Don’t Tiptoe Around Your Legal Risk To Drive Diversity Efforts  

In India, where a population of 1.4 billion speaks more than 450 languages, the concept of diversification and inclusion is no longer a mere talk but an important catalyst for any company’s growth and success. Organisational diversity is not just about hiring people of different genders, ages, races, ethnicities, cultures and backgrounds but also about employee engagement, collaboration, teamwork, and increased productivity for achieving organisational goals. It has been recorded that diversity, equity, and inclusion (DEI) contribute to a company’s growth, but some companies seem to overlook legal risks while driving diversified efforts. 

As per McKinsey’s Diversity and Inclusion report, ethically diverse companies outperform peers by 36% and gender diverse companies by 48%. In the pursuit of diversified goals, companies often fail to manage their significant legal risks and face many financial complications. In today’s competitive landscape, the pressure on companies from both internal and external stakeholders to achieve ‘diversified’ goals often leads to a mismatch of data. Companies’ quantitative goals pertaining to diversification do not always comply with the legal landscape. If not handled carefully in consultation with an experienced counsel, the company’s efforts to achieve diversified goals may lead to significant risks. Diversification is no longer a ‘good-to-have’ in today’s competitive business landscape but a ‘must-have’ to leverage a true competitive advantage. Companies must also heed legal risks to avoid complications in the future. Reducing legal risks during change and diversification is a must for companies with the following indispensable steps:

Access Your Risk Tolerance

Knowing the company’s risk tolerance is the first step in accessing and managing risk. Companies can prefer the approach to drive diversified efforts. Some companies believe that effective diversity measures reflect their core values and assume legal risks to achieve significant business goals. Few companies that are highly risk-averse with respect to diversity metrics can still use an evidence-based approach without using metrics. Hence, it becomes important for companies to assess risks associated with goals to drive diversify efforts. 

Identify Different Levels of Risk-Associated 

To succeed in their diversified efforts, companies must recognise different types of risks associated with a variety of data. Any company may work with a range of data like internal data, marketing data, qualitative data, transactional data, customer demographics data, etc. When the company drives diversity efforts, it is exposed to an array of risks pertaining to a variety of data. Organizations that become aware of diversified efforts and challenges take persistent steps to address the issues in order to avoid liability. 

Take Reasonable Measures to Remedy Any Issue 

The crucial step for any company is to get a sense of the metrics of an issue to take necessary steps towards a solution. Companies should know that they do not solve the issues immediately; rather, they must take the necessary steps to begin working on the issue. Another important way to control risk is to ensure that the data can help the companies identify legal risks in compliance with the company’s policies. 

Limit Access to Sensitive Information

According to The National Cyber Security Alliance, over 60% of companies that experience a cyber attack shut down within six months. Therefore, the companies must limit the access to sensitive information from getting hacked. Cybersecurity ventures estimate that global cybercrime costs will grow by 15% every year over the next five years, reaching $10.5 trillion USD annually by 2025, up from $3 trillion USD in 2015. By limiting access to sensitive information and data, companies can achieve their diversity efforts while reducing risks associated with sensitive data.  

Though diversity makes companies a pool to access new talent, simply driving diversity doesn’t contribute to the success of any company. Improving and implementing a robust diversity strategy within the organisation will promote harmony and peace while managing legal risks. A company that implements and promotes diversified strategies while maintaining legal risk will achieve all the organisational goals and endeavour towards innovative change. 

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