Human capital and risk management
In a business, human capital is all the intangibles that people bring to the business, without which the business would be so much poorer. It’s the knowledge, skills, experience, attitudes, creativity, training and judgement that help a business grow and succeed. Human capital is the total capacity of the people in the business. It is another form of wealth directed to accomplish the business’ goals.
Assess what risks might arise out of not managing your human capital well or from events beyond the business’ control that would threaten the business’ human capital:
- catastrophic workplace events such as disabling illness, injury or death
- rapid staff turnover
- a team member committing fraud or misappropriating assets
- negligent hiring or retention, where an employer may fail to complete necessary background checks on a new hire and consequently employs someone dangerous or untrustworthy
- complacency, an organisational culture of ‘I don’t know’ and ‘I don’t care’
‘Almost everything that can go wrong in a business has a human capital component.’ David Creelman, CEO of Creelman Research
As you develop your risk management strategy, assessing risk is not so much about analysing how likely or unlikely an event may be. We’ve witnessed that extreme and unlikely events occur too often. Analyse the cost to the business if these risks occurred. Could the business take the hit? What strategies could help avoid them or cushion the blow?
If you need a sounding board as you work through your risk assessment, let us know.