ASK THE EXPERT:CH Insurance-Risk Management and
Human Resources a Winning Combination
If you were to ask most employers what their organization’s most valuable asset is, they’d say it’s their people. But people also represent the greatest liability for most organizations…whether it’s complying with complex state and federal employment regulations, workplace conflict, or even attendance, people are both an organization’s greatest asset and its greatest risk. There are basically three ways that employers can manage that risk–by accepting it, transferring the risk, or reducing the risk.
1. There are some small risks that employers may accept as a cost of doing business, like the occasional weather closure, or building maintenance. But there are a lot of risks that employers simply cannot accept as a cost of doing business, and these usually revolve around their employees.
2. Many employers transfer the major risks they face by insuring against them. Sometimes the risks are great enough that they are required to insure them like Workers’ Compensation in the event of a (workplace injury) while other times it makes just makes business sense to transfer the risk to a third party. For example, many organizations choose to carry Employment Practices Liability Insurance (EPLI) to help cover the costs of defending the organization from a lawsuit brought against the company by an employee who accuses it of discriminatory practices. Whether the claims are legitimate or not, the cost to defend these claims are high, and many businesses simply can’t accept that level of risk.
3. The third way organizations manage the liability of having employees is by reducing the risk, taking proactive steps to identify the risk, and mitigate it. Taking these steps can also make it easier to transfer risk. An organization that understands it has employees who represent some level of risk can take proactive steps to reduce that risk with policies and procedures. One of the most important documents available to all employers is their Employee Handbook. A well written handbook establishes expectations of policy, offers consistency in procedures, and it lets employees know what to do whenever they have questions. Having these in place not only reduces the overall risk of a human-resource incident, but often it demonstrates to insurance companies that the organization takes potential liability seriously, which could lead to lower insurance costs. When have you had your Employee Handbook updated or reviewed?
Every employer will face challenges when it comes to managing its people and the inherent liability they can represent. Understanding where you stand and how to improve can make an enormous difference to your organization. For more information on how these practices work, contact your CH team or your local independent agent. Happy New Year and we wish you a successful and prosperous 2018!
Contributing Editor: Paul Banuski, Human Resource Consultant, HR One