Lloyd’s, the world’s leading marketplace for commercial, corporate and speciality risk solutions, today published a new report in collaboration with KPMG, which looks at how human capital, or the collective abilities and skills of employees, is a key driver of organisational value and a potential blind spot for firms failing to invest in their workforce in the wake of the pandemic.
The new report, ‘Safeguarding human capital: How to protect and enhance the value of human capital’ is the last in a series of joint reports from Lloyd’s and KPMG which focus on the increasing risk intangible assets pose to organisations, and the importance of protecting them.
The report identifies ways in which the insurance industry could help organisations to manage and mitigate against the varying and far-reaching implications of human capital events, such as a pandemic.
While there are existing insurance solutions already available in the Lloyd’s market, the report highlights the need for a further continued effort at product development in this area.
By protecting the value associated with teams rather than just key individuals, human capital insurance solutions could be key to workforce management in the wake of the pandemic and future systemic risks.
The report focuses on how insurers can support organisations following an adverse event by not only addressing the wider damage caused, but also by playing a preventative role. As well as considering how different metrics and indices can be used to quantify and measure the damage of human capital events, insurers could track and analyse workforce data to project risk triggers and their potential impact on value.
COVID-19 has exacerbated many of the risks involving human capital value. With the pandemic impacting the entire workforce globally, and many organisations still operating under a remote working model, the value of employees in achieving productivity is vital for business continuity. It is becoming increasingly apparent that talent attraction and retention, and employee wellbeing are not just intrinsically linked, they also have a direct impact on business performance.
Though most firms recognise this, many are failing to fully understand the value of their people. This means that their skills and knowledge – and corresponding value as human capital – depart when employees do, leaving firms exposed. By investing in employees through upskilling, better engagement and proactive culture management, firms can ensure they are attracting and retaining the best talent.
The report identifies four key actions that risk owners in organisations need to think about to advance their preparedness to safeguard their organisations’ human
capital. These include:
– Ensure leadership champions a culture that truly empowers employees in remote working conditions
– Use data to hire and manage your employees
– Prioritise the needs of employees but also reduce the reliance on any one individual
– Horizon scan and be prepared to continuously adapt to change
Dr. Trevor Maynard, head of Innovation at Lloyd’s said: “Human capital is key to company value, and whilst insurance solutions already exist to protect this intangible asset, the past two years has highlighted the need for insurers to work with risk owners to manage the new risks that have emerged as work practices change and evolve. Lloyd’s is a great place for such collaboration to happen and we hope to see new innovative solutions and products that will help protect companies’ human capital.
Paul Merrey, partner at KPMG UK, said: “Technology will need to play a key role in future human capital insurance solutions. Currently most organisations have limited capabilities in gathering and analysing in-depth employee data. There is significant scope for insurance solutions that provide organisations with the required tools, knowledge and financial capital to overcome challenges whilst minimising business interruption and any adverse impact on their competitive position.”