Business is a game of risk and reward. Big companies can afford to take more chances than their smaller competitors, and certain industries are simply riskier than others. Global markets can be dangerous, but international growth may be worth the trepidation. What one risk manager considers “business as usual” can keep another up at night. There are, of course, some concerns that are universal. Here they are…
The Aon Center for Innovation and Analytics, part of the Aon Risk Solutions company, conducted a global study to identify the top 10 global risk management factors as perceived by public and private businesses worldwide.
Businesses of all sizes, regardless of location, ranked the global economic slowdown as their top concern for 2013 and beyond. Political uncertainty made the top 10 for the first time and is projected to move up the list due to ongoing regional upheaval and provocative rhetoric.
Natural disasters, number 16 on the 2013 global list, are expected to catapult to the number nine spot in the next study to come. Unusual weather patterns and drastic changes in the world’s climate are viewed as a growing threat. Businesses in the Asia-Pacific region are already putting this risk factor in their top 10, reflecting their experience with widespread flooding and the Japanese earthquake and tsunami.
Human Capital Risk
Attracting and retaining top talent is another major concern for businesses around the world. After all, even with advanced automation technologies and robotics, it is people who generate profit.
Industries that are facing the impact of an aging workforce, coupled with unprecedented growth, are in an especially vulnerable position. Healthcare and technology are two examples of business sectors where demand for experienced talent is quickly outstripping the available supply.
Obtaining the best talent at all levels of the organization gives a company a competitive edge. Risk managers know that succession planning is vital to business continuity during changing times. Already having the right people in place makes for a much smoother transition when the time comes for a high-profile leader to retire or otherwise be removed from a key role.
A commitment to optimizing talent helps organizations add a layer of protection to the dangers of human capital risk. The optimization of an employee population has many considerations, some of which include:
Safety & Compliance
The importance of these factors varies based on the type of business, but all risk managers can agree that keeping employees safe and in compliance with guidelines and policies is an essential strategy. Customers must also be kept from harm that could result in litigation against the company, especially in the healthcare industry where patient safety is part of every employee’s job description. Companies in the chemical, manufacturing, and oil and gas industries are also at greater risk due to the potential for industrial accidents and inadvertent environmental impacts.
Health & Wellness
Investing in employee health can also help mitigate some of the productivity risks facing organizations. While good health cannot be mandated, it can be encouraged through employer-sponsored initiatives that incentivize smoking cessation, weight loss, and the like. America’s aging workforce is especially susceptible to chronic and debilitating conditions that come from a lifetime of bad habits. Getting employees involved in wellness programs has proven to deliver impressive ROI in terms of lower insurance costs and decreased absenteeism.
Engagement & Retention
Caring about employee health is a well-documented retention tool. Performance-based compensation, educational opportunities, and work-life balance programs also pay off in creating a satisfied workforce. But truly engaged employees are more than simply satisfied. They are aligned with the company’s mission, vision, and values; driven by business goals and performance objectives; and knowledgeable about how their work contributes to the bottom line. Fully engaged employees are at less risk for absenteeism, termination, privacy breaches, and other actions with negative impact.
There are many perils facing risk managers today. Some are controllable, like human capital risk, whereas others can only be classified as acts of God. Top-performing risk managers are quickly discovering how to prepare for changing times, by educating themselves on emerging threats and addressing others that have gone unnoticed until now.
About the Author: Laura Mingo writes in the field of higher education. This article aims to offer advice for university students in relation to business management and promotes the benefits of advanced study regarding a BU Masters in Risk Management