You see, ERM, as it's known, is all about identifying potential risk and prioritising it. And what's one of the biggest risks to business? People, of course.
So why is human capital risk so low down the list when managing risk effectively in business?
According to those interviewed for HR magazine's April cover story business is ironically taking a big risk itself by not prioritising people risk. As Deloitte's Will Davies succinctly puts it: "Any one person can bring a company down."
True, risk is not the sexiest area in HR. As one HR professional admits, it is somewhat tedious, quipping: "A risk for me would be going to Pret and finding they've run out of my favourite sandwich."
But just think about it. What would happen to your business if you couldn't get the right talent? What would happen if your top team suddenly upped and left? How would an ethical breach affect your reputation? What would happen if your customer data fell into the wrong hands?
All of these are risks that fall under HR. Yet, according to The Conference Board, while human capital risk is rated fourth in importance when measuring the impact of risk on business performance, it comes a poor 10th when ranked on how effectively business risk is managed.
There is obviously a lot of work to do here. Even companies that recognise the impact of people risk tend to have poor processes to manage it, or else focus on one or two core areas, such as succession planning. Culture plays an important role - just take the financial sector's woes - while behavioural change is also part of risk management. Both of these are areas where HR can work with risk managers to mitigate risk.
Once again, much of it comes down to HR demonstrating the value it can bring in this area. All our commentators agree on one thing: risk management doesn't understand HR. Backing up the story through data is one way HR can bring the message home.
In today's high-pressured working environment, mental health is surely one of the biggest risk areas. One company showing the way here is Astellas Pharma, where staff wellbeing is tied inextricably to engagement and development and the CEO and HR director work in tandem to ensure employee resilience in an intensely competitive sector.
People are typically both the biggest cost and biggest advantage to business. Prioritising human capital risk is self-evident. Not to do so would be a very risky strategy indeed.
