0%
 

Understanding Human Capital Risk

Welcome to Human Capital Risk Management

If you are accessing the lesson from a personal device directly over the Internet (outside of the Citi network), some links may not work if they link to content within Citi’s network. This will not impact your ability to complete the lesson.

What does Human Capital mean?

Human Capital consists of the skills, knowledge, and experience people contribute to their company.

As a people manager, you are on the frontline in identifying, assessing, and managing Human Capital Risk.

Your actions directly impact employee engagement, productivity, and business outcomes.

This lesson is an introduction to Human Capital Risk management and explores the role Citi people managers play in mitigating Human Capital Risk.

This is a required training for all Citi people managers. Managing Human Capital Risk is a shared responsibility across Citi.

This lesson will take approximately 20 minutes to complete. 

Navigate down to continue.

Lesson Learning Objectives

After completing this lesson, you will be able to:

  • Define Human Capital Risk and identify where it fits within Citi’s Risk Taxonomy
  • Recognize what Human Capital Risk means to people managers and their responsibility to mitigate it
  • Practice handling and solving Human Capital Risk situations through a real-world scenario

Completion Criteria

This lesson contains a final assessment. You must score 80% or higher on the assessment to complete this lesson.

You have already met the requirements for completing this lesson. You may now review content or exit the lesson.

This lesson also includes an optional test-out. If you pass, you can bypass the lesson content and final assessment and exit the lesson.

If you prefer, you can skip the test-out and go straight to the content.

Understanding Human Capital Risk

Understanding Human Capital Risk

In this section, we'll examine Human Capital Risk, where it sits in Citi's Risk Taxonomy, and types of Human Capital Risk.

Navigate down to continue.

Human Capital Risk Taxonomy

Citi's Risk Taxonomy is foundational in creating a common risk language that can be used by all to support the identification, assessment, monitoring, and reporting of risk.

As a people manager, it is important to understand that Human Capital Risk is one of the Operational Risk categories.

Our definition of Operational Risk at Citi is in line with Regulatory Obligations and can be found in the Operational Risk Management Policy.

It includes Legal Risk – which is the risk of loss (including litigation costs, settlements, and regulatory fines) resulting from the failure of the bank to comply with laws, regulations, prudent ethical standards, and contractual obligations in any aspect of the bank's business – but excludes Strategic and Reputation Risks.

What is Human Capital Risk?

Citi's definition of Human Capital Risk can be found in the Human Capital Risk Management Policy.

Human Capital Risk is the risk arising from inadequate management of staffing adequacy, talent, and the linkage of performance to pay, as well as, risks arising from inappropriate employee behavior inclusive of discipline and accountability.

Inadequate management of these areas can result in:

  • Financial loss
  • Regulatory action
  • Reputational damage
  • Negative customer, client, or market impact

Here are a few examples of Human Capital Risks.

To proceed, select each risk category to explore different Human Capital Risks.

Staffing Adequacy Risk
Employee Relations Risk
Remuneration and Rewards Risk
Talent Management Risk
Discrimination Risk
Termination Risk

Staffing Adequacy Risk

Staffing Adequacy Risk arises from failure to effectively identify and maintain adequate Human Capital resourcing requirements. Examples include:

  • Staffing skills: Not adequately identifying and maintaining capacity, skills, and operating structure.
  • Disclosure: A member of the workforce failing to disclose personal relationships which may impact employment eligibility or lead to potential conflicts of interest.
  • Inappropriate hiring practices: Hiring based on personal relationships rather than qualifications.

go to next button

Employee Relations Risk

Employee Relations Risk arises from employee misconduct and/or failure to effectively manage employee concerns. Examples include:

  • Employee misconduct: An intentional act that results in a material breach of Citi's policies (e.g., inappropriate physical contact, aggressive behavior).
  • Investigations: Inadequate or untimely investigation into employee misconduct.
  • Retaliation: Employment actions taken against an employee for raising concerns.

go to next button

Remuneration and Rewards Risk

Remuneration and Rewards Risk arises from inadequate design and program management of remuneration, rewards, and benefits. Examples include:

Compensation:
  • Not aligning pay with performance.
  • Failure to record employee work hours and work-related activity (e.g., overtime, travel, business meetings), which may lead to underpayment or overpayment.

go to next button

Talent Management Risk

Talent Management Risk arises from inadequate design and/or execution of talent management processes. Examples include:

  • Succession planning: A critical role is vacant, and a lack of succession planning prolongs hiring and disrupts business.
  • Performance: An employee’s performance is mismanaged.

go to next button

Discrimination Risk

Discrimination Risk arises from discriminatory treatment of employees, non-employees or candidates based on a legally protected class (e.g., age, religion, gender, etc.) within the context of the employee lifecycle.

go to next button

Termination Risk

Termination Risk arises from the mismanagement of terminations, for example Reduction in Force, failure to process terminations timely, or wrongful terminations.

go to next button

Policy Principles

As a manager at Citi, it is crucial that you understand and apply the key policy principles of Citi's Human Capital Risk Management Policy in your daily work and decision-making.

You are responsible for mitigating Human Capital Risks and fostering a positive, ethical work environment. This involves knowing and applying key policy principles.

Citi maintains an environment that will not tolerate the following:

  • Misconduct, as defined in the Code of Conduct
  • Discriminatory practices, harassment, or retaliation in the workplace, as defined by the Global Anti-Discrimination & Anti-Harassment Policy
  • Violations of employment laws and regulations
  • Failure to escalate, investigate, or review material employment-related issues
  • Employment of individuals whose background presents undue risk to Citi

Knowledge Check

Which of the following describes Human Capital Risk?

Select the best response from the three responses and then select Submit.

Please use the Space key only when selecting a radio option with the keyboard. The Enter key is not fully supported. If the Enter key has been used to select a radio option, please use the Escape key. Then you will be able to use the Space key again to select a radio option.

Submit

Coming Next

With a solid understanding of Human Capital Risks, let's explore our roles in mitigating them.

Roles and Responsibilities

Roles and Responsibilities

In this section, we define your role and responsibilities for managing Human Capital Risk.

Navigate down to continue.

Appropriate Actions


Every manager plays a role in risk management. Knowing the appropriate actions to take helps you to effectively manage Human Capital Risk and align with strategic goals. This involves the following elements:

  • Workforce planning: Monitor and maintain appropriate staffing levels, understand your team's staffing plan and workforce needs, and use resource planning tools, as denoted in the Workforce Planning Standard, to support adequate staffing.

  • Hiring competitively: Hire based on qualifications and experience, ensuring a qualified slate of candidates.

  • Enforcing accountability: Address misconduct promptly and consistently. Follow the Code of Conduct and document incidents to hold employees accountable.

  • Managing talent: Utilize Citi’s programs and tools to support talent assessment, development, management, and succession planning.

  • Aligning pay with performance: Adhere to Citi's tools and guidelines to drive fair and competitive compensation practices to promote pay alignment with performance, as denoted in the Incentive Compensation Policy.

  • Promptly processing terminations: Handle terminations quickly and professionally. Follow Citi's policies and procedures for a smooth transition.

  • Promoting an inclusive culture free from discrimination: Foster a respectful, inclusive, and discrimination-free workplace that aligns with Citi’s Code of Conduct and values. Use available resources to create a work environment where all employees feel valued and supported.

As a people manager, your decisions directly influence engagement, productivity, and business success, making it crucial to proactively manage Human Capital Risk.

Understanding Your Role

As a people manager, you are accountable for Human Capital Risk. Human Resources provides programs and processes to support you in effectively managing Human Capital Risk.

To proceed, select each area to see how Human Resources provides support to Citi.

Resources
Risk Indicators
Controls

Resources

Human Resources develops programs, informed by comprehensive policies and procedures, to assist people managers in effectively managing Human Capital Risk. These programs include:

  • Strategies to enable Citi to plan for workforce needs and to engage, select, and onboard the best talent.
  • Strategies that support talent assessment, succession planning, promotions, and employee development.
  • Enterprise solutions that include the development of professional skills and manager/executive leadership.
  • The design of the overall assessment framework used to evaluate employees at Citi.

go to next button

Risk Indicators

People managers should use available resources to make data-driven decisions when managing Human Capital Risk.

To support these efforts, Human Resources provides quantitative Human Capital Risk Metrics (e.g., Voluntary Attrition and Timeliness of Termination Initiation).

go to next button

Controls

People managers should identify, implement, and monitor controls to mitigate Human Capital Risk.

To support these efforts, Human Resources develops common/outward controls (e.g., skills management, resource planning) to help mitigate Human Capital Risk.

Knowledge Check (1 of 2)

Human Resources provides various tools and support to help you manage Human Capital Risk effectively. Let's test your understanding of your role.

You were just informed by Jaqui, the head of your department, that a decision has been made to move from a decentralized to a centralized client support model.

Your team will now have a global remit, and Jaqui confirms that the changes will take effect in 90 days.

After determining your new organizational structure, you believe the centralized service and support model may require additional resources.

What should you do first?

Select the best response from the four responses and then select Submit.

Please use the Space key only when selecting a radio option with the keyboard. The Enter key is not fully supported. If the Enter key has been used to select a radio option, please use the Escape key. Then you will be able to use the Space key again to select a radio option.

Submit

Knowledge Check (2 of 2)

As part of the annual performance review process, Avery is evaluating his team against Citi's four performance pillars.

Avery views his team members as strong contributors. However, Ben, one of his direct reports, has lacked oversight of his team during the last six months. This has resulted in a Control failure as the team has failed to self-identify multiple ineffective controls.

Direct feedback was given to Ben verbally at the time of the incident. Avery decided not to record this incident and feedback in Ben's performance evaluation.

Did Avery take the right action?

Select the best response from the four responses and then select Submit.

Please use the Space key only when selecting a radio option with the keyboard. The Enter key is not fully supported. If the Enter key has been used to select a radio option, please use the Escape key. Then you will be able to use the Space key again to select a radio option.

Submit

Coming Next

You've seen how managers and Human Resources work together to mitigate Human Capital Risk. Now, let's apply that knowledge through a real-world scenario.

Managing Human Capital Risk

Managing Human Capital Risk

In this section, we'll use a real-world scenario focused on reducing risks.

Navigate down to continue.

Risk Management Strategies

Let's explore the process for managing Human Capital Risk.

As we proceed, we'll apply this framework to a real-world scenario, allowing you to practice and gain hands-on experience in managing Human Capital Risk effectively.

1

Identify Risks: Identify the Human Capital Risk that Citi is exposed to through the course of its business activities.

2

Assess Risks: Consider the materiality of the Human Capital Risk, focusing on both likelihood and impact.

3

Mitigate Risks: Consider and implement strategies to help manage the Human Capital Risk.

4

Monitor Risks: Ongoing review of the Human Capital Risk and understanding if there have been any changes to the materiality of existing risks or the realization of new risks.

5

Review and Improve: Regularly review risk management practices and make improvements based on new information and feedback.

Maya’s Handling of Employee Terminations

Maya, a people manager, did not terminate an employee in a timely fashion, which caused processing delays.

This real-world scenario examines her actions and what went wrong.

To proceed, select each event to see what happened to Maya’s delays.

 

Misconception and Delay

Sam, a member of Maya's team, resigns with two weeks' notice, and his last day with Citi is in the middle of the team's busy season.

Maya and her team are focused on several upcoming deliverables. She delays submitting Sam’s termination date into the HR system, as she believes it would immediately cut off all his access and doesn’t want to disrupt his work.

After Sam's final day, Maya realizes her mistake of not submitting his termination date upon receiving his resignation.

Consequences

As a result, Sam has erroneously received an extra paycheck which may be costly to recover and/or which Citi may lose.

Sam continues to have access to the building and all Citi systems and information (i.e., Citi proprietary information, client records, trading platforms) post his last day.

Sam receives undue Citi benefits during this time (e.g., pension contributions, social security contributions, etc.).

Lessons Learned

It's crucial to understand each risk management step to handle Human Capital Risk effectively.

To proceed, select a step to explore how Maya could have better managed the termination process within this risk framework.

Identify Risks
 

As a people manager, Maya has a responsibility to manage Human Capital Risk. She should have entered the termination date in the HR system as soon as she received Sam’s resignation.

In reality, this action only impacts a few functionalities, like restricting external emails to prevent forwarding confidential information.
Assess Risks
 

By overlooking the importance of submitting the termination on time, Maya has exposed Citi to Human Capital Risk with the following implications:
  • Financial losses (i.e., overpayment of compensation, benefits, taxes, etc.).
  • Unauthorized access to people, facilities, and information, which may lead to improper use or disposal of data/documentation, exposing Citi to potential non-compliance with regulatory requirements, reputational damage and client impact.
Mitigate Risks
 

Maya needed to take immediate action by entering Sam's termination date into the HR system upon receipt of resignation.

This would have automatically ceased paychecks and other employee benefits, and revoked his building and system access.
Monitor Risks and
Review/Improve
 

Regular reviews of the timely processing of terminations by the Process Owner help maintain a streamlined and properly followed process, reducing the likelihood of similar issues in the future.

Think about it...

Reflect on a recent Human Capital Risk situation you managed. How could the strategies you've learned today improve your approach next time?

Coming Next

Next, we'll review your learning before completing the assessment.

Key Takeaways

Summary

We’ll conclude this lesson by reviewing the key learning points.

Navigate down to continue.

Recap of What You Learned

Review critical insights and strategies from our Human Capital Risk Management lesson.

To proceed, select each item to go over our key takeaways.

 

Human Capital Risk

Human Capital Risk is part of Citi's Operational Risk Framework.

Human Capital Risk is the risk arising from inadequate management of staffing adequacy, talent, and linkage of performance to pay. As well as risks arising from inappropriate employee behavior inclusive of discipline and accountability.

Key sub-risks include:

  • Staffing Adequacy
  • Employee Relations
  • Remuneration and Rewards
  • Talent Management
  • Discrimination
  • Termination

Inadequate management in these areas can lead to:

  • Financial losses
  • Regulatory issues
  • Reputational damage
  • Negative impacts on customers, clients, or markets

Key Principles

Citi is committed to maintaining a professional and ethical work environment. We do not tolerate:

  • Employee misconduct
  • Discrimination, harassment, or retaliation
  • Violations of employment laws and regulations
  • Failure to escalate material employment-related issues
  • Employment of individuals who pose undue risk to the company

Roles and Responsibilities

As a manager, you play a crucial role in managing Human Capital Risk. Key responsibilities include:

  • Workforce planning
  • Competitive hiring
  • Enforcing accountability
  • Managing talent
  • Aligning pay with performance
  • Proper termination processing
  • Promoting an inclusive workplace culture

Human Resources provides programs and processes to support you in effectively managing Human Capital Risk.

Managing Human Capital Risk

Managers should:

  • Identify Risks: Identify Human Capital Risk that Citi is exposed to through the course of its business activities.

  • Assess Risks: Consider the materiality of the Human Capital Risk, focusing on both likelihood and impact.

  • Mitigate Risks: Consider and implement strategies to help manage Human Capital Risk.

  • Monitor Risks: Ongoing review of Human Capital Risk and understanding if there have been any changes to the materiality of existing risks or the realization of new risks.

  • Review and Improve: Regularly review risk management practices and make improvements based on new information and feedback.

Coming Next

It's time to check your understanding of the content by completing a five-question assessment.

In the risk taxonomy inventory, Human Capital Risk is a sub-risk of which of the following?

Select the best response from the four responses and then select Submit.

Please use the Space key only when selecting a radio option with the keyboard. The Enter key is not fully supported. If the Enter key has been used to select a radio option, please use the Escape key. Then you will be able to use the Space key again to select a radio option.

Submit

Which of the following is a sub-risk of Human Capital Risk?

Select the best response from the four options and then select Submit.

Please use the Space key only when selecting a radio option with the keyboard. The Enter key is not fully supported. If the Enter key has been used to select a radio option, please use the Escape key. Then you will be able to use the Space key again to select a radio option.

Submit

Which of the following are responsibilities of Human Resources in managing Human Capital Risk at Citi?

Select the best response from the four options and then select Submit.

Please use the Space key only when selecting a radio option with the keyboard. The Enter key is not fully supported. If the Enter key has been used to select a radio option, please use the Escape key. Then you will be able to use the Space key again to select a radio option.

Submit

As a people manager at Citi, you must apply the key principles of Citi's Human Capital Risk Management Policy.

Which of the following actions align with these principles?

Select the best response from the four options and then select Submit.

Please use the Space key only when selecting a radio option with the keyboard. The Enter key is not fully supported. If the Enter key has been used to select a radio option, please use the Escape key. Then you will be able to use the Space key again to select a radio option.

Submit

Which of the following are responsibilities of people managers as it relates to Human Capital Risk?

Select the best response from the four options and then select Submit.

Please use the Space key only when selecting a radio option with the keyboard. The Enter key is not fully supported. If the Enter key has been used to select a radio option, please use the Escape key. Then you will be able to use the Space key again to select a radio option.

Submit

Copyright © Citi and/or its affiliates. All rights reserved.

Select the Home button at any time to return to this menu.

Welcome

Understanding Human Capital Risk

Roles and Responsibilities

Managing Human Capital Risk

Key Takeaways

Assessment

Home
Welcome
Understanding Human Capital Risk
Roles and Responsibilities
Managing Human Capital Risk
Key Takeaways
Assessment

go to close menu button

 

go to close button