The widespread consequences of the pandemic - supply chain disruption, economic uncertainty, skills shortages, and digital acceleration - have turned human capital assumptions on their head. The 2022 Mercer Marsh Benefits MEA People risk report shows that for nearly nine out of ten firms in the Middle East and Africa (MEA), the concept of ‘people risk’ is becoming an existential problem.
The survey of 316 HR and risk professionals examined the five pillars of people risk with the greatest impact on businesses across the region. The vast majority - 88 per cent - say that health and safety risks to employees remain the biggest threat to their business – a clear legacy from the pandemic. Those risks come from a variety of sources.
In order of perceived risk, the top five are (1) cybersecurity and privacy; (2) benefits, policy and reward decision-making and accountability; (3) catastrophic personal life events; (4) administration and fiduciary; (5) and the changing nature of work. To avoid these becoming existential problems, mitigation is essential.
By many crucial metrics, the Middle East and Africa region is ahead of the curve. Nearly eight out of ten firms in the region say that they are actively mitigating risks associated with the threat of pandemics and other communicable health conditions. The global average is 76 per cent. The Marsh survey also shows that a similar number have clear roles and responsibilities for managing such risks, and 49 per cent have instigated specific pandemic policies, health benefits, and training and development strategies.
The region is also leading with the deployment of effective policies, practices, environments, and communication to support and promote a culture of employee health and well-being – 49 per cent compared to the global average of just 41 per cent.
However, the MEA region faces its own unique ‘people risk’ challenges – including cybersecurity and data privacy. Sadly, a paucity of skilled resources makes it harder for businesses to understand and manage cybersecurity risks – pointing toward an enduring digital talent gap.
Employee attraction, retention and productivity are therefore crucial – but increasingly threatened, with 81 per cent of organizations across MEA unsure how to make the right decisions on benefits, rewards, and accountability. Mismanagement of these factors has the potential to precipitate a number of side effects, including an inflationary spiral, cost increases, benefits inequity, biased decision-making, and misalignment with regional and global strategies.
Similarly, managers need to enact employee support protocols as contingencies for catastrophic life events and future crises, such as those that stem from climate events, inflation and rising interest rates, pandemics, recessions, or violent conflicts.
Remote working revolution
Two of the most fascinating people risk developments are that of administration and fiduciary risk. And the changing nature of work, which rank as the fourth and fifth greatest risks to business continuity. These risks relate to the degree to which flexible working has evolved over the last two years, with remote working and highly digitized working practices leaving businesses at greater risk of administrative and trust-related risk.
To mitigate such risks, businesses should review their policies and practices to ensure they are relevant for current and future workforces. For the MEA region, there is good news here too.
Analysis shows that MEA-based organizations are comparatively well equipped to deal with the changing nature of work, with 78 per cent of firms currently addressing the risks identified in this area. A similar percentage have clear roles and responsibilities in place for managing these risks, while 46 per cent have effective policies and support systems in place to enable remote, hybrid and other flexible ways of working.
The MEA also beats companies globally when it comes to working conditions and labor relations: 76 per cent are addressing the associated risks compared to 70 per cent globally, and 78 per cent have clear roles and responsibilities for managing this risk against 70 per cent globally.
People and purpose
These analyses provide crucial insight into how the pandemic has impacted individuals in the corporate space – and they allow companies to respond by laying a proper foundation for risk management in HR. The focus on profits should be balanced out with a focus on people and purpose to create more sustainable business models.
For a great many companies, the coming year will be challenging, and people risks must be managed at an operational level. By anticipating risks and working with partners to mitigate them, MEA-based businesses can get on the front foot, allowing workforces to thrive, and preserving the bonds of trust that employers have worked so hard to achieve.