News & Resources

Risk management: An HR concern?

Oct 17, 2011 Walt Wojoiechowski

The unifying theme since the 2008 financial collapse has been risk management, namely how the lack of such a process permitted such unchecked high-volume investments to inflate an industry and then burst, taking the economy down with it. While certain risk management practices revolve around policy, technology and other automated procedures, some companies are beginning to channel risk management through their personnel, making for an interesting human resources challenge. Peter Cappelli defines human resource risk as "the chance that bad outcomes will occur in some aspect of HR." When an HR procedure or operation threatens an organization's overall goals it becomes a system risk to the business. "Employee turnover, an example of one type of HR risk, becomes a business risk when it could threaten the viability of the business," Cappelli points out for Human Resource Executive Online. "Business risk matters because it has the attention of everyone at the top of the organization." Class-action litigation, the loss of key employees or critical knowledge, gaps in talent or skills management and individual employee behaviors are all examples of potential HR risks.