Study Finds HR Risks Are Ignored

Executives aren’t giving due time and attention to the various levels of HR risk, according to a report by Ernst & Young released earlier in the week. The survey, conducted among global finance, HR and risk executives from Fortune 1000 companies, found that 41 percent of respondents had boards that either never reviewed HR risk profiles, or only reviewed them circumstantially.

HR risks, which include improper training or support and insufficient or misaligned resources, were demonstrated as having the highest importance, with 43 percent of respondents claiming such risks as most likely to have increased exposure over the next three years. The second-most important risks were those related to compliance, with 30 percent of respondents giving them priority in the next three years, with operational and financial risks coming in third and fourth with 20 percent and 7 percent respectively.

"HR risks are the challenges that stem from managing your people, programs and processes, both inside and outside the walls of your business," said Bill Leisy, a co-author of the report. "By proactively addressing these areas, the C-suite, as well as those in HR and finance, can drive sustainable, positive business results.  But if not managed properly, these issues may cause significant damage."

Despite the acknowledgement among respondents that HR risk is an important topic with immediate implications, the survey showed that most companies were negligent in addressing it. Only 42 percent of respondents validate and prioritize their HR risk, while only 46 percent validated their HR risk profile with executive management and members of the audit committee.

"Many organizations are perplexed by the enormity of these issues and do not know how to solve or who should take ownership of these problems," said Chris Lipski, another co-author of the report. "These items are to be considered a shared responsibility.  The charge should be led by HR as they can identify the strategic and operational risk areas that help make the company more productive and globally competitive."