance diversity, equity and inclusion.

All regions see cybersecurity and data privacy as their top people risk. Europe and the Pacific both ranked catastrophic personal life events as their second biggest people risk. This is closely followed by Asia and the US, regions that ranked this fourth overall.

“Globally, fewer than one in two businesses report having effective cybersecurity policies, controls and support systems, such as multi-factor authentication, vendor management or encryption of data in place,” said XXX. “Developing, acquiring and retaining the skills for digital transformation and cyber management is critical. Firms must design benefits for people with future-ready skills, perhaps in roles that do not yet exist.”

As organisations face supply chain disruptions, rising inflation, environmental disasters and workforce exhaustion, they must be more resilient than ever. Responding quickly and with agility requires having an integrated and consistent approach to risk management, one that has an eye towards employee protection.

All of this is putting additional pressure on organizations to reset for relevance — to focus not only on profits, but also on people and purpose in order to create truly sustainable business models. Customers and employees alike are increasingly less willing to tolerate ‘greenwashing’, where business leaders fail to deliver on their commitments.

“Employees want to work for socially responsible employers. Firms must therefore define values and targets around ESG issues and use them to assess current benefits, investments and working conditions,” said XXX. “Top priorities include protecting employees, putting environmental policies in place and renewing focus on diversity, equity and inclusion initiatives.”

The MMB survey indicates that one of the most significant barriers to addressing people risk is the difficulty in changing personal behaviour. More than two-fifths (43%) of businesses said that the difficulty of changing the personal behavior of employees is the main barrier to addressing health and safety risks. A similar number of businesses (39%) see changing personal behavior (such as adapting to the future of work) as the biggest barrier to mitigating talent risks. One in three (36%) said personal behavior also hinders tackling social and environmental risks. One in three businesses also see a lack of skilled resource to tackle risk as a main barrier to addressing accelerated digitisation and environmental and social risks.

The survey also indicates the increasing cost of health, risk protection and well-being benefits is a top-10 priority for businesses across the globe, and this challenge will only be exacerbated by the increasing strain that is being placed on people’s mental health — a problem highlighted by Mercer’s Global Talent Trends, which found that 81% of employees report feel at risk of burnout, a jump from 63% in 2019.

Rebecca Tielemans, CEO Marsh Belux concludes: “There is a delicate balance to be struck between preparing for a potential recession and simultaneously managing people risks using a human-centered approach in order to attract and retain talent in a demanding labour market.”

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