All organizations, regardless of their company size or industry, should have invested in HR risk management. A proper HR risk management plan enables HR teams and employees to be well-prepared when a risk arises within the organization. It helps to identify, evaluate, mitigate, and prevent potential risks in a timely manner. A comprehensive risk management plan should involve every employee in the organization in order to help HR teams to measure and stop the potential risks.

Five Steps of HR Risk Management

HR teams are advised to follow a five-steps process to address the risks and in order to implement a comprehensive strategy for preventing, monitoring, and mitigating risks. Let’s get started.

1.  Identify Risks

Identifying risks is the very first step and the most crucial part in HR risk management. It is to help the HR teams to understand and plan in order to reduce the potential risks. The better you identify the risks, the better solution you can figure out on how to handle them.  HR teams have to consider both general and specific risks such as personal injury, abuse, environmental, reputational etc. 

2.  Assess and Prioritize Risks

Once the risks are identified, HR teams can move on to the second step which is assessing and prioritizing risks. This is the step that HR teams may categorize the risks based on the possibility or frequency of occurrence or by the severity of consequences in order to develop a suitable risk map to prioritize the next steps. 

3.  Develop Risk Response Action Plan

During this step, HR teams have to decide what response to choose when facing risk. The responses include avoidance, acceptance, modification and transfer or share the risk. 

Avoidance is an appropriate response by stopping the activity that’s causing the potential risks, while acceptance is suitable when you have acknowledged the likelihood of the risk and would like to continue the operation. The modification response will involve modifying the activity and implementing procedures to reduce the possibility of severe consequences. Transferring or sharing the risk is another response that obtain insurance or to transfer the risk to an outsourcing vendor.

4.  Implement Strategies

After developing the necessary risk response, HR teams should implement a risk management strategy by outline the steps to carry out the response strategy. Once the strategy is implemented, HR teams should communicate the strategy to stakeholders, determine a person for the implementation and provide necessary risk response training. 

5.  Monitor Risks

After taking all the earlier steps, we are moving into the final step which is monitoring risks. HR teams should monitor how well the strategy meeting its goal, whether the risks have changed, are employees adhering to the strategy in order to analyzing the strategy’s effectiveness. Monitoring helps in tracking and evaluating the potency of the risk management strategy and HR teams are able to adjust or update the strategy as necessary.

Conclusion

Risks within an organization are inevitable. With an effective risk management strategy, it can help to save time, reduce cost, alleviate the consequences of risk and ensure the well-being of the organization and its employees.