CWS 3.0: July 17, 2013


Current Events Highlight Potential Program Risks

These are interesting times when it comes to managing the risk associated with a contingent workforce program. Recent front-page headlines shine a spotlight on real intellectual property risks that a rogue individual can bring. Even widely accepted independent contractor business practices are being called into question, with a major metropolitan business’s assets being frozen because of a projected multi-million dollar judgment. And as we move forward, there is increasing public chatter concerning human capital and domestic government policies that support global economic competitiveness and, unfortunately, short-sighted political agendas.

All this leads to renewed focus on the need to manage risk. While it is not possible to eliminate risk relating to the contingent workforce — to do so would be cost prohibitive and effectively stifle the primary purpose of leveraging contingent resources — program managers can evaluate the various forms of risk their organizations face and be prepared.

A good tool to evaluate risk is the “Risk Management Framework” methodology, which participants in the Certified Contingent Workforce Professional program learn how to use, a fundamental approach to risk management readiness that every established contingent workforce management program should engage and review periodically as the program’s risk portfolio requires. It follows a methodology that identifies and inventories the program’s risks, devises a balanced strategy to address those risks, produces an action plan and contingency policies to execute, which are then supported by ongoing adoption strategies for engagement managers.

A key element of the methodology is to design risk mitigation actions for each program risk that is being addressed. What is your response to certain risk factors and what preemptive actions have you implemented to manage it. For each risk event, an assessment and prioritization — based on the likelihood of the event and its potential costs to the organization — should suggest potential actions to deal with the risk being assessed. There are four main options for responding to risk:

  • Acceptance: Accept the risk as a cost of doing business.
  • Avoidance: Take actions to avoid the risk or stop the risky situation completely.
  • Reduction: Find ways to reduce the impact of the risk event.
  • Sharing/Offloading: Mitigate risk through use of insurance, indemnification or other means.

The risk portfolio and resulting plan will be dictated by evolving market rules and regulations but also the use of a contingent workforce. Variations will even occur in plans/policies for different types of contingent workers, such as temporary workers acquired through a staffing firm versus buyer-sourced independent contractors.

Another important perspective of today’s headlines is pointing to the diversity of risk in the marketplace. While some chase “co-employment” myths, risk concerning intellectual property and misclassification are causing real and present danger to “highly connected” organizations engaging contingent workers. A basic risk portfolio should include an assessment and review of risks in the following categories: strategic, operations, compliance/legal, reporting, safe guarding resources and even personal risks for program management personnel.

So what is your plan and ongoing management practice to manage the risk portfolio in your contingent workforce program? It’s a priority that, once implemented, will lead to tighter engagement management of all non-employees in the client organization and also drive further executive support and organizational adoption of the contingent workforce program.


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