Other parts of this series:
In our second blog, we discussed practical enterprise risk strategies organizations can take to better manage human capital risk. Continuing this series, let’s expand our focus to specifically look at the “human factor” and additional talent-focused strategies that can provide the programs, structure and support to address the underlying drivers of employee-driven risk.
Organizations need to focus on the people themselves providing the tools and resources to drive awareness and education at all levels. This involves putting in place coordinated talent strategies and programs designed to align leaders, build awareness and reinforce risk mitigation as a central part of the organization’s performance.
Every day, employees across all lines of business are presented with multiple circumstances where missteps, whether intentional or unintentional, can pose serious consequences …
These strategies should be comprehensive across the talent lifecycle including ongoing leadership development, conduct and culture, awareness and communication, learning and performance management. Every day, employees across all lines of business are presented with multiple circumstances where missteps, whether intentional or unintentional, can pose serious consequences and so the Human Capital Risk Management strategy needs to be comprehensive, purposeful and ongoing in order to be effective.
As a starting point, organizations should build their Human Capital Risk programs mapped to the Human Capital Risk model with further alignment to the organizations’ Human Capital Management framework. This model can serve as the guide and framework to assess existing risks and design targeted programs to address gaps.
In creating this alignment between human capital risk and the Enterprise Risk Management framework, HR and Risk function leaders can more proactively put in place the measures and programs to reduce and eliminate risks stemming from the workforce.
Enhancing risk management principles into leadership
The profile of an effective and responsible leader is changing. Today’s leaders have to be more focused on elements of trust, inclusion and compassion centered around a more human-oriented organization even as automation scales.1 Aligning risk management as a key leadership competency including defining a set of specific leadership actions focused on mitigating and managing risks is critical in setting the “tone from the top.”
Leadership and Development teams should add risk management and crisis management to their Learning and Development programs (LDP) for senior leaders and managers, including simulated experiences and case studies to provide appropriate application.
Creating awareness, conduct and risk culture programs
At the heart of addressing human capital risk is expanding an organization’s culture to include risk-based attributes and behaviors. The key point about culture is that it drives behavior and actions above and beyond the enterprise’s designed processes and controls, and essentially can be an additional line of defense.
Leading organizations are creating conduct and culture offices and teams with the goal of implementing the conduct, standards and behaviors focused on mitigating risks and acting ethically in all circumstances:
- In addition to the direction from leadership, risk committees need to partner with communication and marketing teams to create ongoing “campaigns” designed to generate awareness, direct behavior and place ethical action and risk mitigation at the forefront of every employee’s mental model.
- In addition to basic Anti-Money Laundering or cyber security messaging, organizations should develop a comprehensive set of messages using videos, testimonials, blogs, industry examples (and failures) to drive this change.
Building key skills and knowledge through risk-based learning and development programs
Human Resources and Risk Leadership teams should strongly partner with the Chief Learning Officer and Learning organization to create and incorporate risk competencies and skills for all roles and levels.
This learning path should incorporate modern strategies including game-based and adaptive learning to deliver the right level of skills but also change the behaviors and actions of employees so that they are able to recognize and manage risks in a variety of scenarios.
Risk management training should take two paths: a core track focused on specific learning paths and learning experiences around the Enterprise Risk framework and then a second track that is role-based with risk principles included in existing training strategies such as continuous learning programs.
Reinforcing behaviors and actions through performance management and compensation alignment
Rounding out the set of talent strategies is creating the right performance and incentive structure around sound risk management principles. Including risk management parameters and ratings directly in performance objectives at all levels can drive and reinforce behaviors and align risk mitigation as an outcome for the business. Several leading financial services organizations have included up to 50 percent of the weighting tied to risk management outcomes, including a direct link to compensation and other incentives.
In our next blog, we will focus on applying data science and analytics to the Human Capital Risk framework to take a data-driven approach to identifying and managing risk.
- “Seeking New Leadership,” Global Shapers Community, The Forum of Young Global Leaders and Accenture, 2020. Access at: https://www.accenture.com/_acnmedia/PDF-115/Accenture-DAVOS-Responsible-Leadership-Report.pdf#zoom=40.