Human Capital Risks Major Threat To Firms

When risk management is concerned,we tend to look at insurance,physical security,and etc. as the major component of risk. However,it seems that the Economist Intelligence Unit’s (EIU) latest survey revealed the following:

“ human capital risks such as skills shortage,succession issues and the loss of key personnel were seen by respondents as being more challenging to manage than threats from risk of losing reputation as well as information technology,political and regulatory risks.  International risk managers,including insurers and reinsurers,see human capital risks as being the most significant threat facing their global business operations. 

“The survey is called The Best Practice In Risk Management:a Function Comes of Age which was conducted in February 2007 involved the following:

• 218 executives worldwide were asked about their approach to risk management and their perception of the key challenges and opportunities facing this function. These respondents surveyed were from various industries involved in risk management,with a third each from Asia and Australasia,North America  and Western Europe.
• The objective of the survey is to assess how effective companies thought they were managing those risks and how they were changing their approach to risk management to keep pace with developments in the business environment
• 62% of the respondents from Asia acknowledged that human capital risks was a significant threat to their operations. However,only 32% of the respondents from Asia said they managed these risks effectively. 
• only areas in which they felt less confident were risks associated with terrorism and climate change.

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