Financial Services Blog

Human capital risk continues to pose significant challenges for financial services institutions. 

We define human capital risk as the human skills, knowledge and ethical conduct component of operational risk and traditionally defined as the risk of an organization’s human resources failing to meet: 1) operational goals (i.e., prevent or mitigate financial losses during performance of normal operations); and 2) business resiliency and continuity goals (i.e., maintain ongoing operations during a severe business disruption like a pandemic).1

In recent years, human capital risk (across all organizational levels from front-line staff to senior executives) has persisted beyond the 2008 mortgage-led financial crisis to dramatically re-emerge and capture the attention of the boardroom, the C-suite and regulators. Human capital risk now has broad enterprise risk management (ERM) implications and significant financial costs beyond business operational losses. Going beyond the traditional operational risk purview (e.g., fraud, theft, workplace safety, not following procedures) of the Chief Operational Risk Officer (CORO) and Chief Human Resources Officer (CHRO), human capital risk now has impact across the enterprise risk impact spectrum, including: 

  • Enterprise-level financial risk such as multi-billion-dollar government fines, costly organization-wide overhauls in risk management controls and governance 
  • Legal and reputational risk such as potential criminal and civil prosecution against the organization and executives 
  • Strategic risk such as regulator-mandated controls on growth
  • Compliance risk such as costly consent order remediations 

For example, failures in human capital components of anti-money laundering (AML) programs (i.e., control oversight failures, inadequate staffing) have contributed to significant fines against individual risk officers, and against banks (e.g., US $450,000 fine against a bank risk officer,2 USD $1.9 billion fines against one global bank).3 Corporate/individual failures in managing behavioral conduct is the largest category of bank misconduct-related charges (inclusive of fines, legal costs and the amount paid to customers) during 2012-1016.4 

Creating the right leadership imperative and organizational approach

Given the re-emergence of human capital risk across the enterprise, organizations should enhance their existing ERM framework and capabilities to incorporate managing human capital risks, including employee conduct and standards. This enhanced ERM framework integrates the traditional HR focus on human talent issues and workforce management, with the more established ERM capabilities (e.g., controls design and testing, risks and controls reporting and analytics, governance and oversight, policies/procedures/tools).  

Failures in human capital components of anti-money laundering (AML) programs have contributed to significant fines against individual risk officers, and against banks.

The approach needs to start at the top with the Chief Risk Officer (CRO) and CHRO creating a strong partnership to recognize and proactively manage the re-emerging human capital risk across all of the major enterprise risk pillars. This C-Suite partnership combines the complementary knowledge and capabilities from their respective areas to enhance the organization’s existing ERM framework capabilities. Failing to appropriately integrate human capital risk into the organization’s ERM framework can lead to siloed, and uncoordinated human capital risk management efforts from top to bottom across the organization, thereby increasing regulatory scrutiny or penalties, potential financial losses, market and brand erosion, customer complaints. 

In the next blog in this series, we will discuss specific strategies that financial services organizations can use to proactively manage human capital risks across the enterprise. To find out more on the topic and how we can help you, please contact Anson Gong or Eric Garner. 

To help our clients respond to the global pandemic challenge and outmaneuver uncertainty, Accenture has created a hub of our latest thinking on a variety of COVID-19 topics. One report titled “Productivity in Uncertain Times through the Elastic Digital Workplace” discusses key people, process and technology issues to be addressed for allowing an elastic digital workforce. Also of interest is “Human resilience: What your people need during COVID-19” which shares the top 10 things that C-suite leaders can do now to effectively support their workforce in today’s challenging environment.  


  1. “Principles for the Sound Management of Operational Risk,” Basel Committee on Banking Supervision, June 2011. Access at: 
  2. “FinCEN issues rare penalty, nearly half a million dollars, against top risk officer for longstanding AML failures, alert caps,” Association of Certified Financial Crime Specialist, March 11, 2020. Access at:    
  3. “The Seven Largest Sanctions-Related Fines Against Banks,” American Banker, 2020. Access at:     
  4. “The world’s top 20 banks faced misconduct charges worth £264 billion,” Business Insider, August 16, 2017. Access at: 

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