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How to Avoid the Sting of Unknown Risks

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By including HR threat assessments as part of your risk management program, your organization could predict, prevent, and mitigate damage from any human capital threat.

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How to Avoid the Sting of Unknown Risks

  1. 1. Human Capital Risk Management How to Avoid the Sting of Unknown Risks Through HR Threat Assessments
  2. 2. “Almost everything that can go wrong in a business has a human capital component.” — DAVID CREELMAN OF CREELMAN RESEARCH
  3. 3. Human capital risks commonly stem from one or more of these 5 critical areas: Occupational Fraud Catastrophic Workplace Events Complacency Turnover Negligent Hiring or Retention
  4. 4. Culprits of Complacency Foregoing a ‘moment of insight’ Excessive sense of confidence False sense of reality Tendency to make excuses
  5. 5. Turnover: A Costly Risk Direct Costs • Separation • Temporary staffing • Replacement • Training Indirect Costs • Lost productivity • Coping with vacancy • Learning curve of new employee • Reduced morale • Lost clients • Lost knowledge Companies typically pay between 25% and 250% of an employee’s annual salary to replace that employee.
  6. 6. Occupational Fraud Types: • Corruption • Asset Misappropriation • Financial Statement Fraud Costs: • Management costs • Brand • Staff morale • External business relations • Regulator relationships • Share value Companies lose 5% of top-line revenue to fraud every year.
  7. 7. Catastrophic Events The consequences of large failures can impose financial, reputational, loyalty, and other brand- related costs that will persist for a very long time. • Active assailant incidents • Major data breaches • Armed robberies • Kidnappings • Workplace violence • Etc. Every employer must not only prepare, but anticipate each potential catastrophic workplace event, before it occurs.
  8. 8. Negligent Hiring/Retention Employers lose 75-80% of all negligent hiring claims It’s about what you knew or SHOULD HAVE KNOWN
  9. 9. Got HR Risks? Only 36% of businesses include HR risks in their risk management frameworks —DELOITTE’S 2014 RISK AND REGULATORY TALENT SURVEY
  10. 10. With the wrong people in place, risk can turn into loss quickly. When those risks aren’t even on your radar, the losses can be even more devastating. Screening, Testing, Background Checks Threat Assessments
  11. 11. Unknown risks sink ships. The Titanic: A Case Study in Human Capital Risk Management • Excessive speed • Warnings ignored • Faulty engineering • Lack of training in evacuation • Captain lacked relevant experience • And the list goes on…
  12. 12. HR Threat Assessments: Because what you don’t know CAN hurt you. IDENTIFY THREATS Consider both existing and emergent threats. CATEGORIZE Determine internal vs external sources of threats and how to mitigate them. EVALUATE Assess the likelihood and outcome/ramifications of each risk. PRIORITIZE Recommend proper security and defenses to address your specific threats. AUDIT & TEST Regularly check for suitability and employee compliance. Also, test measures for effectiveness. MONITOR Evaluate, monitor, observe, and assess for new or evolving threats and to optimize your risk mitigation program. 1 2 3 4 5 6
  13. 13. The Role of Background Screening in HCRM Verifies that your applicant’s claims about experience, education, and accomplishments are accurate. Demonstrates due diligence in the hiring process. Helps to create a safer and more productive workplace environment. Improves your organization’s ability to keep good employees. Reduces outright organizational fraud.
  14. 14. “People are at the core of each major risk. If not as part of the problem, then as part of the solution.” — DELOITTE, 2012 REPORT
  15. 15. ProformaScreening.com | (866) 276-6161

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