Module 6: Risk Management
7% PHR (16 questions)
7% SPHR (16 questions)
© SHRM
6-1
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.
© SHRM
6-2
Risk Management Techniques
Assess risk
Develop systems
Evaluate/modify
systems
Implement
programs
Monitor efforts
Tools: Enterprise risk management (ERM) software
systems and risk management scorecard
© SHRM
6-3
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 to be used for recovery
of data.
© SHRM
6-4
Insurance That Mitigates Risk
• Employment practices liability insurance (EPLI)
– Protects against claims of discrimination, wrongful
termination, or sexual harassment.
• Errors and omissions (E&O) insurance
– Protects against employment claims; covers economic
and emotional damages.
• Directors’ and officers’ (D&O) liability insurance
– Protects directors, officers, and the corporation from
claims related to SEC violations or shareholder class
actions.
© SHRM
6-5
Risk Management Legislation: OSHA
Employee rights
Employees must comply with OSHA standards and have
a right to:
• Demand safety and health on the job.
• Request inspections.
• Have an authorized representative accompany an
inspection.
• File a complaint.
• Be informed of workplace hazards.
• Receive training.
© SHRM
6-6
Risk Management Legislation: OSHA
Employer responsibilities
Keep employees informed.
Keep employees safe.
• Display OSHA posters.
• Provide copies of rules and
regulations.
• Post OSHA citations.
• Maintain accurate records.
• Permit authorized
employee representation
during an OSHA
inspection.
• Correct violations.
• Allow employees to refuse
abnormally dangerous work.
• Provide personal protective
equipment.
• Provide medical surveillance.
• Provide training.
• Enforce rules and
regulations.
© SHRM
6-7
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 appoint an employee representative to
accompany OSHA during inspections
C. To refrain from enforcing rules that cause
economic hardship for the company
D. To review and rule on employee protests
regarding unsafe working conditions
Answer: A
© SHRM
6-8
OSHA Regulatory Standards
• Emergency Exit
Procedures
• Occupational Noise
Exposure
• Machine Guarding
• Hazard Communication
• Control of Hazardous
Energy—Lockout/Tagout
© SHRM
• Bloodborne Pathogens
• Confined Space Entry
• Personal Protective
Equipment
• Process Safety
Management
6-9
Injury and Illness Definitions
PHR only
• 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.
© SHRM
6-10
Recording Criteria
PHR only
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
© SHRM
6-11
PHR only
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.
B.
C.
D.
3 working days
7 working days
8 hours
24 hours
Answer: B
© SHRM
6-12
OSHA Inspection Priorities
1.
• Imminent danger
2.
• Catastrophes and fatal accidents
3.
• Employee complaints
4.
• High-hazard industries
5.
• Follow-up inspections
© SHRM
6-13
OSHA Violations
Willful
• Intentional
Serious
• Likely to cause death or serious
injury
Other-thanserious
Repeat
De minimus
© SHRM
• Not likely to cause death or serious
injury
• Repeat of an earlier violation
• No direct or immediate relationship
to job safety or health
6-14
Drug-Free Workplace Act
Federal contractors with contracts of
$100,000 or more 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.
© SHRM
6-15
Safety Hierarchy
© SHRM
Priority 1
• Eliminate hazard.
Priority 2
• Use safeguards.
Priority 3
• Use warning signs.
Priority 4
• Train and instruct.
Priority 5
• Provide personal protection.
6-16
Safety Responsibilities
HR
 Gain management
support.
 Assist in coordinating
safety programs.
 Develop reporting
system.
 Provide expertise on
accident research and
prevention.
 Train line managers.
© SHRM
Line Management




Show support of safety.
Monitor employees.
Recognize hazards.
Report accidents and
conduct follow-up actions.
 Follow up with employees.
 ACCEPT ULTIMATE
RESPONSIBILITY FOR
SAFETY.
6-17
Safety Committees
•
•
•
•
Are elected by peers.
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.
© SHRM
6-18
Influences on Accidents & Incidents
Internal
Factors
• Nature of task
• Work group
• Management
goals
• Organizational
style
• Leader’s style
and experience
• Employee
orientation
• Machinery
© SHRM
External
Factors
• Economic and
geographic
conditions
• Labor force mix
• Labor unions
• Governmental
regulations
Human Factors
• Attitudes,
abilities,
motivation, and
preferences
• Skills
• Distractions
6-19
Classifying Incidents
•
Failing to use protective
equipment
• Improper dress or use of
equipment
• Performing unauthorized
procedures
Unsafe acts
© SHRM
•
•
•
•
•
Defective equipment
Noise, heat, dust, or
vibration
Poor ventilation
Improper lighting
Unsafe floor surfaces
Unsafe conditions
6-20
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.
© SHRM
6-21
Ergonomics Programs
© SHRM
Include:
•
•
•
•
•
•
•
Ergonomics team
Work-site analysis
Job redesign
Surveys/monitoring/feedback
Training
On-site exercise programs
Budget
Reduce:
•
•
•
•
Musculoskeletal disorders
Computer vision syndrome
Lower back strains
Sick building syndrome
6-22
Modified-duty 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: D
© SHRM
6-23
Health Hazards
Infectious diseases
• Current illnesses
–
–
–
–
© SHRM
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
6-24
Health Hazards
Environmental factors
• Physical
– Heat, noise, air conditioning, radiation, ventilation,
smoking, sanitary conditions, drinking water, etc.
• Chemical
– Dust, fumes, gases, toxic materials and chemicals,
carcinogens, smoke
• Biological
– Bacteria, fungi, insects
© SHRM
6-25
Employee Assistance Programs
Services provided:
• Financial
• Workplace violence
• Career
• Legal
• Family and marital
• Alcohol and drug abuse
• Emotional
© SHRM
EAP options:
• In-house
• Outside contractors
• Consortium
• Affiliate
6-26
Employee Wellness Programs
Nutrition
and weight
control
© SHRM
Smoking
cessation
Stress
reduction
Wellness
and
fitness
6-27
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: B
© SHRM
6-28
Drug Testing Categories
Preemployment
Reasonable
suspicion
and for cause
Post-accident
Post-treatment
Random
Periodic
© SHRM
6-29
Drug Intervention Strategies
© SHRM
Constructive
confrontation
• Focuses on job
performance
Counseling
• Focuses on the
cause of the
problem
6-30
Security Measures
• Security guards
• Preventive audits
• Identification and external
control systems
• Fingerprints, magnetic cards
• Structural barriers
• Gates, fences
• Security hardware
• Alarms, sensors
© SHRM
6-31
Fraud Control Practices
•
•
•
•
•
Inventory counts
Fraud hotlines
Sound auditing procedures
Video surveillance
Dollar-limit authority
© SHRM
6-32
Risk Analysis
Vulnerability = Degree of probability that loss will
occur + Severity of impact
Probability
• Virtually certain
• Highly probable
• Moderately
probable
• Improbable
© SHRM
Severity
•
•
•
•
Fatal
Very serious
Moderately serious
Negligible
6-33
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.
© SHRM
6-34
Causes of Workplace Violence
Violence = Stress + Inappropriate responses +
Opportunity
• 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.
© SHRM
6-35
Government Responses
to Terrorism
• USA PATRIOT Act
– Expands powers of the government to deal with
suspected terrorists or those harboring them.
• Department of Homeland Security
– Creates a National Response Plan to manage
domestic incidents.
– Analyzes threats and intelligence.
– Guards borders and airports; protects
infrastructure.
© SHRM
6-36
Protection of Proprietary
Information
• Restrict access to computer information and employee
data.
• Restrict discussion or display of sensitive information.
• Ask employees to safeguard company secrets.
• Use confidentiality and nondisclosure agreements.
• Identify proprietary information.
© SHRM
6-37