An Introduction to Recruitment Agency Risk Management
A Recruitment Agency – like any business – must manage its risk. And whilst the risks that a Recruitment Agency faces may be similar to those of other businesses, there may be differences due to the nature of your industry and the fact that you provide a professional service to clients. Therefore, diligent and comprehensive risk management is vital for protecting your business.
There are many approaches to risk management, but most important in your risk management process is that you approach the subject with a clear head and an objective mind. 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 irrespective of insurance, risk still requires careful and considered management.
First, you must identify the risks that are present in your recruitment agency. What situations might stop you from operating? What losses might create one-off costs which would stretch your cash flow? What liabilities have the potential to damage your business? How could the interjection and support of an insurer help your business whilst in distress? A good way to identify risks is to get your board or management team to carry out a brainstorming exercise.
Once you have reviewed the risks that your company faces, you should set up a simple spreadsheet to serve as a risk register, with a basic scoring or rating mechanism. This will be a regularly updated and reviewed document that will change often, as new risks and concerns are identified and mitigated. The register identifies key areas of risk in terms of their potential frequency and impact. This will help highlight risks that require your attention - in order of priority - and identify methods which will help to mitigate these risks.
Next, use the risk register to create a Business Continuity Plan (BCP). This should look at the major risks your business could encounter and how you will react if they occur (including how you will handle your communications). The aim of the BCP is to keep your business running smoothly when crisis strikes. Your BCP will be specific to your business and circumstances; it should identify who’s responsible for the Business Continuity Plan and a crisis management hierarchy so it is clear who is in charge when the BCP is invoked. You should consider the impact on income and cashflow, the impact on effectiveness, staff, customers and candidates and the impact on reputation and stakeholders that may arise because of big risks. Don’t forget to consider the IT (both software and hardware) implications of big risks!
To remain up to date and relevant to your developing recruitment business, your risk register and BCP should be regularly reviewed at board/senior leadership level and should be a fundamental document in the running and planning of your business strategy.
When your risk register and BCP has been created, your board or managing director can agree on an insurance purchasing plan (i.e. the insurances required per your risk register). This allows you to match the insurances you require to the risks you face and highlight any uninsured risks to ensure they are dealt with appropriately. At this stage, you should approach a specialist insurer or broker who understands the recruitment industry. RecruiterCover are proud to work with SSG to provide specialist recruitment agency insurance.