Implementing a Risk Management Policy for 2024 Success

Although diversity, equity, inclusion and belonging (DEIB) and environmental-social governance (ESG) policies are important, they still face challenges. Despite the proven benefits, there are always critics. To ensure success, strong risk management is essential to manage potential issues and improve these initiatives.

For example, anti-corporate activists have dismissed DEIB and ESG as distractions from important corporate policies. These groups have raised concerns about issues such as green-washing and long-term risks to stakeholder interests. It has become increasingly difficult for companies to secure the support they need for an effective DEIB and ESG mission.

Fortunately for decision makers, the winds of change appear to be sweeping the corporate landscape in 2024 and reshaping the DEIB/ESG narrative.

The re-emergence of risk management policy in 2024

The DEIB and ESG controversies have led industry leaders to predict a “back to basics” for some companies in 2024. These predictions suggest that business leaders may rethink (and prioritize) their risk management policies. Unlike DEIB and ESG, risk management objectively focuses on maintaining a company's profitability and productivity.

This could help with issues such as labor shortages and a slowly recovering economy. Instead of relying on emotions, focusing on practical steps can help gain stakeholder support, form partnerships, and strengthen customer support during this uncertain time.

Focusing on risk management could also help companies avoid scrutiny from authorities and shareholder activists. With the increasing trend of anti-DEI laws in education popping up in various US states, including Utah, Florida, and Texas, it could only be a matter of time before these laws are applied in businesses as well.

However, it is important to note that the emphasis on risk management does not mean abandoning DEIB and ESG initiatives. In fact, these issues remain necessary to promote diversity (within the workforce, suppliers and partnerships), which is a critical component to the success of modern companies.

Instead, 2024 calls on companies to address sensitive social and environmental issues with a less aggressive and more integrated approach.

What exactly is risk management?

Risk management is not new. It existed before DEIB and ESG in the management of companies. It is a process that detects, assesses, prevents and manages threats to your organization. So your risk management policy is crucial to maintaining a healthy corporate culture and business management workflows.

Risk management addresses all possible issues that could impact your company's performance and business continuity. These include things like cybersecurity breaches, workplace conflicts, unfair hiring policies, and inefficient accounting systems.

In this sense, DEIB and ESG play an important role in your overall risk management standards by building a positive corporate reputation and a resilient workforce. The new year brings with it the challenge of proposing tactful strategies that convince board members and shareholders of the importance of environmental and social trends.

We present some strategic measures with which you can integrate your company's DEIB and ESG strategies into your risk management policy.

How can your company optimize risk management?

Align your risk management policies with your company's priorities. A good approach to risk management involves systematically identifying, assessing, ranking, mitigating, reporting and monitoring every important part of your operations."

A good risk management policy outlines emergency procedures and the roles of each team member. In addition to these basics, your company should also use these steps to improve your risk management in line with the latest workplace requirements.

Realigning organizational strategies

As leadership priorities change, companies may need to rethink and update their strategies. While DEIB and ESG previously existed as separate strategies, it is now a good idea to integrate them seamlessly into your overall risk management plan.

The year 2024 could be a turning point when it comes to considering the broader implications of DEIB and ESG and their ongoing impact on the growth and survival of your business.

The realignment of corporate strategies also includes a review of traditional DEIB and ESG terms to avoid unwanted political connotations and risks.

For example, your company could focus on corporate citizenship initiatives (which exclude the sensitive social aspect of corporate social responsibility). While the term suggests similar priorities, it makes discussions less polarized and contentious.

Include the entire company

Instead of relying on specific managers for DEIB and ESG, risk management needs a team approach. Ensure that all departments in your company participate in regular risk management meetings.

These meetings should include senior management, cybersecurity experts, human resources managers, technology experts, finance teams, board committee members, and directors. A mix of different perspectives allows your organization to assess different risk channels and quadrants (models that visualize the likelihood of a threat) for comprehensive decision making.

Redesign roles

If your company is facing a talent shortage, HR managers may need to change job responsibilities as part of your risk management policy. Retraining current team members for a position can be more cost-effective than hiring new employees.

However, reassigning roles would require management to take certain performance risks in talent management, particularly in skills-intensive areas such as the technology industry. In such scenarios, companies may need to step out of their comfort zone (since employers are traditionally risk-averse when it comes to engaging non-professionals).

Despite potential hesitation from leaders, repurposed roles have proven to be a practical approach for many companies. A McKinsey survey found that 44% of tech workers start in other, non-technical jobs.

Improved risk management in 2024 could mean more organizations considering additional opportunities for crossovers and repurposed roles based on similar expertise and skills requirements.

Review of talent attraction strategies

The PwC study shows that 38% of companies rank attracting and retaining talent as the second highest organizational risk, ahead of rising production costs and only behind the dangers of common cyberattacks (according to 40% of respondents).

Ineffective hiring and recruiting strategies directly impact the sustainability of your business by disrupting the transfer of knowledge and skills. The prolonged vacancy of important positions can also lead to significant productivity losses and missed market opportunities.

It's also important to recognize employee retention as an important part of your ongoing talent management strategies (which significantly impacts risk management). SHRM research shows that the cost of filling positions can be as high as 50-60%, with total costs ranging from 90% to 200%. Therefore, it is essential for your company to choose the right hire when it comes to talent acquisition.

Employers and recruiting teams can maximize the quality of hires by tapping into a diversified and global talent pool. This increases the selection of committed and well-qualified employees who fit well into your company culture and remain committed and satisfied in the long term.

Application of new technologies

The emergence of big data and related technologies has enabled organizations to streamline and accelerate risk assessments while achieving greater consistency. For example, your company could use predictive analytics to predict and prevent organizational risks based on historical and real-time data.

Proactive risk management can significantly reduce costs and avoid business interruptions and delays while your team takes advantage of gaps and opportunities in the industry. Artificial technology (AI) and data-driven algorithms can help your company fine-tune and scale hiring practices to fill positions with the best candidates.

IceHrm's Text Analyzer platform refines your JDs with the latest DEIB standards and job seeker trends, targeting your most qualified applicants.

Text Analyzer helps HR teams identify and replace the smallest biases, including ageism, disability bias, and racism, to ensure your company doesn't reject the next important hire or violate DEI regulations. Text Analyzer also offers sophisticated

JD templates that you can easily fill out and customize to your specific hiring needs.

The templates adapt your JDs to the latest guidelines while giving you the opportunity to position your unique values. Text Analyzer allows you to cost-effectively scale your talent acquisition campaigns. This frees your HR managers' schedules from repetitive tasks, allowing them to focus on value-added contributions like conducting quality interviews.

Benefits of adopting a sound risk management policy

A well-structured risk management policy integrates DEIB and ESG standards to increase and protect the value of your company. Essentially, a comprehensive risk management strategy interprets DEIB and ESG objectives and uses them to effectively drive organizational excellence.

DEIB standards improve talent acquisition policy

Justin Butler, Executive Vice-President and Chief Risk Officer at Bremer Bank, says diversity, equity and inclusion remain key for leaders when assessing organizational weaknesses and threats.

The increasing trend toward a more diverse economy and workforce requires companies to think from multiple perspectives and consider all cultures and identities involved in a company's progress.

Statistics from the US Census Bureau predict that by 2060, one in three Americans will have a non-white background. It is beneficial for employers to prepare for these trends and their impact on talent acquisition and risk management policies.

DEIB hiring initiatives could become a risk management priority for HR managers by 2024, which could help mitigate the “glass ceiling.”

The glass ceiling metaphor describes the invisible barriers and inequalities that women and marginalized people face in the workplace. These can include lower pay and a lack of training and career opportunities.

Increase competitive advantage

Proactive risk management can give your company a competitive advantage in times of industry uncertainty. A solid strategy built on DEIB and ESG empowers decision-makers to recognize the opportunities overlooked by less inclusive and less environmentally conscious companies.

Business leaders can implement well-established risk management policies to tap untapped talent pools (e.g. underrepresented groups or passive job seekers) and resources and develop effective partnerships with organizations or institutions with shared DEIB or ESG goals.

Strengthen risk reduction

A collective risk management approach allows interdisciplinary team members to pool their tools and resources to collectively increase the company's competencies. These team arrangements can incorporate unique DEIB and ESG data to strengthen risk mitigation techniques and support business performance.

Integrated tools enable decision makers to identify individual risks in different aspects and facets of the business, generate detailed reports and improve team visibility for efficient problem solving.

Future-proof workforce for new situations

By incorporating DEIB and ESG into risk management, you have your finger on the pulse of world events, customer trends and industry standards. This allows your company to train and prepare its employees to adapt and respond to new demands.

By keeping your employees informed and equipped with the latest industry data, you foster results-oriented perspectives to achieve impactful solutions in unfamiliar environments.

Towards effective risk management

Ultimately, the year 2024 requires a business balancing act. Instead of viewing DEIB, ESG and risks as separate governance issues and priorities, it is time to recognize their interplay. This gives your company a deeper understanding of its dynamics and how each relationship can be improved.

The new year is not about pushing DEIB and ESG aside due to public pressure. On the contrary, it is a crucial crossroads for companies to rally and engage in a broader discussion about how these issues directly impact the success and bottom line of their business through the power of risk management.

IceHrm's innovative tools streamline risk management, integrating DEIB and ESG standards for organizational excellence.