It can be tempting to give less attention to risk management, especially since it can be expensive. It's easy to forget its importance when nothing happens for a while. However, the dangers of bad risk management supersede the savings you may experience. In fact, you could be vulnerable to fines, injuries, employee lawsuits — and that's just the beginning.
According to Quantivate, 62% of organizations have experienced a critical risk event in the past three years. Of those risks, the most significant consequences were in categories like:
- Employee productivity (62%)
- Operational efficiency — disrupted systems, processes, etc. (59%)
- Employee safety (29%)
- Brand and reputation (28%)
As this data shows, it's important to take risk into account, but not all companies are doing so systematically. If your company fails to do any of the following, you should look into an HR outsourcing solution that includes risk management services.
No Independent Review
Employees have an interest in keeping their bosses happy in most cases. So, it's not uncommon for many to skip over issues when performing risk management.
Conducting independent reviews can reduce this from happening by a large margin. This is especially true when you set aside time to discuss the importance of being completely honest and accurate when formulating a strong risk management strategy.
No Dedicated Personnel
When you don't have any dedicated personnel to take on all your risk management needs, you only add more risk to your efforts. Risk management can be a full-time job that deserves regular care and attention to be successful. This is why many companies employ individuals specifically to deal with risk management services.
Although this is a more helpful solution to no dedicated personnel at all, a more economical solution is to outsource risk management. This way, you can benefit from a team of experts with years of experience without all the time and effort that often goes into hiring in-house.
Not Performing Regular Safety Audits
One of the biggest mistakes employers can make when reducing risk in your business is not performing regular safety audits. Safety audits ensure your employees are safe to do their jobs, and there isn't much more important than that. Risk management is not a one-time event, and you're done. You need to have consistent updates to know whether safety measures are being implemented correctly.
Multiple Workplace Injuries
According to the U.S. Bureau of Labor Statistics, nonfatal injury and illness rates are at about 2.8 cases per 100 workers, and there is an average total of 5,333 fatal work injuries. If this statistic resonates close to home, you likely have a real problem on your hands.
Each workplace injury in your business can lead to workers comp claims or even employee lawsuits, so it's crucial that you pinpoint the problem and find a solution as soon as you can. When there are multiple injuries, there is usually some underlying cause that is not being addressed. Risk management services will find the issue and rectify it, lowering the number of accidents that occur.
Dealing with Non-Compliance Fees and Fines
You also need risk management services if you're dealing with non-compliance fees and fines. This is because complying with all relevant laws and regulations is a major component of risk management that can save your business from a significant amount of trouble.
According to Complysci, "The average cost of compliance came in at $5.47 million, while the average overall cost of non-compliance was $14.82 million. In fact, the average cost of non-compliance has risen 45%." This isn't your only worry, though. Not only can the consequences of non-compliance lead to hefty fees and fines on your organization, but you also risk employee lawsuits.
Failing OSHA Audits
The Occupational Safety and Health (OSH) Act of 1970 requires companies to meet a specific safety and health standard to ensure their employees are working under conditions that are not deemed hazardous to their safety and health.
When under investigation, companies may face OSHA audits of the workplace. If you do not pass with flying colors, something is wrong with your risk management strategy. Having a risk management service in place could prevent this problem from happening and even assist in helping you pass. Otherwise, The United States Department of Labor states that you risk more significant issues from failing your OSHA audits, like a civil penalty of up to $70,000 for each violation but no less than $5,000. It could also become a serious risk to your employees and lead to public reputational damage that can take some time to repair.
HR Outsourcing as a Solution
The best way to deal with issues like independent reviews, personnel, workplace injuries, audits, and fines is to outsource risk management services to a Professional Employer Organization (PEO). This is because outsourcing can enhance on-site safety by performing critical reviews/consultations and optimize your worker compensation by reducing claim burdens. Outsourcing can also ensure HR compliance and help you manage unemployment claims, maintain error-free payroll, offer support during investigations, and consult on employee relations.