SPHR HR Risk Management 3 — Questions and Answers
Question 1: An organization is preparing its business continuity plan (BCP). What is the primary HR contribution to this process?
- Negotiating insurance premiums for property damage
- Identifying critical workforce roles and ensuring succession and cross-training plans exist (Correct answer)
- Auditing IT disaster recovery systems
- Establishing vendor contracts for emergency supplies
Correct answer: Identifying critical workforce roles and ensuring succession and cross-training plans exist
HR's primary BCP role is ensuring human capital continuity by identifying key positions, cross-training staff, and maintaining succession plans.
Question 2: A company discovers that a manager has been classifying employees as independent contractors to avoid benefit costs. The greatest regulatory risk exposure is to:
- ERISA penalties for benefit plan mismanagement
- IRS and DOL penalties for worker misclassification, including back taxes and benefits (Correct answer)
- NLRB sanctions for unfair labor practices
- EEOC fines for discriminatory compensation practices
Correct answer: IRS and DOL penalties for worker misclassification, including back taxes and benefits
Worker misclassification exposes employers to IRS back taxes, DOL penalties for wage law violations, and liability for benefits the workers should have received.
Question 3: The risk treatment option of 'risk avoidance' in HR practice is best illustrated by:
- Purchasing directors and officers insurance to cover board liability
- Deciding not to operate in a jurisdiction with complex employment laws (Correct answer)
- Implementing stronger background check procedures
- Requiring employees to sign mandatory arbitration agreements
Correct answer: Deciding not to operate in a jurisdiction with complex employment laws
Risk avoidance means eliminating the activity that creates the risk entirely, such as not entering a market to avoid its regulatory burden.
Question 4: Which of the following is an example of a leading indicator for workplace safety risk?
- Number of lost-time injuries in the prior quarter
- Near-miss reports filed per month (Correct answer)
- Workers' compensation claims paid year-to-date
- OSHA citation count for the last inspection
Correct answer: Near-miss reports filed per month
Near-miss reports are leading indicators because they signal hazards before an injury occurs, enabling proactive intervention.
Question 5: A multinational company is expanding into Germany. Which employment law risk is most distinct from U.S. requirements and must be assessed?
- At-will employment doctrine applicability
- Co-determination rights requiring works council consultation on HR decisions (Correct answer)
- Title VII protections for protected classes
- FMLA leave entitlements for employees
Correct answer: Co-determination rights requiring works council consultation on HR decisions
Germany's Betriebsverfassungsgesetz requires works councils to be consulted on many HR decisions, a co-determination right with no U.S. equivalent.
Question 6: A thorough job hazard analysis (JHA) is primarily used to:
- Determine appropriate wage rates under the FLSA
- Identify and mitigate task-level safety risks before work begins (Correct answer)
- Establish performance benchmarks for annual reviews
- Evaluate ergonomic suitability of remote work setups
Correct answer: Identify and mitigate task-level safety risks before work begins
A JHA systematically breaks down a job into tasks, identifies hazards in each task, and prescribes controls before work is performed.
Question 7: When an organization self-insures its workers' compensation program, the key financial risk it assumes is:
- Premium volatility from the commercial insurance market
- Catastrophic or aggregate losses that exceed the stop-loss coverage threshold (Correct answer)
- Regulatory fines from state insurance commissioners
- Legal fees from OSHA enforcement actions
Correct answer: Catastrophic or aggregate losses that exceed the stop-loss coverage threshold
Self-insured employers bear all claims costs directly; the primary financial risk is catastrophic or high-aggregate losses beyond any stop-loss protection.
SPHR HR Risk Management 3
An organization is preparing its business continuity plan (BCP).
What is the primary HR contribution to this process?