n spite of the considerable investment and development around the preservation o f assets and the mitigation of risks across

conventional corporate assetssuch as facilities, information, equipment and products, the same methodology and motiv ation remains far less advanced in regards to human capital. Before any organization even explores risk management strategies for their human capital it is fundamentally important that they first determine the value at ri sk. Not only is it a case of valuing the contributions of the individual or grou ps of personnel but differentiating the value in which they contribute to the co mpany, whether it be through the provision of specific skills and services or th e commercial value they present the company. These distinctions also need to be made between job functions or management/executive levels. No two individuals ar e contributing to the company in the same manner, much less two diverse business functions. How many companies even know this definitive financial value of the ir people? Following the basics of valuation, and any other unique considerations that the company may have (mobile work force, fixed laborers, knowledge capital, research and development) a unit cost can then be applied for prioritizing strategies or expenditure. For example, an individual that reflects a unit cost/investment pe r hour of $1 will be less likely to addressed as a priority when compared to an individually that presents a unit cost/investment per hour of $100. However, if there are significant numbers of the basic unit cost of $1 at risk, that group a s a whole may be a greater priority than that of a single or limited $100 per un it cost individual. Threats and residual risks associated with human capital are many and varied. Ov er time a detailed and thorough analysis can be conducted to determine the proba bility, velocity of onset and other governing factors that will provide a single or annual loss expectancy to the company. A single loss expectancy, such as dea th, may cost the company significantly more than just the forecast value identif ied in the first stages. Conversely, an annual loss expectancy, especially in li ght of the fact many companies are unable to even quantify this loss, may equate to millions of dollars in lost productivity, administrative burden or opportune costs.

To truly understand or appreciate the current or potential losses to a company t hrough their human capital it is imperative to model the disruptions and time lo ss (inclusive of management and departmental support) to a cellular and group le vel. If someone falls ill, how long are they unproductive? What does it cost the company? Should the become a victim of crime or their business activity disrupt ed due to a natural disaster, what is the cost to the company? When applied to o ur entire human capital asset base, what is our single and annual loss expectanc y? If you are making a truly informed decis â You canâ t improve what you canâ t measureâ your assets are distributed, you can then make informed decisions around strateg ies to preserve their value. You also enjoy the benefits of comparative investme nt/management. Most companies are surprised to discover that despite their commi tment to their people, they actually devalue their contribution by not acknowled ging them as an asset and preserving it accordingly. Are you one of those compan ies? Companies that have undertaken to approach the management of their human capital consistent with other corporate assets have found the process highly rewarding and very confronting. Conversely, those adverse to such strategies or behind the curve continue to loose more money than the cost of such preparation and mitiga tion. They too find over time that penny wise turned out to be pound foolish.

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