People Risks lurking in the dark

their own employees!

Your business is vulnerable to a range of risks and top of the list should be people. Risk management of people is often ignored out of ignorance, underestimated as its largely invisible or postponed until you have spare time (which is never!).

When these risks materialise, the business suffers from damage to their assets and earnings capacity.

Here are four examples of local relevance to consider:

•  You hire a candidate based upon their impressive CV (all the ‘right’ qualifications, skills and experience) and interview performance. A third of the CV was creative writing. The candidate learnt all the answers from a “How to ace interview questions’ book. You were unaware of reference checks and assessments or considered them to be a waste of money. 

•  Theft of company stock that was urgently needed to fulfill an international order. One of your high performing employees colluded with a crime syndicate. The employee was unhappy about his pay and worked excessive unpaid overtime in the office. You thought the pay gripe was adequately addressed in the performance appraisal and admired his dedication.

•  An employee runs their own business after hours by selling their services to your clients at lower rates. You find out about his business when a customer accidentally mentions it during a meeting. The standard employment contract and company policies are silent on employees engaging in business interests outside work.

•  You hire IT graduates (all Employment Equity) and you provide them with mentoring, training and hands on experience over two years. It involves high upfront costs and personal time. However you are prepared to invest in them because you expect them to deliver value over the long term. Headhunters have lured away 40% of your IT graduates with higher packages in the third year.

Even though some of the incidents in these examples could have been mitigated by traditional internal controls around transactions, the emphasis is on understanding the risks from the people in your business. Take action this month by educating yourself on risk management of people, do a bit of digging in your workplace for obvious risks and seek professional assistance before something goes wrong. Your business depends upon it.

(, August 2006)

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