Your recruitment agency should always keep a keen eye on risk management. Everything you do from sending a CV out to a client through to supplying temporary workers has inherent risk. Recruitment risk management involves identifying, addressing and planning around these risks in order to minimise risk and impact and to keep your business running in the event of something going wrong.
There are many approaches to risk management, but the most important factor is that your recruitment agency approaches this subject with a clear head, and objectively. Risk management is about asking yourself questions and devising robust answers; the fundamental questions that you should be asking yourself are what you may lose or suffer (the event), how likely it is that the event could materialise (the frequency) and the extent to which you can afford that event occurring (the impact).
Insurance is only one stage in the risk management process and risks still require careful and considered management whether insurance is chosen as a potential solution or not.
The first stage in managing risk is identifying the risk. What might stop your recruitment business from operating? What circumstances might lead to one-off costs that would stretch your cash flow? What liabilities have the potential to damage your business? In which circumstances might the interjection and support of an insurer help you handle unfortunate circumstances? A good way to identify risks is to get your board or management team to carry out a brainstorming exercise – don’t forget to include any liabilities that arise as a result of the fault of any candidates that you have placed or may place in the future.
Once you have reviewed the risks that you face, you should set up a simple spreadsheet to serve as a risk register. This will be a fluid document that should be regularly reviewed, critiqued and added to; this is a key document in your recruitment agency’s risk management process and will be called upon time-after-time when reviewing your risk.
When you have reviewed and recorded the risks you face, you’re ready to create a Business Continuity Plan (BCP). This should cover all the major risks that you face and how you will react if any of them occur. Your BCP should aim to keep your recruitment business running smoothly if there is a problem; equally, it should plan for restoring operations to normal as quickly and efficiently as possible in the case of a crisis.
A critical tool in your recruitment risk management toolkit, your BCP should also cover impacts on income and cashflow, effectiveness, staff, clients and candidates and the impact on reputation and other business stakeholders that may arise because of the identified risks. Don’t forget to consider IT (both software and hardware) implications, and data protection, as recruitment agencies often handle Personally Identifiable Information (PII) and Sensitive Personally Identifiable Information (SPII) in the form of CV’s and application documents.
To remain up to date and relevant you should review your risk register and BCP regularly at senior leadership level.
Once your risk register and BCP has been created, you can consider an insurance purchasing plan. These documents allow you to match the insurances you require to the risks you face and highlight any uninsured risks to ensure they are dealt with appropriately. In effect, your risk register and BCP should glaringly point out what insurance you need; you can discuss them with your recruitment insurer or broker and ensure you’re getting the right insurance for your business.