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Human Resources

Most risks in an organisation can be either directly or indirectly sourced back to people. HR Risk is the risk that human capital is not adequate to execute business strategy. The reasons for this risk could be skills shortages, inadequate resources, HIV/AIDS, absenteeism, presenteeism, corruption, fraud, cybercrime and other forms of unethical conduct or inappropriate people behaviour. These can all result in significant costs and losses for an organisation.

This risk arises from a lack of policies or a breakdown in HR procedures and processes e.g. recruitment, performance, disciplinary.

These can result in crime due to the employment of high-risk employees, poor operational performance, reputational damage due to poor quality products or services and financial losses with an impact on the balance sheet.

Organisations put their sustainability at risk if they do not consider the impact of HR/People risks. These impacts can be significant and have a material impact on the financial position and operations of an organisation.

HR/People risk should be integrated into the overall risk management framework of the organisation. Strategies need to be put in place to ensure that employees don’t become victims of work-related and non-work-related stress, poor health and death and that the organisation does not become a victim or suffer a loss due to the lack of robust HR processes and controls and the presence of high-risk employees.

management of HR/People risks will ensure that the business is better equipped to identify, mitigate and manage the risks associated with human elements of the organisation in an effective way before they can have a financial or operational impact.