Risk Management is About People

Through my constant contact with my clients, there are 5 factors that cause a problem in an organization which in turn triggers operational risks, e.i.,:

1. People
2. Precedures
3. Information and system
4. Organizational issues: policies, other functions
5. External factors: economic, politics, nature, other parties, etc.

The most frequent factor of the above is people. Talking about people in organization, we may refer to them on individual basis such as their lack of competencies and knowledge and the possibility of their engagement in fraudulance acts or on organizational basis such as misplacement, inappropriate performance measurement, lack of appropriate rewards and punishment system, inappropriate culture, etc.Thus, enterprise risk management must also means managing your people well. HRM department becomes very critical when we talk about ERM.

Just as James Lam wrote in his book enteprise risk management is about people. Couldn't agree more with him.