Question

Which best demonstrates HR's role in managing organizational risk?

Following management's lead in identifying, prioritizing, and managing risks within the HR function
Identifying past and current risks and avoiding those risks that affect the HR function
Participating in the identification and management of threats and opportunities across the organization
Defining the risk level that the organization is willing and able to assume

Answer 1

HR's primary role in managing organizational risk involves proactive participation in identifying and managing threats and opportunities across the organization, which includes professionalizing HR functions to minimize biases and maintaining efficient strategies in line with managerial expectations.

Step-by-step explanation:

The best demonstration of HR's role in managing organizational risk is participating in the identification and management of threats and opportunities across the organization. HR's involvement goes beyond mere risk aversion within their department or following management's directives. Rather, the HR function plays an integral part in the overall security management & safeguards by proactively identifying potential risks and collaborating on a strategic response to these risks. The Human Resources Institutional & Corporate Management team plays a pivotal role in ensuring equal opportunity and reducing biases, as seen in hiring practices where diversity is essential for inclusivity and mitigating reputation risk.

Professionalizing human resources functions is an example of proactive risk management because it may prevent discrimination and litigation risks, as suggested by research demonstrating bias against applicants with Asian-sounding names. Professional HR practices reduce such biases, contributing to a safer and more secure working environment. Additionally, HR's participation can help to navigate the complexities of structural changes like downsizing or mergers, which have been associated with job stress and insecurity.

Your Manager's Role and Responsibilities

Understanding and working effectively within the managerial structure—whether it represents Theory X or Theory Y management style—is crucial for navigating and managing organizational risks associated with human resources. By understanding managers' expectations and aligning HR strategies accordingly, HR professionals help to align employees' motivations with organizational goals, thereby efficiently contributing to risk mitigation strategies.