The Missing Strategic Link – Human Capital Knowledge, and Risk in the Finance Industry – Two Mini Case Studies

33 Pages Posted: 3 Aug 2013

See all articles by Carol Royal

Carol Royal

UNSW Australia Business School, School of Management

John R. Evans

Centre for Analysis of Complex Financial Systems

Sampath Windsor

University of New South Wales (UNSW) - School of Organisation and Management

Date Written: August 2, 2013

Abstract

Understanding risks faced by firms and their reactions in response to those risks requires analysis of the ambiguities inherent in human behaviour. Yet, evidence from two case studies on investment and insurance professionals in the finance industry suggest that more focus on human capital may be prudent in reducing epistemic uncertainty particularly considering recent events in which the investing public has had a crisis of confidence in corporate leaders. It is particularly appropriate for regulators to provide a context in which market participants exercise due diligence by ensuring human capital is enhanced by as much knowledge as possible where more human capital knowledge could reduce both risk in investments and insurance, ultimately challenging the sustainability of organisations during periods of epistemic uncertainty. This paper suggests that investment analysts, fund managers and insurance professionals lack the appropriate competencies, skills, knowledge and abilities required to meet the demands of the analysis of human capital in relation to understanding risk. Such competencies include disciplinary knowledge of sustainable human resource management and organisational change systems and their links to corporate performance and risk mitigation. An alignment with human resource management (HRM/ HR) that is equally focused on internal and external risk is of strategic importance for such professionals and their organisations in human capital risk mitigation.

Keywords: regulation, risk management, financial services

JEL Classification: G21, G22

Suggested Citation

Royal, Carol and Evans, John R. and Windsor, Sampath, The Missing Strategic Link – Human Capital Knowledge, and Risk in the Finance Industry – Two Mini Case Studies (August 2, 2013). Available at SSRN: https://ssrn.com/abstract=2305036 or http://dx.doi.org/10.2139/ssrn.2305036

Carol Royal (Contact Author)

UNSW Australia Business School, School of Management ( email )

Gate 11, Botany Street, Randwick
Sydney, NSW 2052
Australia

John R. Evans

Centre for Analysis of Complex Financial Systems ( email )

PO Box 363
Summer Hill, 2130
Australia

Sampath Windsor

University of New South Wales (UNSW) - School of Organisation and Management ( email )

Sydney, NSW 2052
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
91
Abstract Views
585
rank
290,625
PlumX Metrics