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People and Risk

Written by: Lisette Howlett

Article Overview: A risky business … Business is risky; the less static the more risk, thus the more successful the business the more risk in must embrace and benefit from. In this article, Lisette Howlett shares her thoughts and experiences in the area of risk and people. Without people you have less risk; but you also have no business. Risk is unavoidable but not insurmountable. Indeed taking your people risk seriously will improve your business; the successful management of risk has a positive impact on business success.

People and Risk

A risky business …
Business is risky; the less static the more risk, thus the more successful the business the more risk in must embrace and benefit from. In this article, Lisette Howlett shares her thoughts and experiences in the area of risk and people. Without people you have less risk; but you also have no business. Risk is unavoidable but not insurmountable. Indeed taking your people risk seriously will improve your business; the successful management of risk has a positive impact on business success.

Proactively identifying your organisations' people risks give you the opportunity to make improvements that prevent problems arising. There is an additional benefit in that it also signals to employees that you mean it when you say that ‘your people are your greatest asset’ and this in itself addresses many of the potential areas of risk.

What are the top business threats?
When the Corporate Executive Programme asked its members to identify the risks that pose the biggest threat the top two were:
1. Bird Flu pandemic
2. Global Terrorism

These are both well publicised current concerns but warrant a further look. They also draw attention to key areas of ‘normal’ business where, managing people risks, offers business opportunities. By extrapolating into this area, considerable benefit can be realised. Let’s consider each in turn and identify some of the people risk implications and potential solutions:

The most obvious people risk for Bird Flu is around absenteeism – either due to a pandemic itself, or the fear of exposure to a potential pandemic.
o What contingency plans do you have for dealing with sudden and very high levels of absenteeism?
o What about your plans for a state imposed quarantine?
o Do you have policies in place for dealing with people who refuse to come to work in case they get infected?

Applying the learning to current management practices:
o How effective are you managers at managing absenteeism?
o Do you measure the cost of absence today and its impact on profits, business reputation, customer satisfaction, etc?

These and many other questions need to be addressed. The effectiveness with which you address them will impact both on the costs and also the benefits.

Managing these and all other people related risks gives you the opportunity for competitive advantage.

Looking at Terrorism and related crises including loss of key employees.
o How strong are your business contingency processes?
o Do you have a mechanism to contact all your employees at short notice?

You may benefit from taking a systematic look at your processes and putting in place best practice solutions. Your approach needs also to address some of the broader implications such as dealing with international mobility (which is strongly impacted by the fear of terrorist attacks).
Applying these risks to ‘everyday business’ raises the question about your ability to retain key employees (and if necessary replace them). Employee motivation is key to retention. Studies all show that pay is not the prime reason for losing employees. Success is assured by the adoption of an holistic approach to employee retention – understanding and addressing underlying causes in a way that improves your employee productivity as well as retention. It is also good practice to develop contingency plans for dealing with the loss of critical staff. Once again, the costs of good management practice and prevention are significantly lower than the cost of dealing with the problem itself.

Tackling People Risk
As with any business project a planned, step-wise approach will give you the best results. First establish the business drivers and imperatives – is this to address a specific issue or concern? Or do you want to seek to overhaul your approach in order to gain competitive advantage? Ensure that you balance your efforts between benefit realization and compliance – both are essential for sustained improvement.

Related Articles
  MANAGING RISK
  Risk Assessment & Analysis Techniques
  If you are going to buy a business, you need to accept business risk.
  Peter Bernstein on Amaranth: Better to be Wrong Than Too Right
  RISKY BUSINESS

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