Is your workforce at risk?

• Climate change. How exposed are your workers to the direct impacts – such as heatwaves? Do your current employees and potential hires think you are doing enough to combat climate change? How will the green transition affect your workforce needs?
• Fracturing world. How exposed is your workforce to geopolitical risks? Do you have contingency plans for your people in exposed locations?
• Demographic shifts. Are your people policies and practices ready to cope with having 5 generations in the workforce for the first time? With working age populations declining in much of the world, can you attract and develop the talent you need?
• Social instability. Just as elsewhere in the world, Switzerland faces a cost-of-living crisis. According to PwC’s Workforce Hopes and Fears Survey 2023, only 38% of employees in Switzerland have money left over at end of month, down from 47% in 2022. Are your people under financial stress? How is political polarisation (e.g. around the conflict in Israel and Gaza) affecting your workforce?
• Technological disruption. Do your people have the right skills to leverage the current wave of technological innovation? How will you need to reconfigure your workforce? How effective and resilient is your HR technology?

Companies in Switzerland as elsewhere need to understand the risks and opportunities that these disruptions present from a workforce perspective.

Understanding your Workforce Risk

Bringing your various workforce risks and opportunities into an easy to understand, manageable framework is critical to navigate disruptions effectively. It is also important to be more data-led, leveraging data and analytics to understand the workforce risk landscape.

We can start by identifying four key categories of workforce risk:

1. Brand and reputation. Your brand and reputation is a valuable commodity, so understanding how it intersects with your workforce is critical.
2. Organisation. Your structure, operating model and functional relationships are the foundation to successfully managing your workforce risk.
3. Regulatory and compliance. Understanding your workforce-related regulatory and compliance landscape with a forward-looking, proactive approach will create competitive advantage.
4. Talent and people. Understanding how your people are managed, rewarded and their lived experience of your organisation will be key to unlocking their true potential.

Taking a holistic view

Proactive interventions and strong risk management capabilities can help drive sustainable growth for organisations. Two-thirds of organisations in PwC’s Global Risk Survey 2022 were increasing spending on risk management and enabling technologies. By identifying and mitigating potential risks, businesses can reduce costs, increase operational efficiency, and create new value.

However, organisations’ current approaches to workforce risk often fall short in terms of having a holistic view, comprehensive data, collaboration across functions, suitable governance and alignment with business priorities. Key problems are that organisations do not have a joined-up view of workforce risk and the responsibility for the different categories are often spread out—between HR, internal audit, risk, as well as business units. We asked a gathering of senior executives who was responsible for workforce risk in their organisations, and the consensus was that it didn’t have a single owner.

Two examples from many can illustrate these challenges. First, a global reinsurance firm undertaking a strategic planning workshop identified “people risk” as being above tolerance on their risk register. The Head of Strategic Planning, reporting to the CHRO, was formally responsible for this risk, but did not have a holistic framework to look at it. Nor were they working effectively with their counterparts in the Risk function. The firm was unsure on how to approach, measure and manage the risk.

Second, a global manufacturing firm ran an HR transformation—however, they had never completed a holistic assessment of Workforce Risk, which had led to a number of problems. These included: first, not having people with the capabilities to lead and execute the change; second, large gaps in the skills required as a result of the transformation; and third, the impact of the transformation on key, upcoming reporting obligations.

Tackling Workforce Risk

Here are some questions to consider:

• Do you understand the biggest workforce risks and opportunities your organisation is facing?
• Are the capabilities and skills to address these available to you?
• Do you know how to benchmark against your peers to reveal valuable insights?
• Do you have the technology to continually monitor these, as well as the ability to predict future risks and opportunities surrounding your workforce?

If the answer to any of these is no, then it is time to take action. There is the opportunity to comprehensively address Workforce Risk challenges and turn them into competitive advantages. Recommended steps include:

• Assessing and understanding your enterprise-wide Workforce Risk landscape using a global risk taxonomy and framework.
• Harnessing data and technology to monitor and report on a standardised set of metrics.
• Identifying areas of concern and opportunities for growth to deliver intelligence-led interventions with confidence.

Organisations should be seeking insights that take into account their appetite for different types of risk, remove the guesswork, and provide a precise view of investment priorities.

If these are challenges that resonate for your organisation and if you would like to learn more about solutions, please get in touch.