How to manage the top workforce-related risks facing businesses across MEA in 2022

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As the pandemic persists, Environment, Social, Governance (ESG) gains traction and businesses face new supply chain and talent threats, it is more critical than ever to manage people risks as part of a broader approach to risk management. HR, risk managers and the C-suite should work closely together to ensure that threats are identified, evaluated and mitigated appropriately.

The past few years have been tough on organizations but important lessons have been learned. It is clearer than ever that business resilience is intrinsically linked to the health and well-being of the workforce.

Now, the test for firms is to take those learnings and make changes to the way they operate rather than revert to “business as usual”. With a global economic crisis and the ongoing war for talent, employees expect more from their employers.

The consequences of getting this wrong are significant, as evidenced by our People Risk Report 2022. We found that the top five risks facing firms in Middle East and Africa (MEA) are:

Cybersecurity and privacy
Benefit, policy and reward decision-making and accountability
Catastrophic personal life events
Pandemics and other communicable health conditions
Changing nature of work

Firms need to ask themselves: “Can we give people more security, flexibility and better health while also facing up to the business challenges of lowering costs, navigating operational disruption and increasing liquidity?”

The answer is yes, but only for those organizations that get the basics right and ensure they have strong risk management and HR practices in place.

Five key global findings from the People Risk Report 2022

The top people risk that faces businesses today are cybersecurity and data privacy. This is not surprising given the geopolitical landscape and data breaches at major organizations that occurred over the past year.
The number two risk globally is administration and fiduciary. The inability to administer benefit and compensation plans accurately, fairly, and in accordance with promises made quite rightly has companies concerned. Errors and unmet obligations can lead to damaged reputations, along with regulatory action and penalties.
Catastrophic personal life events are the third-ranked global risk, while the fourth is pandemics and other communicable health conditions. This highlights the need for employee support and other proactive strategies to navigate future crises, including those that stem from climate change, inflation/rising interest rates, pandemics, recession, or violent conflict.
Closing out the top five risks was the changing nature of work. The degree to which flexible working has evolved over the last two years merits examination and a resetting of practices per relevance. With the Great Resignation upon us, firms must tackle this emerging issue now to attract, retain, and engage employees in the future.
We were surprised to see the lower risk rating scores (the product of the likelihood of the risk occurring in the next three years, and the severity) for work-related illness and injury, workforce exhaustion, mental health, leadership issues, and travel/mobility. These have caused pain points for organizations during the last three years, and while many have made significant strides toward managing these threats, firms should not become complacent and should prioritize continuous improvement.

What businesses can do

Organizational complexity is a high barrier for governance and financial risks. As businesses continue to grow and threats are present across traditionally siloed work areas, organizations are struggling to define who is responsible for owning a particular mitigation effort, thus leading to gaps in adequately addressing looming risks. HR and risk managers must therefore work together to break down siloes and further enhance collaboration on risk identification and mitigation.

Difficulty changing personal behavior is a top barrier for organizations across MEA for most of the risks. For this reason, it is critical to develop a culture of risk management and HR. Our “Age of Adaptability” report indicates that 88% of HR teams have seen more involvement in benefits from the C-suite . Risk managers and HR teams must therefore take their disciplines to the next level.

This means developing more deliberate approaches to listening to employees, a tighter connection between benefits and business goals, and cost management that is focused on value and long-term benefit strategies. Some are tweaking values and cultures to promote human-centric leadership and purpose. With ESG on the rise, many organizations are looking to build a sustainable people culture, including delivering on total well-being. In this scenario, it will be more challenging to make cuts to benefits as many have done in the past to keep benefit budgets affordable. Hence, cost management instead of cost shifting to employees is needed; for example, steering employees through plan design to higher-quality points of care to reduce complications, or using virtual care when appropriate.

Good questions to ask

For HR or risk professionals just starting to acquaint themselves with the discipline of their respective HR or risk counterpart, here are some possible conversation topics to get started on identification opportunities.

How are employee, customer, investor and regulator expectations around ESG impacting the business?
Is diversity, equity and inclusion a blind spot for us? Are the needs of the diverse workforce reflected in the employee benefit programs?
Could mental health be more proactively managed, and what impact could this have on insurance needs in areas such as director and officer coverage or key person risk?
How is the difficulty in attracting, retaining and engaging talent impacting business operations, the customer experience and profitability?
Are there opportunities to further strengthen the culture to aid employee retention and improve risk management practices?

Conclusion

All of the top ten risks identified by HR and risk managers can be mitigated by employee benefits and other support programs (or by how they are designed and delivered). Firms need to make sure that they have the right supports in place and that they’re delivered appropriately. An enterprise management risk approach can be applied to all people risks to build organizational resilience and agility.

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Five key global findings from the People Risk Report 2022