Any business with a workforce is vulnerable to HR risks relating to hiring, training, and retaining employees. HR risk management means anticipating these risks, creating a mitigation plan, and implementing it to prevent them from occurring or lessen their impact.
One of the risk management processes involves creating a risk register. Read on for more information on a risk register and tips for risk register building that will help you stay on top of potential HR challenges.
What Is a Risk Register?
A risk register, also known as a risk log, contains details about potential risks, their possible impact, and mitigation plans. It helps manage common organizational hazards and plan for the company’s future to ensure success and growth in the volatile business environment.
While the details in a risk register may vary depending on the project or department, some components cut across industries and fields. Below are the essential elements that every risk register should contain.
- A risk identification number or name
- Risk description
- Risk category
- Risk probability
- Risk analysis
- Risk mitigation
- Risk priority
- Risk owner
- Risk status
Risk Registers are Vital for Security
All organizations should have a risk register as part of their risk management plan. The record is crucial for anticipating risks and addressing them before they manifest. The level of preparedness that comes with having an articulate risk register protects your business and keeps it safe in the face of challenges. It also enhances your team’s adaptability and increases your ability to overcome any obstacles that may prevent you from achieving your business goals.
8 Tips for Building a Risk Register
When building a risk register, it would be best if you only focused on outlining potential risks, detailing your risk analysis, and establishing how you intend to handle them. To make your risk register creation process smoother and more efficient, below are eight tips for risk register creation.
1. Identify the Risk
The first step when creating a risk register is identifying the risk. HR risks range from workforce and compliance risks to employee training and development. Once you outline your potential risks, determine names or identification numbers to represent them in your risk register. Remember to include a date and subtitle when filling in your risk register’s “Risk Identification” field.
2. Describe the Risk
When describing HR risks, provide a risk overview and why consider the risk a problem in waiting. You don’t have to go into much detail as long as you cover the essential points about the risk and why it is a potential issue. Be sure to maintain accuracy in your description to make the risk easy to identify and address in the future. A suitable risk description format will start with the cause, followed by the risk, and finally, the impact.
3. Categorize the Risk
Grouping risks into categories enables you to filter potential hazards and address them collectively, saving you time. It also makes it easy to assign them to the appropriate response teams. For example, you can categorize HR risks into training and development, ethics and leadership, mergers and acquisitions, employee data, and employee compensation. Consider where the risk comes from and decide who can handle it better to help you create proper categories.
4. Assess the Likelihood of Risk Occurring
Once you have identified and categorized your risks, score them based on their probability of occurring. Your scale can be from 1-5, 10-100, or low, medium, and high. You can also choose parameters like “not likely,” “likely,” and “very likely.” Doing so will allow you to choose which risk to work on first. The information will go into the “ Risk Probability” field.
5. Analyze the Risk Impact
While some risks have little impact, others are catastrophic and may grind business operations to a halt. Evaluate each risk to establish its possible implications, which tells you which threat is more crucial to handle. You can use a scale of “very low,” “low,” “medium,” “high,” and “very high” to categorize risk impact. Alternatively, you can choose quantitative figures to represent a risk’s impact. Your findings will go into your risk register’s ” Risk Impact “field.
6. Create a Risk Mitigation Plan
After analyzing your HR risks, it is time to create a response plan which you will enter into the “Risk Mitigation” field. Your risk mitigation plan should include a detailed solution for reducing the risk, a summary of the expected outcome, and how the strategy will affect risk impact. Simple issues might be easy to handle, while more complex ones may need teamwork and meetings. Regardless of your approach, ensure you outline the plan accurately and clearly for reference purposes and to reduce confusion.
7. Prioritize Risk
Usually, you prioritize risks with the highest likelihood of occurring and with the most adverse impact on your company. Similarly, those with low impact and probability scores go to the bottom of the list. For example, you can have a risk priority scale between 1 and 3, with 1 being the lowest priority, 2 being medium, and 3 being the highest priority. If you prefer organizing by color, you can color-code the risks and enter the information into the “Risk Priority” field.
8. Assign Risk Ownership
Assigning risk ownership means identifying the ideal individual in charge of the risk and ensuring proper mitigation in line with the company’s risk mitigation plan. The risk owner can be more than one person and includes other team members instrumental in implementing the set risk mitigation plan for success. Once you identify the individual who will head the response team, you can fill in your register’s” Risk Ownership” segment.
The Bottom Line
Creating and maintaining a risk register is a crucial and continuous process in risk management. The above information can help you develop a comprehensive risk register to keep your risks low and company productivity optimal.