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In today’s world of rapid change and new developments, business leaders recognise the importance of the need to take a holistic approach to managing exposures and risks across their organisation.
In addition to new risks caused by changing legislation, emerging technologies and sustainability issues, there are emerging cultural pressures due in part to people mobility driven both by opportunity and economic uncertainty. Changes and developments have an impact across all areas of the business, including exposures and risks associated with employee benefits (EB).
Organisations have sought to formalise an integrated approach to risk through the development of business wide risk management programmes. These are often termed enterprise risk management (ERM) programmes as they apply across the whole business enterprise. A successful ERM programme should operate within existing business processes and structures and drive a shared understanding of risk - and risk responses - across the organisation.
Historically EB have not always been a priority for full inclusion within the ERM strategy. This is changing through recognition of the real advantages to the organisation. The techniques of risk financing and risk management are being focused on understanding EB risk - and how to shape and manage it.
This guide outlines the evolution of the management of EB risks and highlights the opportunity for companies to manage such risks to bring additional financial and other value to their organisations.
This guides is intended to be used by Airmic members starting out in their career in the profession, for those who may be new to this subject, or to share with their business colleagues in areas such as procurement, finance, human resources, IT and internal audit.
This short guide covers:
How ERM as emerged as an important tool for organisations
The critical role for employee benefits in a successful business
The costs of employee benefits
Risks associated with the provision of employee benefits
How multinational companies manage employee benefit risks
Readers will find it useful to read this guide in conjunction with the following Airmic short guides:
“Explained - Risk and Managing Risk ” summarises current approaches to ERM referencing relevant international standards
“Explained - Insurance and Managing Insurance” outlines the insurance buying process for EB and other insurances
“Explained - Captives and Understanding Captives” provides a useful introduction of the role of the captive insurance company in financing EB and other risks.