The current approach to managing workforce risk is insufficient, with only 44% of executives in Deloitte’s forthcoming Workforce Risk survey believing that the risk-related metrics their organizations capture give an adequate view of current exposure to workforce risk. That figure falls to 34% when executives are asked to evaluate their preparedness over the next three years.
The new fundamentals
Consider a more expansive set of risks and create a framework for monitoring them. Shifting to a focus on human risks requires a more expansive framework that accounts for the complexity and dynamism of today’s world of work. That means moving beyond outdated models that only consider a limited set of internal factors, such as open roles, succession plans, and workforce safety, to account for a broader set of both internal and external human risks. This new framework must look comprehensively at what work is performed, how work is performed, and where work is performed. It must also consider the well-being of the communities in which the organization operates, the well-being of the workforce, and the long-term employability of the workforce—and whether the organization is “future-proofing” workers by helping them acquire transferable skills and capabilities.
Even under today’s narrow lens of workforce risk, few organizations are meeting the mark. According to our forthcoming Workforce Risk survey, only 40% of organizations have a clear definition of workforce risk and less than 10% of executives say they are satisfied with how their organization monitors risk. This is especially concerning given the limited set of risk measures today, with few organizations considering expanded metrics like the impact of inclusion (27%) or environmental, social, and governance (ESG) (16%) on the workforce.
For those who get it right, there’s no question of the benefit to their business. The same survey revealed that organizations that create more structure and discipline around how human risks are managed to achieve enhanced business results. Those organizations are more likely to outperform peers on profitability, operational efficiency, worker satisfaction, and brand recognition.
Create organizational agility through expanded insights. Human risks don’t follow an organization’s planning timeline. Instead, they emerge quickly, often catching organizations off-guard and sending leaders scrambling to respond. Beyond determining consistent definitions and instituting a human risk framework, organizations need to enhance business planning and ongoing risk measures to evaluate progress in a more timely manner. Yet only 40% of the organizations surveyed say they are implementing data and analytics to better sense and prepare for emerging human risks. And, only 43% plan to do so within the next 2–4 years.
The ability to generate those analytics depends on an integrated data infrastructure that can ingest expanded human risk factors and provide consumable insights for organizational response. For instance, consider how an enhanced understanding of human risk, including workforce factors and the broader economic, political, technological, social, and environmental landscape, could influence business decision-making. This might include determining where to open a new manufacturing facility, which workforce skilling and benefits programs to offer, or how an organization plans to support workers, redirect supply chains, or pivot business priorities in the event of a climate or public health emergency.
Even in instances in which the analytics are not predictive, they still increase organizational agility by providing a foundation by which actions can quickly be taken, evaluated, and adjusted in times of disruption. And the insights generated will allow organizations to focus on a broad set of human risk outcomes: financial, operational, regulatory, reputation, and brand.
Instill responsibility at the board-level so it cascades through the organization. The limited emphasis placed on human risk management has traditionally fallen to an organization’s chief human resources officer and on occasion, its chief financial officer. Even simple knowledge or understanding of workforce-related risk appears to be limited outside the human resources department.