What is HCRM

What is Risk Management?

Risk Management is a systematic process of managing an organization's risk exposures, including potential losses to its property, income, legal liability, and last, but not least, its people. Risk Management involves making and implementing decisions that minimize the effects of accidental losses and makes them more predictable.

What is Human Capital Risk Management (HCRM)?

Human Capital Risk Management (HCRM) is a unique approach to traditional HR practices. HCRM applies risk control principles to reduce the frequency, severity, and unpredictability of losses to your greatest asset -- your people! Leveraging this asset is your best opportunity for innovation and growth. However, ignoring or mishandling the risks inherent to Human Capital can result in significant losses.

Risk Management vs. Risk Avoidance

Risk Management should not be confused with Risk Avoidance, which is the process of avoiding or entirely eliminating the possibility of a loss. This is the most extreme risk control technique and can often lead to new loss exposures, including the loss of opportunity to try new things or create new revenue streams.

Managing risk, rather than avoiding it, can help your company both protect itself by reducing the likelihood or severity of a loss, and also to realize opportunities they may have otherwise foregone because you feared they were too risky.

Why Human Capital Loss Exposures Differ from Other Loss Exposures

Unlike loss exposures to your property, for example, which may never occur, Human Capital losses are inevitable and expected. No employee or manager will work forever without eventually retiring, getting sick, going on a parental leave, leaving your company to work for a competitor, becoming less effective at their job, or (gasp), dying. Although you know that some of these situations are going to occur, the kicker is that you likely won't know when.

As you can imagine, it is impossible to completely eliminate all Human Capital losses, but active management of your Human Capital risks can reduce the frequency and severity of those losses.

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