Sector Risks

Areas of Risk in Human Resources

HR stands for Human Resource. It is a vast term that comprises the employees that work for the company or the organization and also the unit that is accountable for all the employee-related matters for instance recruiting, training, firing, and many more. Everything around the world has its level of risk involved, so does HR and for that, an effective risk management process needs to be undertaken.

HR risk assessment should be a crucial part of any business regardless of industry or size. Essentially, a comprehensive human resources risk and control plan should have a place on your business’ overall roadmap to success.

Now, let us understand some of the common risks that the Department of Human Resource face is as follows:

  1. Shortage of Appropriate Skills

The growth of many organizations around the globe is hampered due to inappropriate employee skills. This can be stated as the biggest risk to the organization because the right skill of the employee can help to do wonders. To find a person that completely fits the required skills for a job becomes a huge task for the HR department.

  1. Intellectual Property Loss

A large number of businesses have shifted to maintaining electronic records of their customers. Loss of such data can result in tarnishing the business image and helping competitors grow. Therefore, the HR department has to regularly check the actions of the employees so that safe culture among the employees is maintained and intellectual property is protected.

  1. Faulty Insurance

According to Health and Protection advisers, Punter Southall Health and Protection Consulting (PSHPC), 15.6% (2013) of the employees are not insured and they are not aware of the same (in the United Kingdom) which makes the employer liable to face the losses in case of any mishap.

  1. Abiding by the Rules & Regulations

The HR department has to ensure that the organization has an ethical environment, meaning that employees must be aware of the updated government policies and strictly stick to them, and do not indulge in any unethical practices knowingly or unknowingly.

  1. Digital Transformation

If there is anything the last year has taught us, it is that one should be able to succumb to any circumstance, may it be economic, social, or health. Due to the pandemic, everyone around the globe is trying to get used to working from home including the HR Department. This is where HR plays a vital role in digitizing, automating, and optimizing the employee lifecycle. Reports show that about only 40% of the HR had digital work plans to cope with the situation, the rest were either failing or struggling to work.

Human Resource is one of the most essential units in any organization, hence regular HR risk management measures must be undertaken to eliminate the potential risks to achieve an inclined line on the organizations’ growth graph.


French, M., 2013. 5 Risk Areas for HR Managers and How To Mitigate Them. [online] Available at: < > 2021. What is Human Resource? [online] Available at: < >

Jacobs, K., 2013. Top eight HR risks, and how to handle them. [online] HR Magazine. Available at: < >

Blog Published By: Vishesh Manghani, Student Risk Committee Member


You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in Sector Risks