Managing Risk - The Human Factor, published in association with Arthur D. Little, Willis Towers Watson and Zurich, outlines examples of people risk in the workplace - from those risks posed to organisations from their employees, to those risks that employees face from their organisation.
Human factors, however, do not only present risks. By taking a pro-active approach to understanding the workforce, organisations can realise opportunities such as improving wellness and performance, optimising employee benefits programmes and controlling healthcare spend.
"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," said Tom Teixeira, partner within the Arthur D. Little Risk Practice.
"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."
The Guide also encourages more collaboration between risk professionals and their colleagues in human resources if you want to build an effective people strategy.
"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," said 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."
Another area where collaboration can be extremely valuable in large organisations is between insurance and HR professionals on international employee benefits programmes.
The costs of providing insurable employee benefits is increasing, with 2019 Global Medical Inflation reports from Aon, Mercer Marsh Benefits and Willis Towers Watson all showing medical insurance escalating at a compound average rate of almost 10% per annum globally.
These rising costs attract the attention of CFOs and senior management who are keen to see them brought under control. With some employers spending more than £1k per person per year on insurable employee benefits, global budgets for employers with larger populations can exceed £100m per annum.
The approach to insuring employee benefits has evolved considerably since the 1950s, with multinational organisations now making use of captive insurance and global underwriting strategies to take more control of their benefits spend and tailor coverage to best serve their employees needs and corporate goals. The Guide sets out these different strategies and pros and cons of each approach.
Rob Brown, director of customer and distribution management, UK, at Zurich Insurance Company, said: "This Airmic guide is a timely and valuable resource as the growing popularity of international employee benefits programmes is demanding more collaboration between risk and insurance professionals and their HR colleagues.
"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."