Module 6: Risk Management

8% PHR 7% SPHR

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Risk – possibility of positive opportunities and outcomes as well as negative.

Risk Management – is the identification, evaluation and control of risk that may affect an organization.– Is a complex enterprise-wide concern that has

ramifications for all areas discussed in all SRHM Modules

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Risk & Risk Management

Categories of Operational Risk

• Personnel risk (fraud and error)

• Physical assets (business environments)

• Technology (viruses)

• Relationships (lawsuits)

• External/regulatory (external fraud)

HR role: Examine HR policies to prevent or mitigate loss and ensure business continuity.

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Risk Management

Integrated effort of any organization, with executive level support, supports strategic goals and growth of the organization.

HR should assess risk and create policies.

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Risk Management Techniques

Tools: Risk management software systems and risk management scorecard

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Continuity and Recovery

Business continuity planning• Identifies potential threats and impacts.• Plans for disruption, interruption, or loss of

business functions.

Disaster recovery planning• A set of guidelines and procedures to be

used by an organization for the recovery of business operations due to disasters such as earthquakes, fires, terrorism, or epidemics.

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Insurance That Mitigates Risk

• Employment practices liability insurance (EPLI)– Protects against claims of discrimination, wrongful

termination, and sexual harassment.

• Professional liability insurance– Protects directors, officers, employees, and the

organization against claims of negligence in the performance of professional services.

• Worker’s compensation insurance– Protects workers in case of work-related injury or

disease.

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• Demand safety and health on the job.

• Request inspections.• Have an authorized

representative accompany an inspection.

• File a complaint.• Be informed of workplace

hazards.

Employees must comply with OSHA standards and have a right to:

Risk Management Legislation: OSHA

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Employee rights

• Request action from the employer to correct hazards or violations.

• File a discrimination complaint.

• Receive training.

Keep employees informed.• Correct violations.

• Allow employees to refuse abnormally dangerous work.

• Provide personal protective equipment.

• Provide medical surveillance.

• Provide training.

• Enforce rules and regulations.

Employer responsibilities

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Risk Management Legislation: OSHA

• Display OSHA poster.

• Provide copies of act and rules/regulations.

• Post OSHA citations.

• Notify employees of hazards.

• Maintain accurate records.

• Permit authorized employee representation during an OSHA inspection.

Keep employees safe.

Which of the following is an example of an employer’s rights under OSHA?

A. To apply to OSHA for a temporary or permanent variance from a standard

B. To restrict inspectors and employee representatives from all areas that contain confidential information, processes, or equipment

C. To refrain from enforcing rules that cause economic hardship for the organization

D. To review and rule on employee protests regarding unsafe working conditions

Answer: A6-10

OSHA Regulatory Standards

• Emergency Exit Procedures

• Occupational Noise Exposure

• Machine Guarding• Hazard Communication• Control of Hazardous

Energy—Lockout/Tagout

• Bloodborne Pathogens• Confined Space Entry• Personal Protective

Equipment• Process Safety

Management

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• Occupational injury: Injury that results from a work-related accident or exposure involving a single incident.

• Occupational illness: Medical condition or disorder caused by exposure to environmental factors associated with employment.

Injury and Illness Definitions

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Recording Criteria

For both work-related illnesses and injuries:• Death• Days away from work• Restricted work or transfer to another job• Loss of consciousness• Diagnosis by a licensed health-care

professional• Medical treatment beyond first aid

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OSHA FormsForm 300 – Log of Work-Related Injuries & Illnesseskeep separate logs for each location

Form 300A – Summary of Work-Related Injuries & Illnessesposted at the end of the year for 3 months

Form 301 – Injury and Illness Incident ReportFilled out within 7 days of learning of an accident

Form must be kept for five years

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An employer learns that a worker has fractured an arm on the job. Within what time frame must the employer complete OSHA Form 300?

A. 8 hoursB. 24 hoursC. 3 calendar daysD. 7 calendar days

Answer: D6-15

OSHA Inspection Priorities

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OSHA Violations

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Drug-Free Workplace Act

Federal contractors with contracts of $100,000 or more and recipients of grants from federal government must:

• Develop a policy that maintains a drug-free workplace.

• Specify penalties for policy violations.

• Provide a copy of the policy to employees.

• Establish a drug-awareness program.6-18

Legislation Summary

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Legislation Relevance to Risk Management

Healthand Safety

IndustrialSecurity

WorkplacePrivacy

OSH Act Mine Safety and Health Act

Drug-Free Workplace Act USA PATRIOT Act Homeland Security Act GINA ADA FLSA

Legislation Summary

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Legislation Relevance to Risk Management

Healthand Safety

IndustrialSecurity

WorkplacePrivacy

OSH Act Mine Safety and Health Act

Drug-Free Workplace Act USA PATRIOT Act Homeland Security Act GINA ADA FLSA

Safety Program Priorities

• Injuries are prevented and hazards are minimized.

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Safety Hierarchy

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Safety Responsibilities

HR Line Management Gain management

support.

Assist in coordinating safety programs.

Develop reporting system.

Provide expertise on accident research and prevention.

Train line managers.

Show support of safety.

Monitor employees.

Recognize hazards.

Report accidents and conduct follow-up actions.

Follow up with employees.

ACCEPT ULTIMATE RESPONSIBILITY FOR SAFETY.

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Safety Committees

• Encourage safety awareness.

• Motivate employees.

• Identify and correct hazards.

Ensure that the safety committee does not become an employer-dominated labor organization—a violation of the NLRA.

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Influences on Accidents and Incidents

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Classifying Incidents

Unsafe acts

• Failing to use protective equipment

• Improper dress or use of equipment

• Performing unauthorizedprocedures

Unsafe conditions

• Defective equipment• Noise, heat, dust, or

vibration• Poor ventilation• Improper lighting• Unsafe floor surfaces

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Accident Prevention

• Design work sites and flow to manage risk.

• Assign safety specialists and line managers to committees.

• Analyze why accidents happen and have outside experts inspect working conditions.

• Provide updated job and safety training; test and document results.

• Provide safety rewards and recognition.

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Ergonomics Programs

• Ergonomics team• Work-site analysis• Job redesign• Surveys/monitoring/feedback• Training • On-site exercise programs• Budget

• Musculoskeletal disorders • Computer vision syndrome• Lower back strains• Sick building syndrome

Include:

Reduce:

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Return-to-work programs require that injured employees

A. return to less-strenuous jobs on a permanent basis.

B. refrain from taking FMLA leave until they can return to work.

C. stay on disability until they can perform all the duties of their current jobs.

D. perform jobs that accommodate their current limitations.

Answer: D6-29

Health Hazards

• Current illnesses– Hepatitis B virus– Hepatitis C virus– HIV/AIDS– Tuberculosis

• Future pandemics– Disease that is new

to the population– Human infection that

causes serious illness

– Agent that spreads easily

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Infectious diseases

Environmental factors• Physical

– Heat, noise, vibration, air conditioning, radiation, ventilation, smoking, sanitary conditions, drinking water, workplace design

• Chemical– Dust, fumes, gases, toxic materials and chemicals,

carcinogens, smoke

• Biological– Bacteria, fungi, insects

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Health Hazards

Employee Assistance Programs

Provide counseling for:• Alcohol and drug

abuse• Emotional• Family and marital• Legal• Career• Workplace violence• Financial

EAP options:• In-house• Outside contractors• Consortium• Affiliate

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Employee Wellness Programs

Wellness and

fitness

Nutrition and weight

control

Smoking cessation

Stress reduction

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A written policy on substance abuse benefits the organization because

A. it’s a deterrent to absenteeism and tardiness.

B. supervisors are more willing to confront employees with impaired performance.

C. it fulfills compliance with state and local laws and ordinances.

D. top management does not have to deal with issues related to drug abuse.

Answer: B6-34

Drug Testing Categories

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Drug Intervention Strategies

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Security Measures

• Security guards• Preventive audits• Identification and external

control systems— Fingerprints, magnetic

cards

• Structural barriers— Gates, fences

• Security hardware— Alarms, sensors

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Fraud Control Practices

• Inventory counts

• Fraud hotlines

• Sound auditing procedures

• Video surveillance

• Dollar-limit authority

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Risk Analysis

Probability• Virtually certain• Highly probable• Moderately

probable• Improbable

Vulnerability = Degree of probability that loss will occur + Severity of impact

Severity• Fatal• Very serious• Moderately

serious• Negligible

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Emergency Response Plan Guidelines

• Involve senior management.

• Create a team.

• Set priorities.

• Identify resources.

• Communicate the plan.

• Keep the plan up-to-date.

• Test the plan.

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Causes of Workplace Violence

• Reduce stress by giving employees a vehicle to express concerns.

• Reduce inappropriate responses by checking employee references and monitoring behavior.

• Reduce opportunity by maintaining a zero tolerance policy for weapons and violence.

Violence = Stress + Inappropriate responses + Opportunity

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Workplace Violence Prevention/ Intervention Program Elements

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Identify and involve stakeholders.

Conduct needs assessment.

Develop prevention and intervention program.

Implement program.

Invoke incident management plan.

Monitor and evaluate

program and response.

A company is located in a multi-tenant building in a suburban area, off an interstate highway lined with shopping malls and fast-food restaurants. There is ample parking in an unsecured lot. There is a desk at the building’s one unlocked public entrance to screen visitors, but the door is locked at night and there is no security guard at the desk. The company operates a sales office, a service center, and a 24-hour call center in this facility. There is no record of employee conflicts and few complaints against supervisors. What is the company’s greatest vulnerability at this facility?

A. Workplace stressB. Likelihood of weapons possession in the workplaceC. Parking lot at nightD. Unsecured alternative entrances at night

Answer: C

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Evening and night shifts will be using the unsecured parking lot at night in an area that is likely to have significant traffic at all hours. This is a vulnerability for employees on those shifts who could be robbed or assaulted on their way into or from work. A range of actions could be taken to address this risk, from improving lighting to contracting with security services during shift turnover hours.

Government Responses to Terrorism

• USA PATRIOT Act

• Department of Homeland Security

• National Response Framework

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Protection of Proprietary Information

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• Identify proprietary information.

• Use confidentiality and nondisclosure agreements.

• Secure trade secrets.

• Confine intellectual knowledge on “need-to-know” basis.

• Provide training to employees about the organization’s plan.

• Recognize insider/outsider threats.

Technology Security Risks

• Unauthorized access to data

• Virus downloads

• Social engineering

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Organizational policies for accessing and using technology in the workplace help to mitigate security risks.