Airmic, the UK risk management association, has recommended that insurers and reinsurers should take a more integrated approach to people-related risks, by working more closely with human resource teams and benefits managers.
In a new report – published in association with Arthur D. Little, Willis Towers Watson and Zurich – Airmic warns that organisations are entering an era of unprecedented volatility with regards to people risk.
Airmic analysts argue that the most successful organisations will be those that take a new and more sophisticated approach to people risk.
“Risk professionals have tended to think about people risk as risk to employees, whereas HR professionals tend to view it as the risk to the organisation from human factors,” explained Julia Graham, Airmic’s deputy CEO and technical director.
“Both perspectives are equally important, so it was surprising to us how little interaction there is between the two functions. Risk and HR can really support each other and enhance the strategic value of their roles.”
Airmic believes that a more integrated approach to people risk will provide new insights, offer additional opportunities to control risk, and increase the value derived from risk management activities.
“Organisations should think of their people as investors in their business, rather than assets,” said Crispin Marriott, client relationship director at Willis Towers Watson. “Employees choose to invest their human capital in the organisation, and they have choices about where to place that investment. Organisations need to attract that investment and make it grow”
Rob Brown, director of customer and distribution management, UK, at Zurich Insurance Company, also commented: “Risk management needs to be perceived as a value-added business partner to HR colleagues, assisting them to achieve their objectives by managing HR risk using similar tools and strategies that are employed in managing property and casualty risks.”
And finally Tom Teixeira, partner within the Arthur D. Little Risk Practice, stated: “In most, if not all organisations, people represent both the biggest source of risk, but also implement and maintain the great majority of controls. If significant people risks sit outside the corporate risk profile then our understanding of our risk position is incomplete.”
“Integrating these risks into our enterprise risk management approach gives a more complete and holistic risk profile, allows better risk aggregation and visibility of controls, and, most importantly, allows issues related to people to be identified and escalated to levels of management that are best equipped to manage the situation.”
