4 Reasons to Have Training for Risk Management
Why spend time and money on ongoing training for risk management? The answers are quite simple, but many! To save time and money, protect your reputation, maintain trust, avoid bankruptcy, prevent injuries, and protect human lives, among others.
In 2020, JPMorgan paid a $250 million fine for inadequate management of risk controls. Ponemon Institute’s 2011 study revealed companies lose an average of $332 million in brand value the year after a data breach. An estimated 98,000 preventable deaths yearly occur due to medical errors in U.S. hospitals. These are alarming statistics that show the costs of not following best practices around risk management.
Definition of Risk Management
Training for risk management is critical. But what exactly is risk management? It’s a process that prepares employees to recognize hazards and risks in order to prevent loss. A hazard is a source of potential harm. Risk considers the probability that hazards will cause harm to employees, customers, and/or the company. A risk is the likelihood of harm. Harm is caused by the hazard.
Types of Workplace Risks
Becoming aware of your organization’s risks is the first step toward risk management. Specific risks may fall into several types of risk categories. For example, a poor customer service experience could go viral on social media, negatively affect your brand reputation, and result in significant financial costs.
By no means is our following list of categories and types of potential workplace risks all-inclusive. But it can help get you started with your own planning and risk rating. You will see training opportunities in every example.
Physical Health and Safety Risks
- Onsite Employee Emergencies: Unexpected emergencies happen to employees. A co-worker shared a story of someone goofing around on a hoverboard in the office. He fell and broke his arm. It was his first day on the job.
- Physical Health: Employee physical health issues can result from workplace activities and personal lifestyle choices. According to the National Library of Medicine, employee health-related absence and decreased productivity due to health issues are estimated to cost U.S. companies more than $260 billion each year. And it may even cost some companies more than direct medical expenditures.
- OSHA Safety: According to the United States Department of Labor, the National Safety Council estimated work-related deaths and injuries in 2019 cost the nation, employers, and individuals $171 billion. Not knowing and/or understanding the OSHA laws puts your company directly at risk. Think about the costs of OSHA penalties for repeated safety violations. HSI's OSHA 10- and 30-Hour Training can help mitigate these risks.
Human Resources Compliance Risks
- Anti-Discrimination: Unfortunately, it's still quite common to see news stories about customers being racially profiled and harassed while shopping or dining. The discriminating actions by a few frontline employees can go viral or end up in the news.
- Bullying / Hostile Work Environment: The cost of workplace bullying amounts to approximately $14,000 per employee in lost job performance, states workplacementalhealth.org.
- Sexual Harassment: Did you know that last year, nearly 13,000 sexual harassment claims were filed with the EEOC? According to a YouGov and Huffington Post poll, 75% of individuals that have been sexually harassed do not report it. Only 33% of people who witness sexual harassment file a report. This is such a serious offense that HSI has an entire series of sexual harassment training videos.
Employee Mental Health
- Employee Burnout: From April ‘21 to June ‘21, there was a 60% increase in searches containing “how to write a resignation letter,” according to the 2021 Google Year In Search Report. How do you recognize the signs and causes of employee burnout before it’s too late and valuable employees leave your company?
- Stress Management: Employees can experience stress from triggers in their personal lives and in the workplace. Stressed employees can become unproductive or distracted. This opens them up to other workplace safety risks.
- Mental Health: Many employees experience depression and anxiety. At one point in recent years, the CDC reported the percentage of adults with symptoms of anxiety or a depressive disorder during the past 7 days increased significantly (from 36.4% to 41.5%). What are the risks in your workplace, if 4/10 employees are affected? And how can you support them?
- Active Shooter / Acts of Violence: According to the FBI active shooter incidents report, in 2021 the majority occurred in commerce-related environments. Violent acts can happen anytime, anywhere. It’s not only guns involved, but other weapons, and even cars. Violence can result due to an irate employee, vendor, or customer. Because of the safety training HSI offers, my manager shared that she instinctively looks for emergency exits everywhere she goes. Safety training has heightened her situational awareness.
- Corporate Crime: Also called white-collar crime, corporate crime is estimated to cost $2.6 trillion in a single year. These crimes include falsifying information on financial statements, manipulating the stock market, bribery, and embezzlement.
- Cybersecurity / Information Security: In 2021, the average number of cyberattacks and data breaches increased by 15.1%. Security executives polled by ThoughtLab forecast a rise in social engineering and ransomware attacks over the next two years. Current trends are real!
- As I was writing this blog, Fast Company’s content management system was breached. Their entire website was shut down until the situation was resolved.
- Poor Onboarding: Poor onboarding is a major cause of employee turnover, which can cost a company 100% - 300% of the employee’s salary in total. Studies show that 69% of employees stay with a company for at least three years when they're brought up through a successful onboarding program.
- Inventory: Many issues can arise with product parts, food ingredients, and packaging. When I worked for a supermarket chain, sometimes the manufacturer could not get the product in time for the advertised sale. Our risk management activities were well planned. We were sure to have a substitute product in place. And we always waited for the drop-dead deadline to have the ad on press and signage distributed.
- Machinery Preventive Maintenance Process: What happens when a printing press breaks down at a high-volume printing company? Is there a backup plan? How does it affect other print runs? How will the customer’s deadline be met? What’s the risk of losing their business, along with other customers’ scheduled print runs?
- Public Safety: Many types of hazards exist in brick-and-mortar businesses that attract customers in person. Slips, trips, and falls are very common. The average slip and fall claim can usually settle anywhere between $10,000 and $50,000. One incident caused by a leaky awning was awarded $12.2 million dollars. Having proper maintenance practices in place can help mitigate the risk.
Brand Reputation Risks
- Poor Customer Service: It’s not uncommon to see a social media post go viral from poor customer service. An airline loses a $22,000 wheelchair or a musician’s guitar, and the baggage desk representative lacks empathy or concern. Or a frustrated gate representative is swarmed by angry passengers whose flight was just canceled. Providing customer-facing employees with practical skills in handling problems and irate customers can help to reduce risk.
- Poor Product Quality Control: This past Summer my niece worked as a prep chef at a local coffee shop. She left the main ingredient off the signature breakfast sandwich. The CEO ordered it during his surprise visit. She immediately learned about brand integrity and product quality control.
- Social Media: What's your plan when someone records a video of your poor customer service, and it goes viral? Who responds? You don’t want the social media intern handling it on Twitter! Having a plan will help reduce the risk.
Natural Disasters / Pandemics
- Natural Disasters: Every year, we see the devastating effects of hurricanes. Sadly, we recently saw the impact of hurricane Ian in southwest Florida. The hurricane caused between $45 billion and $70 billion in damages and economic losses, Chuck Watson of Enki Research estimates. How do you plan for business continuity when your employees lose everything, and your workplace is destroyed?
- COVID-19 Pandemic: The International Monetary Fund forecasts the pandemic will cost the global economy $12.5 trillion through 2024. So many lessons learned. Hopefully, now that businesses have experienced the impacts of the pandemic, they are better prepared. Crisis management plans could now include on-site supplies of PPE, access to online tools, and mental health support for staff.
4 Reasons to Have Training for Risk Management
All the real-life scenarios discussed above clearly show why training for quality risk management and risk analysis is critical. The idea is to get all employees involved. Encourage them to be more aware of risks, look for opportunities to mitigate those risks, and raise issues with their manager so the company can take action.
“If you don’t invest in risk management, it doesn’t matter what business you're in, it’s a risky business.” - Gary Cohn, widely known as the smartest, best prepared play-by-play announcer in baseball
#1: Increases Risk Awareness
Effective training in risk management helps to increase risk awareness throughout your company. With a better understanding of risk management principles and an increase in their own situational awareness, employees will start to look at things differently. They may start recognizing hazards and risks.
For example, they may be more likely to notice a piece of metal sticking out from an endcap and report it to their manager. Or inspect their ladder before climbing to the roof. Or remind their co-worker to wear their safety glasses. Or review the HR guidelines before they interview a new job candidate, so they don’t ask any inappropriate or illegal questions. The opportunities for improvement are all around us.
#2: Improves Risk Response
Training helps establish a risk-based approach to thinking and can empower employees to proactively raise red flags to managers. In turn, managers can use the tools they learned in training to develop strategies and processes to take action to mitigate risks with ongoing operations.
- Construction project managers may pay extra attention to the change orders to ensure all details are documented, so they don’t incur unexpected costs.
- A call center manager may make the decision to temporarily turn off the phones, so the employees can seek shelter during a tornado warning.
- The director of marketing realizes that only one person on the team knows how to send mass emails to customers. The director asks the employee to document the process and cross-train another team member to minimize the risk.
#3: Shows Commitment
When employees see their company investing time and money in training around risk management, it makes a difference. Employees recognize that the company is watching out for the safety and security of the employees, customers, and the business. Ideally, employees will feel more engaged and empowered to speak up and participate in the risk management process.
HSI recently asked employees to take training in ergonomics. Many of us are working from home, so this was a great reminder to watch our posture, adjust hand placement, and take time to walk around and stretch. Spending a few minutes watching this training course was a simple reminder to all of us about the risks to our health from working on the couch or slouching at our desks.
The video below shows how to mitigate the risk of tendinitis, muscle strains and carpal tunnel syndrome, and other musculoskeletal disorders.
#4: Deepens Management Support
“The problems we have today cannot be solved by thinking the way we thought when we created them.” - Albert Einstein
Manager support and buy-in are critical for the success of any training program. Managers must approve the time to be spent on risk management training, which may take employees away from their daily tasks for a short period of time.
Once management sees the benefits from more risks identified, more completed risk assessments, new risk mitigation policies implemented, and corrective actions being taken, support for training should deepen.
As management teams see the return on investment, they should continue to invest time and money in ongoing training for risk management. The tangible rewards might include reduction in machinery repair costs because of improved maintenance, decreased safety incidents, fewer HR claims, and ongoing antivirus maintenance, not to mention higher morale and productivity.
HSI Can Help
HSI offers a wide variety of off-the-shelf programs for your diverse needs and experience levels. Several key topics include courses specifically about risk management, related soft skills, HR compliance, and safety.
- Risk Management Training Courses
- Creating a Healthy Risk Culture
- Decision Making
- Defining Hazards, Risks, and Loss
- Embedding Risk Management Processes
- Employee Health
- Financial Basics
- Identifying Risks
- Preventative Maintenance
- Reputation Management
- Risk Assessment
- Risk Management Techniques
- Types of Risks
- Violence Awareness
- Related Soft Skills Training Courses
- Critical Observation
- Customer Service
- Healthy Communication
- Managerial Courage
- Psychological Safety
- Safety Training Courses
- Aerial Lift Safety
- Box Cutter Safety
- Emergency Exits
- Fire Extinguishers
- Heat Stress
- Personal Protective Equipment (PPE)
- Lockout Tagout
- HR Compliance Training Courses
- Age Discrimination Act
- Avoiding Discrimination
- Discrimination: The Protected Classes
- Equal Pay Act
- Fair Labor Standards Act (FLSA)
- Family and Medical Leave Act (FMLA)
- Additional Related Training Courses
- Active Shooter
- First Aid, CPR, AED
- HR Compliance
- Industrial Skills
Safety Management System
HSI offers even more than training. Our combination of risk management and safety training, along with HSI’s on-demand safety management system helps safety, human resources, and operations leaders train and develop their employees. It also helps workers keep safe and meet operational compliance and regulatory requirements. Our safety management system is an all-in-one platform that can track your company’s EHS, OSH, & WHS use-cases, employees, suppliers, contractors, vendors across all your locations, devices, and workplaces. HSI also has an EHS software platform, and risk management is one of the modules.
The COVID-19 pandemic taught us many life lessons. One of the critical ones without a doubt is the true value of risk management. It all starts with proper risk management training to improve skills and give employees the knowledge to manage risks. Just think how things may have been different, if only…