Psychological Risk Matrix

Psychological Safety

13.11.23 17 MIN READ

Managing risks in a workplace involves identifying potential hazards, assessing their likelihood and potential impact, and implementing measures to mitigate or eliminate them. This may include but is not limited to; promoting a safety-conscious culture, providing proper training to employees, maintaining equipment and facilities, enforcing safety protocols, regularly reviewing and updating risk assessments, and fostering open communication channels to report and address concerns promptly. Regular monitoring and adaptation of risk management strategies are essential to ensure a safe and productive work environment.

The chnnl psychosocial risk assessment tool allows users to systematically identify and categorise hazards, assign likelihood and impact ratings, and generate risk assessments based on predefined criteria. This tool might offer templates for risk assessment plans, helping leaders outline steps to mitigate identified risks, assign responsibilities, set timelines, and track progress. Using the chnnl platform allows leaders to facilitate communication and collaboration among teams, ensuring that risk assessment findings and mitigation strategies are transparent and accessible to all stakeholders and frontline employees, ensuring ISO45003 compliance.

Learn how the chnnl App can help your organisation create a psychologically safe workplace

Importance of Psychosocial Risk Management

Rapidly changing and complex work environments have the potential for immense pressure on the wellbeing and mental health of employees. As organisations strive to create and maintain healthier, more productive and more psychologically safe workplaces, psychosocial risk management is a crucial component of success.

Psychosocial risks refer to the potential sources of stress, discomfort, or harm that arise from interactions between the social and psychological aspects of work, which potentially impact employees' mental wellbeing, health, and job performance. These risks are often associated with the organisation's culture, work design, interpersonal relationships, and the balance between work and personal life.

Psychosocial risk management involves identifying, assessing and mitigating these factors within the work environment that have the potential to impact an employee's psychological, emotional, and overall wellbeing.

chnnl has created a psychosocial risk matrix - a structured framework allowing organisations to identify and evaluate psychosocial hazards that employees might encounter in their work. By categorising, prioritising and managing these risks through the evaluation of potential severity and likelihood of occurrence, organisations are aided in developing strategies which are targeted and tailored in order to address and manage them effectively and efficiently.

Psychological harm can be caused in the workplace when psychosocial risks are not effectively identified and managed. More on psychosocial risk next up but it’s worth noting that The Health and Safety at Work Act 2015 says businesses must take reasonably practicable steps to protect health and prevent harm at work, including psychological harm. Workplaces can be subject to some hefty fines if they aren’t identifying & minimizing potential harm to their employers but from a more humanistic perspective, preventing harm to your most valuable assets (your people) is a worthy and ethical cause that has far-reaching benefits across the communities you operate in.

Legislation

Various countries have recognised the significance of psychosocial risk management and have introduced legislation to ensure the well-being of employees. These countries include the United Kingdom, United States and Australia, which now have legislation for mandatory management of psychosocial risks in the workplace.

New Zealand is tracking towards incorporating psychosocial risk management into workplace health and safety legislation. Don’t wait for legislation, be a leader and manage psychosocial risks in your workplace using chnnl’s psychosocial risk matrix.

To learn more about psychosocial risks, click here.

For a 'quick guide to psychological safety terms, click here.

Psychosocial Risk Categories

Each category within this psychosocial risk matrix has been strategically chosen to encompass various facets of potential impact on the organisation, its workforce, and its broader stakeholders. The 6 primary categories are: Financial, Reputational, Legal/Compliance, People, Organisational and Safety.

The financial risk category embodies the tangible and quantifiable consequences of inadequate psychosocial risk management.

By assessing the financial risks, organisations gain insight into the direct potential impact from a financial perspective. It highlights the necessity for an organisation to manage psychosocial risks due to the significant financial implications which are associated with inadequate psychosocial risk management. Effective psychosocial risk management can lead to improved productivity, reduced compensation claims, and a positively enhanced financial outlook for the organisation.

Decreased Productivity

When employees experience high levels of stress, burnout, or dissatisfaction due to unaddressed psychosocial risks, their productivity may decline. Reduced productivity can lead to lower output, missed deadlines, and overall inefficiencies, resulting in financial losses for the organisation.

Work Stress Claims

Employees who suffer from work-related stress due to unmanaged psychosocial risks may file compensation claims for the emotional and psychological toll they experience. These claims can lead to legal and financial liabilities for the organisation, including costs related to legal representation, settlements, and potential fines.

Workers’ Compensation Insurance Levies

Increased workers' compensation claims related to psychosocial injuries can lead to higher insurance levies for the organisation. Insurance providers may raise premiums or apply additional charges to cover the costs associated with such claims.

Psychological Injury Claims (Less than $400k):

In some jurisdictions, employees who experience psychological injuries due to work-related psychosocial risks may be eligible to file compensation claims. These claims, even if they are below a certain monetary threshold, can still result in up to $400k in financial costs for the organisation, incorporating legal fees and potential settlements.

Psychological Injury Claims (Greater than $400k):

More severe psychological injury claims, exceeding a certain monetary threshold, can have even greater financial implications. High-value claims can lead to substantial payouts, legal expenses, and reputational damage for the organisation.

The inclusion of reputational risks as a potential risk category resulting from a lack of psychosocial risk management reflects the critical role that an organisation's reputation plays in today's interconnected and information-driven world. The varying levels of impact within this category illustrate the potential consequences of not effectively addressing psychosocial risks.

Reputation directly affects the organisations overall health, sustainability, and relationships with clients, patients, customers and stakeholders.

Minor Credibility Damage

Addressing minor credibility damage resulting from unmanaged psychosocial risks is crucial to maintaining a positive perception of the organisation. Even seemingly minor issues can accumulate, affecting stakeholders' trust and confidence in organisations commitment to employee wellbeing. By proactively managing these risks, it leads to preserving an organisational reputation as a psychologically safe, alongside credible workplace.

Medium Credibility Damage

Medium credibility damage highlights the potential erosion of trust and credibility due to unresolved psychosocial risks. This level of impact can result in scepticism among stakeholders, affecting customer loyalty and employee morale. By strategically addressing psychosocial risks, it can be ensured that reputation remains strong and that stakeholders view the organisation as trustworthy.

High Credibility - Resulting in Customer and Employee Loss

The potential loss of customers and employees due to high credibility damage emphasises the direct impact of psychosocial risks on the organisation's bottom line. A tarnished reputation can lead to decreased customer retention and future difficulty. By effectively managing psychosocial risks, it safeguards the ability to attract, retain, and engage both customers and employees.

Media Inquiry / PR Scandal

Media inquiries and public relations (PR) scandals can arise when unaddressed psychosocial risks attract public attention. Such events can damage reputation and undermine stakeholders' perception of our commitment to employee well-being, leading to further concerns about overall credibility. By addressing these risks proactively, it mitigates the likelihood of media scrutiny and maintains a positive public image, alongside client, customer, and employee trust.

Public Outcry / Boycott

Public outcry or boycotts reflect a severe reputational crisis that can result from mishandling psychosocial risks. These events can disrupt operations, strain relationships with stakeholders, and lead to financial losses. By strategically managing psychosocial risks, risks of public backlash and the support of stakeholders are controlled.

The consideration of legal and compliance risks in psychosocial risk management is imperative to ensure that the organisation operates within the bounds of the law and fulfils its obligations to create a safe and healthy work environment. Each potential impact within the Legal/Compliance category highlights the legal consequences that can arise from neglecting psychosocial risks.

Incorporating legal and compliance risks into the psychosocial risk management strategy demonstrates commitment to upholding legal obligations and maintaining a responsible and ethical workplace.

Mediation / Legal

When psychosocial risks lead to conflicts, grievances, or complaints, legal and mediation processes may become necessary. Engaging in these processes can be time-consuming and resource-intensive for the organisation. By addressing psychosocial risks proactively, it minimises the likelihood of such legal actions, promoting a more harmonious and productive work environment.

Investigation Costs

Investigations into workplace issues related to psychosocial risks can incur significant costs, both in terms of time and financial resources. Addressing these risks strategically can reduce the need for investigations, preserving valuable resources that can be directed towards core business activities.

KC/Formal Inquiry Cost

The costs associated with formal inquiries stemming from psychosocial risks can strain the organisation's time and finances, and will divert attention from essential operations. By managing these risks effectively, it minimises the need for formal inquiries, allowing focus on delivering value to our stakeholders, patients, clients and customers.

Fine >$50k

Significant fines resulting from non-compliance with psychosocial risk regulations can lead to immense financial strain and negatively impact the organisation's reputation. By prioritising compliance and risk management, it mitigates the risk of substantial fines and ensures that financial resources are directed towards positive business outcomes.

Director Prosecution

In severe cases, legal proceedings targeting directors or senior management may arise due to failures in managing psychosocial risks. Director prosecution can have far-reaching implications for an organisation, including reputational damage and loss of talent. By adopting a strategic approach to psychosocial risk management, we safeguard both the organisation and its leadership from potential legal ramifications.

The consideration of people-related risks in psychosocial risk management is essential because they directly relate to the well-being, health, and performance of the organisation's most valuable asset—its employees. Each potential impact within the "People" category underscores the critical importance of managing psychosocial risks to ensure the physical and mental health of the workforce.

Incorporating people-related risks into our psychosocial risk management approach allows organisations to proactively promote employee well-being, enhance job satisfaction, reduce turnover, and foster a positive organisational culture that values the health and safety of the workforce. Ultimately, a focus on people-related risks contributes to improved health, performance, engagement, and long-term organisational success.

Poor Health

When employees experience poor physical and mental health due to unmanaged psychosocial risks, their overall well-being deteriorates. This can result in increased absenteeism, decreased productivity, and reduced engagement. By addressing these risks, it promotes a healthier workforce that contributes to the organisation's overall success.

Physical Health & Mental Impairment

Psychosocial risks can contribute to physical health issues and mental impairments that impact employees' ability to perform their roles effectively. This can lead to reduced job satisfaction, lower morale, and decreased overall organisational performance. Managing these risks strategically helps maintain a workforce that is physically and mentally capable of meeting job demands, alongside overall enhanced organisational wellbeing.

Psychological Injury (Full Recovery Possible)

In cases where employees experience psychological injuries due to psychosocial risks, a full recovery is possible with appropriate support and intervention. This can be extremely time consuming and mentally deteriorating and draining. Strategic psychosocial risk management ensures that employees receive the necessary assistance and management to never encounter hazards which might lead to psychological injuries.

Psychological Permanent Injury (PTSD)

Severe psychosocial risks can lead to permanent psychological injuries, such as post-traumatic stress disorder (PTSD), that have a lasting impact on employees' well-being and functionality. Managing these risks proactively helps prevent long-term suffering and ensures a safe and supportive environment for all employees.

Suicidal

The most severe consequence of unmanaged psychosocial risks can be the risk of employees experiencing suicidal thoughts, attempting or committing suicide. Addressing these risks is crucial not only for the well-being of employees but also for maintaining a responsible and ethical work environment that prioritises mental health and provides the necessary support to those in need. There is immense risk with psychosocial hazards that lead to suicide which extend further than the individual but for the entire organisation.

The consideration of organisational risks in psychosocial risk management is crucial because it directly affects the overall health, performance, and stability of the organisation. Each potential impact within the "Organisational" category underscores the intricate relationship between psychosocial risks and the organisation's ability to function effectively.

Incorporating organisational risks into our psychosocial risk management approach demonstrates commitment to creating a harmonious, effective and efficient work environment. By addressing these risks proactively, it promotes employee satisfaction, productivity, and engagement, leading to improved teamwork, collaboration, and overall organisational success. Ultimately, focusing on organisational risks enhances the organisation's resilience, adaptability, and ability to achieve long-term goals.

Engagement - Decreased Productivity

Unmanaged psychosocial risks can lead to decreased employee engagement, resulting in reduced motivation and productivity. Employees who experience stress, burnout, or dissatisfaction are less likely to perform at their best, impacting the organisation's overall output and success.

Presenteeism

Psychosocial risks can contribute to presenteeism, where employees are physically present but not fully productive due to health issues or low morale. This not only negatively impacts the employee and their team, but can result in lower efficiency, quality, and ultimately affecting the organisation's performance.

Absenteeism

When psychosocial risks lead to increased stress, anxiety, or mental health issues, employees may take more sick days or extended leaves. Absenteeism reflects poor mental health due to unmanaged psychosocial risks, and can disrupt workflow, strain resources, and hinder the organisation's ability to meet its goals.

Staff Turnover

The presence of unmanaged psychosocial risks can lead to high levels of employee dissatisfaction and turnover. Turnover is not only expensive in terms of recruitment and training but also disrupts team dynamics and can lower morale among remaining employees. Staff turnover also has the potential to create reputational damage.

Mass Staff Walkout / Strike Action

Severe psychosocial risks can lead to collective employee dissatisfaction, resulting in mass staff walkouts or even strike actions. Such events can paralyse operations, damage the organisation's reputation, and lead to significant financial losses.

The consideration of safety risks in psychosocial risk management is crucial because it directly affects the physical and psychological well-being of employees and the overall safety of the organisation. Each potential impact within the "Safety" category underscores the vital connection between psychosocial risks and the organisation's duty to provide a safe and secure work environment.

Incorporating safety risks into our psychosocial risk management approach demonstrates commitment to ensuring the well-being and safety of employees. By addressing these risks proactively, a secure and supportive work environment can be created and maintained that minimises the potential for accidents, injuries, and harmful incidents. Focusing on safety risks not only protects employees but also contributes to a positive organisational culture that prioritises both physical and psychological health and safety.

Low Level Increase in Physical and Psych Health & Safety Risk

Unmanaged psychosocial risks can lead to a gradual increase in both physical and psychological health and safety risks. Over time, this can result in more frequent accidents, psychological injuries, and health issues, affecting employees' well-being and the organisation's safety record.

Med Level Increase in Physical and Psych Health & Safety Risk

A medium level increase in health and safety risks indicates a more noticeable impact on employees' well-being and the work environment. This level of risk can lead to more significant disruptions, potential accidents, and a decline in overall safety compliance.

High Level Increase in Physical and Psych Health & Safety Risk

A high level increase in health and safety risks signifies a critical situation where the safety of employees is significantly compromised. Unaddressed psychosocial risks can contribute to an unsafe work environment, putting employees at risk of physical and psychological harm.

Deliberate Harm to Self or Others

Severe psychosocial risks can lead to situations where employees may intentionally harm themselves or others due to mental distress. This level of impact highlights the potential for serious incidents that threaten the safety of individuals and the organisation as a whole.

Homicidal (Mass Shooting, etc.)

In extreme cases, unmanaged psychosocial risks can contribute to incidents of violence, including homicide and/or mass shootings. This level of impact underscores the potential for catastrophic events that endanger the lives of employees and severely damage the organisation's reputation and operations.

How have we scored the Psychosocial Risk Matrix?

The Psychosocial Risk Matrix is scored through journal theme coding, and survey alongside speak up entries.

Through these metrics, we analyse and interpret the severity and frequency of these risks occurring. Severity is done on a self assessment or chnnl assessment. Frequency is determined based on the number of responses

How to interpret the Psychosocial Risk Matrix?

The different levels of likelihood are commonly used to assess the probability of an event, risk, or incident occurring within a risk management context. These likelihood levels help organisations gauge the chances of a particular scenario occurring and guide decision-making regarding risk prevention and mitigation. Here's a general understanding of what each level signifies:

These likelihood levels provide a framework for organisations to assess the probability of different scenarios and outcomes. By categorising risks based on their likelihood, organisations can prioritise their risk management efforts, allocate resources effectively, and develop strategies to prevent or mitigate potential negative consequences.

Rare

An event or risk with a rare likelihood is highly unlikely to occur. It implies that the circumstances or conditions required for the event to happen are extremely unusual or remote. Such events are considered outliers and have a very low probability of occurring.

Unlikely

An event or risk with an unlikely likelihood has a low probability of occurring. While not as rare as "rare," an unlikely event is still not expected to happen frequently or regularly. It suggests that the conditions for the event to occur are not commonly encountered.

Possible

An event or risk with a possible likelihood has a moderate probability of occurring. It indicates that there is a reasonable chance of the event happening under certain circumstances. While not highly likely, the conditions for the event are not too uncommon.

Likely

An event or risk with a likely likelihood has a high probability of occurring. It suggests that the event is expected to happen with some regularity or frequency, given the prevailing conditions. The chances of the event occurring are substantial.

Almost Certain

An event or risk with an almost certain likelihood is highly probable and expected to happen almost all the time under the prevailing conditions. It indicates that the event is very likely to occur and is practically a certainty.

The different levels of severity categorise the impact and/or consequences of the potential risks which may occur due to poor psychosocial risk management. These aid in the process of identifying, assessing, prioritising and mitigating psychosocial risks.

These severity levels provide a framework for organisations to evaluate and prioritise risks in a consistent and structured manner. By categorising risks based on their potential impact, organisations can make informed decisions about resource allocation, risk management strategies, and preventive measures to ensure the safety, well-being, and continued success of the organisation.

Negligible

An event or risk with negligible severity has a minimal or insignificant impact on individuals, assets, processes, or the organisation as a whole. It is unlikely to result in any noticeable harm or disruption and can often be managed without significant intervention. In some cases, the impact might be so minor that it's practically inconsequential.

Minor

A minor event or risk has a slight impact that might cause inconvenience, but it is manageable and unlikely to cause significant harm. It might result in minor disruptions, delays, or temporary setbacks, but the overall functioning of the organisation is not severely affected. Remedial actions can typically address minor impacts.

Moderate

A moderate event or risk has a noticeable impact that can lead to disruptions, operational challenges, or a decline in performance. While not catastrophic, a moderate impact might require proactive management and mitigation efforts to prevent further escalation. It can affect productivity, customer satisfaction, or other key areas, requiring a more substantial response.

Major

A major event or risk has a substantial impact that can result in significant harm, widespread disruptions, or substantial financial loss. It requires immediate attention and intervention to mitigate its effects and prevent further deterioration. Major impacts can have a lasting effect on the organisation's operations, reputation, or stakeholder relationships.

Catastrophic

A catastrophic event or risk has a severe and disastrous impact that can cause extensive harm, endanger lives, lead to severe financial losses, or even threaten the survival of the organisation. Catastrophic events often require an emergency response, and their effects can be long-lasting and far-reaching. These impacts are severe enough to disrupt entire operations, necessitating an extraordinary level of intervention.

The risk level is a combination of both the likelihood and severity of an event or risk within a risk management context. By assessing the likelihood (probability of occurrence) and severity (potential impact) of a risk, organisations can categorise risks into different levels that reflect the overall level of risk associated with a particular scenario. Here's the general meaning of each risk level:

Minimal Risk Level

A risk categorised as "minimal" indicates that the combination of low likelihood and low severity results in a situation where the potential impact is negligible or inconsequential. Such risks are not expected to cause significant harm or disruption, and they may not require immediate attention or extensive resources for mitigation.

Low Risk Level

A "low" risk level suggests that while the likelihood and severity are still relatively low, there is a slightly greater potential for negative consequences. These risks may cause minor disruptions or have limited impact, but they are generally manageable with standard preventive measures.

Medium Risk Level

A "medium" risk level signifies that the combination of moderate likelihood and moderate severity poses a more noticeable potential impact. These risks may lead to disruptions or challenges that could affect operations or performance to a significant degree, requiring proactive risk management measures.

High Risk Level

A risk categorised as "high" indicates that either the likelihood or severity (or both) are relatively high, leading to a more substantial potential impact. High-risk scenarios are likely to cause significant harm, disruption, or financial loss if left unaddressed. These risks require immediate attention and targeted mitigation efforts.

Extreme Risk Level

An "extreme" risk level represents the highest level of risk, where both the likelihood and severity are very high. Extreme risks have the potential to cause severe and widespread harm, endanger lives, lead to catastrophic financial losses, or even threaten the organisation's existence. Immediate and comprehensive action is necessary to prevent or mitigate the consequences associated with extreme risks.

Psychosocial Risk Matrix References

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Written by chnnl Team

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