The COVID-19 pandemic has had a significant impact on the global workforce, exacerbating human capital risks for companies worldwide. As a result, Lloyd's - the world’s leading marketplace for commercial, corporate and specialty risk solutions - has released a new report to help insurers support organizations in protecting human capital.
Lloyd's has published “Safeguarding human capital: How to protect and enhance the value of human capital,” the last in a series of joint reports from Lloyd's and KPMG. The report aims to explain how human capital – or the collective abilities and skills of employees – is a key driver of organizational value and a potential blind spot for firms failing to invest in their workforce in the wake of the pandemic.
The report identified ways in which the insurance industry could help organizations manage and mitigate against the implications of human capital events – including a pandemic – by addressing the wider damage caused, playing a preventative role, considering how different metrics and indices can be used to quantify and measure the damage of human capital events, and tracking and analyzing workforce data to project risk triggers and their potential impact on value.
“Human capital is key to company value, and while insurance solutions already exist to protect this intangible asset, the past two years have highlighted the need for insurers to work with risk owners to manage the new risks that have emerged as work practices change and evolve,” said Dr Trevor Maynard, the head of innovation at Lloyd's.
“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.”
The report identified four key actions that risk owners in organizations need to consider to advance their preparedness and safeguard their human capital:
- Ensure leadership champions a culture that truly empowers employees in remote working conditions;
- Use data to hire and manage your employees;
- Prioritize the needs of employees while reducing the reliance on any one individual; and
- Horizon scan, and be prepared to continuously adapt to change.
KPMG UK partner Paul Merrey emphasized the key role of technology in future human capital insurance solutions.
“Currently, most organizations have limited capabilities in gathering and analyzing in-depth employee data,” he said. “There is significant scope for insurance solutions that provide organizations with the required tools, knowledge, and financial capital to overcome challenges while minimizing business interruption and any adverse impact on their competitive position.”