Nowadays, the biggest risk to a company often comes from within. The concept of “People Risk” refers to the ongoing threat posed by employees, consultants, and contractors, who may unintentionally or maliciously compromise internal security. Surprisingly, many businesses continue to underestimate this risk, assuming traditional background checks are enough.
However, the reality is far more complex—risks evolve over time as employees’ circumstances and behaviors change. Whether through shifting personal situations or escalating pressures, what starts as a low-risk hire can develop into a serious threat if not continuously monitored. By overlooking this fact, companies leave themselves vulnerable to internal threats, ranging from data breaches to fraud.
What is People Risk Management?
People Risk Management (PRM) is the proactive strategy of identifying, assessing, and mitigating risks from all internal actors within an organization. This approach goes beyond traditional human risk management by incorporating ongoing monitoring and behavioral analysis, helping organizations manage evolving threats over time. As insider attacks increase in frequency and cost, a proactive people risk management framework has become essential to detect and manage risks across the employee lifecycle. This shift reflects the urgent need for companies to anticipate and prevent internal risks, rather than responding only after incidents occur.
It’s Not If, It’s When: The Inevitable Shift to Proactive People Risk Management
Every business will inevitably face an internal security threat, whether intentional or not. Companies that remain stuck in reactive mode—dealing with issues only after they arise—are likely to face severe consequences. According to a 2021 IBM study, insider threats account for nearly 60% of all data breaches, and they take an average of 77 days to contain. This prolonged response time significantly amplifies the cost and impact of such breaches, as the longer it takes to detect and mitigate an insider threat, the more damage it can cause—both in terms of financial losses and reputational harm.
This underscores the urgent need for a proactive approach to managing people risk, one that continuously evaluates potential threats as they emerge. Remaining reactive can lead to catastrophic outcomes—loss of data, reputational damage, or regulatory penalties. Without proactive monitoring, even well-intentioned employees can make costly mistakes, and malicious insiders may exploit vulnerabilities.
Key Use Cases: Managing People Risk Across the Workforce
Whether you’re hiring full-time employees, seasonal workers, or consultants, proactive and ongoing risk management is crucial.
- Hiring Full-Time Employees: Many organizations assume that once full-time staff pass initial screenings, the risk is minimized. However, research shows that personal circumstances and external pressures can change quickly..
- Hiring Seasonal Employees: Seasonal hires often face accelerated onboarding, making it easier for risks to go unnoticed. These employees may not receive the same level of scrutiny as full-time staff, even though their access to company resources is similar.
- Hiring Consultants: Consultants are often given access to sensitive data, yet they are rarely subject to the same long-term risk assessments as permanent employees. This blind spot can create vulnerabilities. Ongoing risk assessments of external staff are critical to closing these gaps.
- Ongoing People Risk Management: Risks aren’t static. They change as employees’ roles evolve, as they gain access to more sensitive information, or as external pressures impact their lives. This is why companies need to embrace a continuous approach to monitoring people’s risk.
Best Practices for Managing People Risk Internally
Failing to proactively manage people risk can be devastating. According to the Ponemon Institute’s 2023 report, companies without regular risk assessments are 30% more likely to experience insider threats, leading to an average annual cost of $16.2 million per organization (40% increase over four years). The financial impact includes not just the immediate loss of data or resources but also longer-term consequences such as reputational damage and regulatory penalties.
To effectively manage people risk, organizations must adopt a comprehensive approach that goes beyond initial background checks and occasional assessments.
- Secure Workflow Integration: Proactive companies are integrating risk management checks into every phase of the employee lifecycle—from recruitment and onboarding to ongoing employment.
- Building a Risk-Aware Culture: Employees should understand that internal security is everyone’s responsibility. Encouraging communication between HR, compliance, and people ops teams is key to fostering a culture where people risk is openly managed and discussed.
- Using Behavioral Indicators: Ongoing assessments should monitor more than just past actions. Behavioral indicators such as sudden changes in performance, absenteeism, or unexplained financial activity can often signal a higher risk profile.
Whether it’s identifying vulnerabilities in hiring processes or managing employee verification tasks, Horizon allows businesses to focus on what matters most—mitigating and preventing significant incidents before they occur.
The Role of People Ops, Compliance, and HR in People Risk Management
Managing people risk isn’t just the responsibility of compliance—it involves collaboration between People Ops, HR, and compliance teams to prevent internal threats from escalating.
- People Ops and HR: : These departments are on the front lines, implementing policies and evaluations throughout the employee lifecycle. By maintaining ongoing checks, they reduce the risk of insider threats.
- Compliance Teams: Regular risk assessments are critical for compliance teams, especially in regulated industries like finance and healthcare. Expanding anti-money laundering (AML) processes to include employee monitoring ensures that companies stay compliant and safe from internal threats.
Adopting a Proactive Approach to People Risk
It’s not if, it’s when”: People risk is inevitable, and the sooner companies recognize this, the better they can prepare for internal threats. Transitioning from reactive to proactive risk management allows businesses to mitigate risks before they become crises. The tools and strategies used to assess risks during hiring should extend into ongoing monitoring, ensuring that your workforce remains aligned with your security goals.
To discover how proactive solutions can address human risk, explore Horizon, Trustii’s dynamic risk management platform, designed to continuously assess and protect against emerging threats. For an in-depth look, check out this article on automating people risk management for actionable insights into safeguarding your organization.