By Aclaimant

Mar 12, 2024

In the fast-paced staffing industry, agencies face a unique set of risks both on the client side and on the employee side of the business. On the one hand, you’re responsible for ensuring the employees you hire are qualified for the potential risks they can face in the work environments where they are placed. But you also must partner with clients who provide safe working conditions and fair wages.

Insurance can help protect your business from lawsuits and associated costs, but only to an extent. This is why you need a robust risk management strategy in place. With the right mix of strategy and technology, you can actively mitigate risk and avoid more extensive legal and financial repercussions.

What does risk in the staffing industry look like?

As a staffing firm, your organization is liable for an employee’s mistakes on the job and the misrepresentation of their credentials. You’re also responsible for ensuring the clients you work with won’t pose a threat to your employees, not to mention ensuring your business operations are compliant and fair.

In the staffing industry, there are four particularly notable categories of risk — fraud, credit, financial, and, liability risks:

  • Fraud risk refers to employee theft from a client company, e.g., a temporary employee who inflates their hours for payroll purposes. 
  • Credit risk includes any potential risk involving a party’s ability to pay another party on time, e.g., a customer’s refusal to pay an invoice would require the firm to pay the employee instead.
  • Financial risk occurs when you are not adequately managing your business, e.g., choosing unprofitable bill rates. 
  • Liability risk refers to hazards that could impact the safety or well-being of your employees, e.g., an agency paying unfair wages or unsafe working conditions.

Each type of risk opens the door to legal, reputational, and financial repercussions that can impact your bottom line. With the countless moving parts in a staffing agency, it’s crucial to proactively identify, understand, and mitigate these threats to keep your business operations running smoothly.

The importance of employee and client risk assessments

To keep up with the myriad risks in staffing, it is critical to conduct employee and client risk assessments. With a thorough screening process, including background checks and past employment verification, you can minimize risks before it’s too late.

  • Employee screening: It’s important to screen potential employees to verify their identity, education, past employment, and skill set. You can’t send an employee to a job they don’t have the correct skill set for without increasing their likelihood of being injured or making a costly error. Additionally, it’s critical to your business reputation that you provide top-notch, qualified candidates to your clients.
  • Client risk assessment: Before signing a contract with a customer, request specific job descriptions (including safety requirements, potential hazards, past OSHA reports, etc.) and an overview of their business operations. This will provide a better understanding of the company’s risk landscape.

While screening employees and clients may incur a higher cost upfront, it reduces the likelihood of risk occurring. The legal and reputational damage that can stem from staffing agency risks rack up a much higher bill than any screening costs will. 

As the scope of staffing risk management continues to increase, outdated tools and spreadsheets are no longer adequate to help effectively manage risk, especially with so many employees in the field. This is why many companies turn to a risk management platform to take their mitigation strategies to the next level.

Level up your strategy with a risk management platform

As risk management needs in the staffing industry continue growing more complex, consider integrating a risk management platform into your existing strategy. With a risk management platform, you can access digitized safety reporting, claims management, and incident intake — all in a centralized repository. 

Interested in how you can proactively manage risk at your organization? Learn more about Aclaimant’s insight-driven workflow solution by checking out our Staffing page or booking an introductory demo with one of our experts.