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UNDERSTANDING HUMAN RISK

HUMAN RISK

Human Risk encompasses the potential loss to an organisation resulting from the decisions and non-decisions of its people: the behaviour of individuals or groups of individuals intentionally or unintentionally that exposes an organisation, its shareholders, its employees and/or its clients to risk of loss.

 

"Loss" includes both financial and non-financial loss such as loss of reputation, loss of relationships, loss of client trust and employee trust.

 

Human Risk can also be caused by how an organisation manages its people including accepting an unsafe workplace culture.  

Human Risk | Human Risk Management | Understanding Human Risk
Human Factors | Human Risk Management | Understanding Human Risk

HUMAN FACTORS

Human factors are aspects of human function, thinking and states that affect performance. They are both physical and psychological, each impacting the other.

Examples of human factors include beliefs & values, perception of stress, biases, academic and emotional intelligence, motivation, memory and physical factors such as fatigue, hunger, age, health both mental and physical.

Some human factors are common to all people and others are the result of individual differences and life experiences.

Human Factors Increase Risk | Human Risk Management | Understanding Human Risk

HUMAN FACTORS CAN INCREASE HUMAN RISK:

Human Risk takes many forms including:  

  • Increased stress resulting in a deterioration of highly valued advanced cognitive skills, the very skills the organisation has invested in  

  • Compromised decision making

  • Rationalisation of cognitive biases

  • Frustration/anger/conflict with employer or other employees

  • Increase in Mental Health Risk

  • Poor self-management - bullying, harassment, substance misuse, family violence 

  • Ineffective or harmful communications

IMPACT OF HUMAN RISK ON ORGANISATIONS:

The GFC, various Royal Commissions, harmful leadership, unsafe cultures and increasing rates of mental unwellness and burnout in addition to growing legislation to protect employees have demonstrated the significant impacts of human risk on organisations, including:

  • Loss of trust by internal and external stakeholders

  • Decreased productivity - absenteeism and presenteeism 

  • Expensive remediation

  • High-levels of attrition 

  • Unethical decision-making

  • Systemic misconduct

  • Reputational damage 

  • Cultures of overconfidence, entitlement

  • Increased compensation claims, litigation, fines

Impacts of Human Risk | Human Risk Management | Understanding Human Risk