Even though diversity, equity, inclusion, and belonging (DEIB) and environmental social governance (ESG) policies are important, these policies still face challenges. Critics persist despite the proven benefits. So, to ensure success, it’s vital to have a strong risk management policy to handle potential issues and improve these initiatives.
For instance, anti-corporate activists have dismissed DEIB and ESG as distractions from key organizational directives. These groups have spread concerns about issues like greenwashing and long-term risks to stakeholders’ interests. It has become increasingly more challenging for companies to secure the support needed to drive effective DEIB and ESG missions.
Fortunately for decision-makers, the winds of change seem set to take on the organizational landscape of 2024 in a reframing of the DEIB/ESG narrative.
The Re-Emergence of Risk Management Policy in 2024
The controversies surrounding DEIB and ESG have led industry leaders to foresee some companies “returning to basics” in 2024. These predictions indicate that company leaders might revisit (and prioritize) their risk management policies. Unlike DEIB and ESG, risk management focuses objectively on sustaining an organization’s profitability and productivity.
These could help with things like labor shortages and a slowly recovering economy. Instead of relying on emotions, focusing on practical steps can help gain support from stakeholders, form partnerships, and boost customer backing in this uncertain time.
Focusing on risk management could also help companies prevent scrutiny from authorities and shareholder activists. With the rising trend of anti-DEI bills in education that have emerged across US states, including Utah, Florida, and Texas, it could be a matter of time before these laws enter the organizational setting.
But, it is important to note that emphasizing risk management doesn’t mean abandoning DEIB and ESG initiatives. In fact, these topics remain necessary for fostering diversity (within the workforce, suppliers, and partnerships), which is a critical component in the success of modern organizations.
Instead, 2024 would challenge companies to address sensitive social and environmental topics with a less aggressive and more integrated approach.
What exactly is risk management?
Risk management isn’t new. It came before DEIB and ESG in running organizations. It’s a process that finds, assesses, prevents, and deals with threats to your company. So, your risk management policy is crucial for keeping a healthy culture and workflow in corporate governance.
Risk management looks at all the possible problems that could affect your company’s performance and business continuity. This includes things like cybersecurity breaches, workplace conflicts, unfair hiring policies, and ineffective accounting systems.
On that note, DEIB and ESG play major roles in your overall risk management standards by building a positive corporate reputation and a resilient workforce. The new year brings the challenge of proposing tactful strategies that convince board members and shareholders of the importance of environmental and social trends.
We share some strategic measures to integrate company DEIB and ESG strategies into your risk management policies.
How can your company optimize risk management?
Adjust your risk management policy based on your organization’s priorities. A good risk management approach involves systematically identifying, assessing, rating, mitigating, reporting, and monitoring every important part of your operations.”
A good risk management policy shows emergency procedures and the roles of each team member. Besides these basics, your company should also use these steps to improve your risk management in line with the latest workplace needs.
Reframe Organizational Strategies
As leadership priorities change, companies may need to reconsider and update their strategies. While DEIB and ESG existed as separate policies, now is a good idea to include them smoothly in your overall risk management plan.
2024 could be a turning point in considering the broader implications of DEIB and ESG and their lingering impact on the growth and survival of your organization.
Reframing organizational strategies also involves a review of traditional DEIB and ESG terms to avoid unwanted political connotations and risks.
For instance, your company might focus on corporate citizenship initiatives (which omit the sensitive social aspect of corporate social responsibility). While the term points to similar priorities, it makes discussions less polarized and controversial.
Involve the Whole Company
Instead of relying on specific managers for DEIB and ESG, risk management needs a team approach. Make sure all departments attend regular risk management meetings in your company.
These sessions should include senior management, cybersecurity professionals, HR managers, tech experts, finance teams, board committee members, and directors. A blend of perspectives enables your company to assess various risk channels and quadrants (models to visualize the likelihood of a threat) for comprehensive decision-making.
Repurpose Roles
If your company faces skill shortages, HR managers might need to change job roles as part of your risk management policy. Retraining current team members for a position can be more cost-effective than hiring new people.
However, repurposing roles would require organizational leaders to undertake certain performance risks in talent management, especially in skill-intensive areas like tech. In such scenarios, companies may have to emerge from their comfort zones (since employers traditionally stay risk-averse to entrusting non-professionals).
Despite the potential hesitation from leaders, repurposed roles have been a practical approach for many companies. A McKinsey survey pool reported that 44% of tech workers start in other non-tech professions.
Greater risk management in 2024 may mean that more companies may consider additional opportunities for crossover and repurposed roles based on similar requirements in expertise and competencies.
Review Talent Acquisition Strategies
PwC research shows 38% of companies rank talent acquisition and retention as the second-highest organizational risk, surpassing rising production costs and only falling behind the dangers of frequent cyberattacks (according to 40% of respondents).
Ineffective hiring and recruiting strategies directly affect your company’s sustainability, disrupting knowledge and skill transfers. The extended vacancy of essential roles could also result in significant productivity dips and missed market opportunities.
It is also important to recognize retention as a major part of your ongoing talent management strategies (which significantly affects risk management). SHRM research indicates replacement costs can reach as high as 50%-60%, with overall costs ranging from 90%-200%. So, it is integral for your company to determine the right hire in your talent acquisition practices.
Employers and recruiting teams can maximize the quality of hires by tapping into a diversified and global talent pool. Doing so increases the selection of passionate and well-qualified individuals who can fit well into your company culture to remain engaged and satisfied for the long term.
Apply Emerging Technology
The emergence of big data and related technologies has enabled companies to streamline and expedite risk assessments with 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 operational disruptions and delays while your team capitalizes on industry gaps and opportunities. Artificial technology (AI) data-backed algorithms can help your organization fine-tune and scale hiring practices to fill positions with the best candidates.
Ongig’s Text Analyzer platform refines your JDs with the latest DEIB standards and job seeker trends, appealing to your most qualified applicants.
Text Analyzer helps HR teams identify and replace the slightest biases, including ageism, ableism, and racism, to ensure your company doesn’t turn away the next big hire or violate DEI compliance. The Text Analyzer also offers polished JD templates for effortlessly populating and customizing details according to your specific hiring needs.
The templates align your JDs with the latest guidelines while giving you the convenience of positioning your unique value propositions. Through Text Analyzer, you can cost-effectively scale your talent acquisition campaigns. Doing so frees your hiring managers’ schedules from repetitive tasks so they can refocus on more value-added contributions like conducting quality interviews.
Benefits of Establishing a Robust Risk Management Policy
A well-structured risk management policy integrates DEIB and ESG standards to enhance and protect your company’s value. Essentially, an all-rounded risk management strategy interprets DEIB and ESG goals, leveraging them to drive organizational excellence effectively.
DEIB Standards Improve Talent Acquisition Policies
Bremer Bank Executive Vice-President and Chief Risk Officer Justin Butler shares that diversity, equity, and inclusion remain integral for leaders in assessing company weaknesses and threats.
The rising trend of a more diverse economy and workforce requires companies to think across multiple perspectives, catering to every culture and identity involved in an organization’s progress.
US Census Bureau statistics project that one in three Americans would come from a non-white background in 2060. It is advantageous 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 through 2024, which could help mitigate the “glass ceiling.”
The glass ceiling metaphor describes the invisible barriers and inequities women and marginalized individuals face at work. These may include lower remuneration and the lack of training and career growth opportunities.
Boost Competitive Advantage
Proactive risk management could give your company a competitive advantage during industry uncertainty. A robust strategy built upon DEIB and ESG empowers decision-makers to recognize the opportunities overlooked by less inclusive and less environmentally involved companies.
Company leaders can implement a well-established risk management policy to access untapped talent pools (e.g., underrepresented groups or passive job seekers) and resources and develop impactful partnerships with organizations or institutions with shared DEIB or ESG objectives.
Reinforce Risk Mitigation
A collective risk management approach allows interdisciplinary team members to pool their tools and resources to boost company proficiencies cohesively. These team arrangements could tie in unique DEIB and ESG data to strengthen risk mitigation techniques and support organizational performance.
Integrated tools enable decision-makers to identify individual risks in different aspects and facets of the company, achieve detailed reporting, and improve team visibility for efficient problem-solving.
Futureproofing Workforce For Novel Situations
Incorporating DEIB and ESG in risk management places a finger on the pulse of world affairs, customer trends, and industry standards. These enable your company to train and prepare team members to adapt and respond to incoming demands.
Keeping your talent informed and equipped with the latest industry data fosters result-oriented perspectives to achieve impactful solutions in unfamiliar environments.
On The Road Toward Effective Risk Management
Ultimately, 2024 presents the need for a corporate balancing act. Rather than separating DEIB, ESG, and risks as separate governance subjects and priorities, it is time to recognize their interplay. Doing so gives your company a deeper understanding of its dynamics and how to improve each relationship.
The new year isn’t about casting DEIB and ESG aside due to public pressure. On the contrary, it is a critical crossroad for organizations to rally and engage in a broader discussion on how these causes directly shape their company’s success and bottom line through the power vested in risk management.
Why I Wrote This:
Ongig remains dedicated to creating effective and inclusive JDs with innovative data-backed technology. Using Text Analyzer enables employers to enhance their risk management policy by boosting and scaling talent acquisition programs across the most competitive job market conditions. Request a demo to learn more.
Shout-Outs:
- Courtney Tanner, The Salt Lake Tribune – Utah’s Gov. Cox signs anti-DEI bill, making the state the latest to limit diversity programs in education
- Insight Into Diversity – The War on DEI
- CFI – Shareholder Activist
- Timothy J. McClimon, Forbes – Risk Management Overtakes ESG And DEI In 2024
- PwC – PwC Pulse Survey: Managing business risks
- RiskOptics – What is Technology Risk?
- Barry Rosen, Forbes Business Council – Leveraging Differences: Tapping The Power Of DEI In The Workplace
- Davis Carlin, Anu Madgavkar, Dana Maor, and Angelika Reich, McKinsey & Company – Overcoming the fear factor in hiring tech talent
- Aon – Future Risks: How organizations see changes in risk management
- Bailey Reiners, Built-in – What is The Glass Ceiling?
- John M. Breman, Forbes – Connecting ESG, DEI And Risk
- Denise Chludzinski, LinkedIn – The TRUE COSTS of Unfilled Positions
