A survey of human capital risk management in Australian insurers
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Human capital risk permeates all other risks in a financial institution as was evidenced by the global financial crisis and subsequent events, but anecdotal evidence suggests this overriding risk was not well understood. The authors applied for and were successful in obtaining a grant from the Actuaries Institute to survey Australian insurers as to how they identified and managed human capital risk. Discussions were held with 8 major insurers, a representative of the Actuaries Institute Risk Management Practice Committee and a representative of the prudential regulator, APRA. The general types of questions asked are set out in Appendix A. The project identified that, while some aspects of human capital risk such as human resource management and occupational health and safety compliance, were well understood, the most important result of this survey was the identification that the linkages between human capital risks and other institutional risks was not well understood, which is why events like the Libor and fixed interest scandal in the UK could easily recur with significant reputational damage for the institution involved.