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How to Manage People Risk

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How to Manage People Risk® 1 Introduction Your employees are your organization's most important asset. At the same time they also represent your biggest risk. People Risk® is a topic that can span a whole range of issues for organizations — from individuals making risky or adverse decisions to organizations not quantifying the impact of retirement and knowledge loss. At an even broader level, firms face socio-economic risks like student debt and critical skills gaps. Finally, there are "black swan" events that cannot be easily predicted or controlled (the sudden death of your CEO), but can have a massive impact on organizations if risk mitigation and business continuity plans aren't in place. In 2017, Aon Risk Solutions conducted a global study to identify top risks facing organizations now and in the near future. Interestingly, all the top risks identified through this survey of CEOs and senior business leaders contained, directly or indirectly, a people risk element, whether it is "damage to reputation/brand" or "failure to attract or retain top talent." Risk management is top of mind for most leaders right now. So how do we unpack people risk? Employees face a variety of choices, circumstances and impulses during the workday, and their behaviors can either help build your organization — or introduce it to risks. There are two categories where people risk can stem: the overall composition of your workforce (i.e. demographic composition, location, tenure) or the behavior of your employees (i.e. their actions, engagement or managerial intent). None of these risks can be eliminated, but they can be anticipated and mitigated with proper measures in place. This article will look at the 10 inherent people risks your organization faces (see graphic on next page) anddetail how to be proactive about them. We'll look at specific examples and address how organizations can control, prepare for and respond to each kind of people risk.

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