Module 6: Risk Management

7% PHR (16 questions)7% SPHR (16 questions)

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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.

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Risk Management Techniques

Tools: Enterprise risk management (ERM) software systems and risk management scorecard

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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.

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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.

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• 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.

Employees must comply with OSHA standards and have a right to:

Risk Management Legislation: OSHA

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Employee rights

Keep employees informed.• Display OSHA posters.

• Provide copies of rules and regulations.

• Post OSHA citations.

• Maintain accurate records.

• Permit authorized employee representation during an OSHA inspection.

Keep employees safe.• Correct violations.

• Allow employees to refuse abnormally dangerous work.

• Provide personal protective equipment.

• Provide medical surveillance.

• Provide training.

• Enforce rules and regulations.

Employer responsibilities

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Risk Management Legislation: OSHA

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: A6-8© SHRM

OSHA Regulatory Standards

• Emergency Exit Procedures

• Occupational Noise Exposure

• Machine Guarding

• Hazard Communication

• Control of Hazardous Energy—Lockout/Tagout

• Bloodborne Pathogens

• Confined Space Entry

• Personal Protective Equipment

• Process Safety Management

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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.

Injury and Illness Definitions

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PHR only

Recording Criteria

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

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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. 3 working daysB. 7 working days C. 8 hoursD. 24 hours

Answer: B6-12© SHRM

PHR only

OSHA Inspection Priorities

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OSHA Violations

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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.

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Safety Hierarchy

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Safety Responsibilities

HR Line Management Gain management

support.

Assist in coordinating safety programs.

Develop reporting system.

Provide expertise on accident research and prevention.

Train line managers.

Show support of safety.

Monitor employees.

Recognize hazards.

Report accidents and conduct follow-up actions.

Follow up with employees.

ACCEPT ULTIMATE RESPONSIBILITY FOR SAFETY.

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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.

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Influences on Accidents & Incidents

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Classifying Incidents

Unsafe acts

• Failing to use protective equipment

• Improper dress or use of equipment

• Performing unauthorizedprocedures

Unsafe conditions

• Defective equipment• Noise, heat, dust, or

vibration• Poor ventilation• Improper lighting• Unsafe floor surfaces

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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.

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Ergonomics Programs

• Ergonomics team• Work-site analysis• Job redesign• Surveys/monitoring/feedback• Training • On-site exercise programs• Budget

• Musculoskeletal disorders • Computer vision syndrome• Lower back strains• Sick building syndrome

Include:

Reduce:

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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: D6-23© SHRM

Health Hazards

• Current illnesses– 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

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Infectious diseases

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

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Health Hazards

Employee Assistance Programs

Services provided:• Financial• Workplace violence• Career• Legal• Family and marital• Alcohol and drug abuse• Emotional

EAP options:• In-house• Outside contractors• Consortium• Affiliate

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Employee Wellness Programs

Wellness and

fitness

Nutrition and weight

control

Smoking cessation

Stress reduction

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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: B6-28© SHRM

Drug Testing Categories

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Drug Intervention Strategies

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Security Measures

• Security guards• Preventive audits• Identification and external

control systems• Fingerprints, magnetic cards

• Structural barriers• Gates, fences

• Security hardware• Alarms, sensors

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Fraud Control Practices

• Inventory counts

• Fraud hotlines

• Sound auditing procedures

• Video surveillance

• Dollar-limit authority

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Risk Analysis

Probability• Virtually certain

• Highly probable

• Moderately probable

• Improbable

Vulnerability = Degree of probability that loss will occur + Severity of impact

Severity• Fatal• Very serious• Moderately serious• Negligible

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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.

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Causes of Workplace Violence

• 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.

Violence = Stress + Inappropriate responses + Opportunity

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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.

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Protection of Proprietary Information

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