Shall we have to assess HR Risk, as a part of ICAAP?

Banks compute Pillar – I capital adequacy to cover credit risk (CR), market risk (MR) and operational risk (OR). Apart from these three types of risks, any other risks that are left out, are to be discussed in “Pillar – II” risks. Banks need to identify, assess and quantify the additional capital for Pillar – II risks. Human Resources (HR) risk is one of those risks in Pillar – II risks. We shall have to understand how and why HR risks are required to be part of Pillar – II risks. Being in strategic management, identify how many of these following factors would affect the profitability, vision, organizational objectives of the company. If your answer is “4” or above for at least 7 questions in the following questionnaire, please accept that HR risk needs to be considered as a part of ICAAP risks. How much capital you need to keep, what are the tools you are using to assess capital requirements…are left to your own methodologies.

Parameters / Questions for Assessment of HR Risk	1	2	3	4	5
Do you agree that there is a relationship between Corporate plan and HR Department objectives?
How far you agree that failure to achieve corporate objectives is due to failure of HR Department strategies?
Do you agree that training the employees in their job profile would lead to improved productivity?
Do you also agree that improved productivity and corporate profitability have positive correlation?
Research papers on “Organizational Behavior” indicate that “The more an employee is motivated, the more he owns up higher responsibilities”. Do you agree that “Highly motivated employees contribute to achieve organizational objectives”?
Creating a healthy work environment is one of the HR Objectives. How far do you agree that it will have an impact on employee productivity?
The core HR concepts like “Team work”, “Team Building”, “Teaming” in the organizations creative a healthy competitions. Do you agree that absence of such phrases in your corporate may lead to scattered results?
Do you agree that “Financial Results are end results”. Before conducting Financial Analysis, the companies need to concentrate on “Analysis of HR practices”?
Do you agree that “Management of diversified cultures” is an art? Wrong handling of those issues would lead to “Not achieving corporate objectives?
“High brain drain” is the result of neglected approach of Human Resources Management. Do you agree that “Talent acquisition and Talent Retention” are important for achieving corporate objectives?

1 – Strongly Disagree; 2 – Disagree; 3 – Uncertain; 4 – Agree; 5 – Strongly Agree