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The business world has been rocked over the past few months by the escalating number of corporate scandals. While these are hugely significant, I'm not certain that even the very best HR people could have intervened to stop them happening. If managing directors and senior finance directors have been powerless to stop them (or even complicit in some cases), it is a tough call to expect HR directors to intervene.
But there are other issues at work which demand our attention when it comes to risk management. There are many inherent risks within the core of what businesses do regarding their people - recruitment, management development and succession, feedback processes, the implementation of new compensation systems or the introduction of wide-scale health and safety policies. Get these wrong and although they will probably not end up in the newspapers, they will seriously damage the work-place and the bottom line.
Managing risk is not a negative exercise involving remedial action after the event. There is a big prize at stake for HR, and it involves taking a proactive, strategic view of managing the risks associated with big, complex organisations.
Without wanting to sound alarmist, there is risk everywhere. It is inherent in the pursuit of the business plan and in the choice of strategic options. There are dangers associated with any investment decision, particularly around the organisation's capability to deliver value. M&As can be risky. There can also be dangerous costs attached to poor recruitment decisions, and we all know that our line managers walk a tight rope with their staff every day over unfair or biased treatment. Consider bullying and harassment. I suspect the actual cases of bullying reaching the courts are just the tip of the 'iceberg'.
Great HR people are able to feel these pressure points and can smooth away the tensions. They take a lead on risk, analyse and describe the dangers, and put systems and practices in place to protect the business.
There is also an opportunity to put a financial measure on the scale of the risk and the potential saving made by HR through action. I wish I had been given the kind of budget our IT friends received to diffuse the so-called millennium time bomb - the risk associated with getting HR issues wrong is equally serious and we spend a tiny pro-portion on pro-active intervention in comparison.
A recent article in the Harvar
