Beyond Wellness

Managing Psychosocial Risk

 

From Hidden Costs to Risk Register

On a humid Tuesday evening in Kathmandu, the executive team of a fast-growing IT services firm gathered for what was meant to be a routine quarterly review. The first slide on the screen looked reassuring: revenue was up, a new European client had come on board, and the delivery teams were busy on billable work. People relaxed in their chairs.

Then the CHRO (Chief Human Resources Officer) flipped to the attrition chart.

Resignations among mid-level engineers had doubled in twelve months. Exit forms were polite. They had reasons like ‘further studies,’ ‘family reasons,’ ‘better opportunity abroad.’ Her own notebook told a sharper story: ‘too many late-night calls,’ ‘no time to breathe,’ ‘can’t say no to client demands,’ ‘team lead shouts when tickets pile up.’

Two months earlier, a critical deployment for their anchor client had gone badly wrong. A senior developer, on her third week of night shifts, missed a dependency in a rushed code review. The bug slipped into production, triggered an outage, and set off a storm of social media complaints. The client demanded service credits and quietly started scouting alternative vendors.

The internal post-mortem stayed on technical ground; testing protocols, documentation gaps, handover processes. Nobody wrote ‘chronic fatigue’ or ‘fear of pushing back on unrealistic deadlines’ on the incident form.

Later, as the board sub-committee scanned the risk register, they saw the usual suspects: cybersecurity breach, forex volatility, key-client concentration, data privacy. Under ‘People,’ there was a single line: ‘Talent market competition – medium/high.’ The CHRO hesitated. The board understood macro talent risk. What they were not seeing was what work inside the organisation actually felt like; the invisible load that was burning through their best people and pushing quality to the edge.

Here is where psychosocial risk lives. Not in slogans, but inside rosters, calendars, tone of voice, and ‘just this one last push’ messages sent at 11:47 P.M.

Psychosocial risk at work, as global occupational health guidance now describes it as the risk that the way work is organised, managed, and experienced will harm people’s psychological health and safety and, through them, the performance of the organisation. It arises from the interaction of job demands with control, support, fairness, role clarity, relationships, and how change is handled. When those factors stay out of balance for long, the likelihood of stress-related ill-health, errors, accidents, and disengagement rises sharply (Health and Safety Executive, 2024; World Health Organisation & International Labour Organisation, 2022).

ISO 45003 takes this logic to the governance table. It asks organisations to treat psychosocial hazards like high workloads, low autonomy, bullying, role conflict, job insecurity, badly managed change as hazards within the occupational health and safety management system, to be identified, assessed, controlled, and reviewed with the same discipline applied to physical risks (International Organisation for Standardisation [ISO], 2021). In plain terms for a CEO: chronic overwork and toxic behaviour belong in the same risk frame as unguarded machines and unsafe scaffolding.

Yet, many leadership teams still encounter this topic first through the language of ‘wellness.’ Wellness weeks, yoga sessions, resilience webinars, and mindfulness apps frame mental health as an individual challenge to be managed; preferably outside core working hours. They are easy to sponsor: no change to deadlines, performance metrics, or manager behaviour is required. When someone burns out, it can be quietly treated as a personal limitation, not a foreseeable outcome of how the organisation allocates work and handles pressure.

The unintended consequence is a shift in accountability. If mental distress is mainly a wellness issue, it stays in HR campaigns, not in board risk reviews. If it is framed as personal vulnerability, the system that created and sustained the pressure remains unexamined. Yet the economic losses from that system are substantial. Global estimates suggest that depression and anxiety alone cost the world economy around US$1 trillion each year in lost productivity (World Health Organisation, 2024). Employer-level analysis, such as Deloitte’s work in the UK, shows that poor mental health drives significant costs through absenteeism, presenteeism (the practice of being present at one’s place of work for more hours than is required, especially as a manifestation of insecurity about one’s job.), and turnover; and that more comprehensive, systemic approaches can deliver a positive return on investment (Deloitte, 2022).

The first article in this series, ‘The Unseen Balance Sheet of the Mind,’ argued that every organisation carries a mental ledger: assets such as clarity, trust, and psychological safety on one side; liabilities such as chronic stress, stigma, and unresolved conflict on the other. Most of that ledger never appears in financial accounts, yet it shapes performance every quarter. This second article takes the next step. It asks: which entries on that unseen balance sheet are not just ‘costs of doing business,’ but avoidable risks that leaders have a duty to govern?

Across very different organisations, the pattern is familiar. As long as mental health is treated primarily as a wellness agenda, efforts stay episodic and fragile. When it is reframed as psychosocial risk, it starts to sit alongside cyber risk, safety risk, and conduct risk; areas where top management and boards expect structured controls, clear ownership, and regular reporting.

The rest of this article explores that shift. It names the psychosocial hazards that show up in boardrooms, branches, construction sites, and code repositories; shows how global standards such as ISO 45003 and the WHO–ILO guidelines can be turned into practical management systems rather than compliance binders; and situates that work in the realities of Nepal and similar economies, where public mental health systems are still building capacity and organisations, whether they like it or not, carry a significant share of the load.

Where the Pressure Lives: Psychosocial Risk in Daily Operations
Psychosocial risk rarely turns up with a label. It arrives as the way deadlines are set, who gets shouted at when sales dip, how many people keep their corporate phones on during Dashain holidays ‘just in case,’ or who never dares to question a client’s demand.

In a mid-sized commercial bank with branches from Kathmandu to the Terai, the pattern is recognisable. Officially, staff work a six-day week. Unofficially, branch teams stay late at quarter-end to clear loan files and hit aggressive cross-sell targets. Job descriptions speak of ‘customer-centricity’ and ‘teamwork,’ but staff talk quietly about conflicting instructions from multiple department heads, last-minute campaign pushes, and an unwritten rule that leaving on time signals a lack of ambition. When documentation errors rise and regulators flag compliance issues, the bank invests in more checklists and training. The underlying configuration of demands, control, support, and role clarity stays untouched.

From a psychosocial risk lens, this is not a cultural triviality. High quantitative and emotional demands, combined with low control over pace and methods, form a well-known hazard cluster for stress and burnout (Health and Safety Executive, 2024). Add weak managerial support and ambiguous roles and the probability of mental strain, mistakes, and turnover climbs. Those outcomes do not show up in the risk register as ‘psychosocial hazards.’ They appear as error rates, complaints, and regretted exits.

On the outskirts of Ring Road, a BPO centre runs through the night. Calls are monitored, scripts are timed, dashboards flash red if wrap-up exceeds the target. Supervisors track ‘adherence’ and ‘average handling time’ down to the second. Few people ask how many angry calls a 23-year-old can absorb before concentration slips. When a client threatens to terminate a contract after a spike in escalations, money goes into new quality tools and refresher training. The psychosocial hazards; high emotional demands, constant monitoring, limited control remain structurally intact.

On construction sites and in manufacturing plants, the pattern shifts but the logic holds. A contractor racing to pour concrete before the monsoon extends shifts, trims rest breaks, and quietly ignores fatigue guidelines. Workers, many from hilly districts or aiming for work in Gulf countries in near future, accept the conditions because of the lack of alternatives. A minor accident is filed as ‘human error’ and ‘weather-related,’ with no mention of sleep debt or production pressure. Yet, international evidence links such conditions to higher rates of injury, musculoskeletal problems, and long-term health issues (European Agency for Safety and Health at Work, 2022).

Across these settings, psychosocial risk follows a similar chain:

• Hazards in how work is designed and led: demands, control, relationships, change.
• Human responses: stress, exhaustion, withdrawal, conflict.
• Operational consequences: errors, rework, delays, accidents, service failures.
• Financial impact: lost days, overtime, penalties, discounts, client churn, higher rehiring costs.

The basic arithmetic is worth repeating, because this is where the risk becomes visible to a board and decision makers. Global estimates that depression and anxiety cost the world economy about US$1 trillion per year in lost productivity put numbers to that chain (World Health Organisation, 2024). Employer-level analysis reinforces the picture: poor mental health drives significant costs through absenteeism, presenteeism, and turnover, while more comprehensive approaches tend to generate positive returns (Deloitte, 2022).

The same mechanics operate, at different scales, in a Nepali IT firm, a Pokhara hotel handling tourists in peak season, or a logistics company trying to move goods during blockades. When people’s cognitive and emotional bandwidth is consumed by unmanaged psychosocial hazards, fewer cycles remain for judgement, learning, and care. Errors multiply. Near misses become incidents. High performers quietly disengage or leave.

What makes these risks hard to manage is not that they are intangible; it is that they are distributed. No single meeting or decision creates them. They accumulate across scheduling practices, incentive schemes, supervisory habits, and informal norms. That is why they resist solution through isolated wellness activities. A yoga session after work does not change the fact that every important decision is communicated on Saturday night.

For senior leaders, seeing psychosocial risk in daily operations is the first move. The second is accepting that these patterns are not ‘soft’ issues. They are structural drivers of cost, risk, and lost opportunity and, as such, they belong in core management conversations, not just in HR campaigns.

From Events to Systems: Turning Standards into Management Practice
Many organisations brush against psychosocial risk through fragments: a stress survey here, a counselling contract there, a one-off training on respectful behaviour after a complaint. These are events. They help, but they rarely add up to a system.

Standards such as ISO 45003, the WHO–ILO guidelines, and the HSE stress framework offer a way to turn scattered efforts into a structured management cycle. ISO 45003 essentially takes the familiar Plan–Do–Check–Act rhythm of occupational health and safety and applies it to psychological health and safety (ISO, 2021). It asks leadership teams to:

• Identify psychosocial hazards in the way work is organised, managed, and experienced.
• Assess who might be harmed and how.
• Control the risks; ideally at source, through changes in work design, leadership, and support.
• Review outcomes and improve over time.

WHO and ILO, in their joint guidance on mental health at work, point in the same direction: fix the way work is structured before teaching employees to ‘cope’ better (World Health Organisation & International Labour Organisation, 2022). HSE’s six stress dimensions: Demands, Control, Support, Relationships, Role, Change, give executives a simple map they can hold in their heads and apply in ordinary meetings (Health and Safety Executive, 2024).

On the ground, this does not require a new bureaucracy. It requires different questions and routines.

Take a large food manufacturing plant in Biratnagar-Itahari corridor. Historically, its safety programmes focused on machine guarding, PPE, lock-out/tag-out, and housekeeping. Accident rates fell, but people continued to report exhaustion during long festival runs and fear of speaking up about line speeds. Absenteeism spiked after every holiday season break; quality complaints rose.

Prompted by a multinational client’s updated supplier code, the plant’s leadership ran a psychosocial risk assessment. Using a short survey based on the HSE dimensions, plus a few focus groups, they mapped predictable hot spots: high demands and low control on certain lines, weak support on night shifts, friction between long-serving supervisors and newer hires. None of it was surprising. For the first time, though, it was treated as risk data, not corridor gossip.

The plant then piloted a control package on two lines: modest staffing increases during peak weeks, more say for operators in scheduling, clarified roles between maintenance and production, and targeted training for supervisors on giving feedback without humiliation. They also added a standing ‘people risk’ item to the monthly safety meeting, obliging managers to bring not only injury reports but also stress-related indicators and near misses.

Six months later, rework and minor incidents had dropped on the pilot lines. Absence after festive holidays remained higher than in quiet months, but the pattern became more predictable and easier to plan around. Operators started raising concerns earlier, before issues escalated into crises. The plant had not pursued formal ISO 45003 certification. It had begun behaving as if psychosocial risk belonged inside its existing safety and risk systems.

That is the essence of a system approach:

• Hazard mapping becomes routine. Workload peaks, role conflicts, toxic behaviours, and digital overload are discussed alongside physical hazards.
• Controls are planned and tracked. Adjustments to staffing, targets, meetings, and manager behaviour are documented as risk controls, not just ‘HR initiatives.’
• Responsibilities are explicit. Boards and executive teams own the overall risk; line managers own day-to-day controls; HR, OSH, and worker representatives provide expertise and feedback.
• Audits and reviews close the loop. Internal audits, client assessments, and periodic reviews check whether psychosocial controls exist, are used, and actually work.

WHO’s guidelines emphasise that such systems are most effective when they involve workers in design and monitoring, integrate mental health into broader OSH and HR policies, and provide access to care for those who need it (World Health Organisation, 2022). EU-OSHA’s surveys across thousands of enterprises show that organisations which approach psychosocial risks systematically, rather than through ad hoc actions, report better outcomes on safety and engagement (European Agency for Safety and Health at Work, 2018).

For CEOs and CHROs, the practical message is clear. Psychosocial risk should be treated as a managed risk class, not as a series of isolated events. That means asking, during risk reviews and operational meetings:

• Where are demands persistently high and control persistently low?
• Where do people report poor support, unclear roles, or unmanaged change?
• Which units show a combination of high turnover, errors, and complaints?

Asked regularly and backed by structured data, those questions shift an organisation from reacting to individual crises to managing patterns.

Context Matters: Psychosocial Risk in Nepal and the Region
Global standards provide a compass. Nepal and neighbouring economies add their own terrain; uneven enforcement, constrained health systems, high informality, migration, and volatility. Any realistic agenda for psychosocial risk needs to read both.

Nepal’s Labour Act 2017 already requires employers to provide safe and healthy working environments and to establish OSH committees in larger workplaces. The National Occupational Safety and Health Profile, developed by the Ministry of Labour and ILO, acknowledges this legal scaffolding but highlights weak enforcement, limited inspection coverage, and sparse data (International Labour Organisation & Ministry of Labour, Employment and Social Security, 2022). Psychosocial hazards are rarely named explicitly in regulations and even less often measured inside enterprises.

On the health side, the signal is similar. The National Mental Health Strategy and Action Plan 2020 and the National Mental Health Care Programme 2022 clearly state the government’s intent to integrate mental health into primary care, reduce stigma, and expand services (Ministry of Health and Population, 2020; Ministry of Health and Population & World Health Organisation, 2022). Yet, the National Mental Health Survey of Nepal and recent facility assessments show a large treatment gap; well over 80-90% of people with mental disorders receive no formal care and low readiness in most facilities to provide mental health services (Nepal Health Research Council, Ministry of Health and Population, & World Health Organisation, 2020; Acharya et al., 2025).

For employers, that combination matters. When public systems are under-resourced and stretched, the workplace becomes one of the few structured environments where early detection, support, and prevention can happen at scale. Organisations did not ask for that role, but in practice they already play it. When a supervisor of an agro-vet company in Chitwan notices a high-performing sales officer abruptly withdraw (and the psychological issue identified as a reason), there may be no functional community mental health service nearby. Internal psychosocial risk management and access-to-care pathways are not luxuries; they are often the only line of defence.

Regional data from India tells a similar story. The National Mental Health Survey estimates a point prevalence of adult mental disorders around 10.6%, with treatment gaps ranging from 70% to over 90% depending on condition (Gururaj et al., 2016). Studies across Indian IT, healthcare, and education sectors report widespread stress and burnout driven by long hours, job insecurity, and weak support; risk factors that overlap closely with global psychosocial hazard frameworks (Sarkar et al., 2024). Wider Asian analyses estimate significant productivity losses from poor mental health and argue that well-designed workplace strategies deliver net economic gains (Yeung & Johnston, 2020; McKinsey Health Institute, 2022).

Now add some specifics of Nepal’s economy. High informality means large portions of the workforce have limited contractual protection, irregular hours, and little control over conditions. Labour migration, internal and overseas is part of many families’ basic strategy. Studies of Nepali migrant workers in the Gulf and Malaysia describe long hours, harsh supervision, cramped housing, and isolation as routine features of work, with clear links to mental distress (Wasti et al., 2024). Those experiences eventually flow back into the domestic labour market as returning workers bring both skills and scars.

Political and economic volatility adds a constant background hum of uncertainty. Fuel prices, tax rules, import controls, and infrastructure disruptions can shift quickly. Managers, especially in SMEs and family businesses, often respond by tightening control, compressing timelines, and pushing staff harder to ‘compensate for the environment.’ Without a psychosocial risk lens, emergency measures become the default operating style.

Picture a large Nepali conglomerate with interests in beverages, construction, and trading. On paper, it has OSH policies aligned with regulations and a CSR portfolio that includes mental health awareness campaigns. Off paper, project teams face repeated design changes because of delayed approvals; sales teams juggle stock outs caused by import delays; factory workers work overtime before landslides close roads. Everyone understands the business pressures. Fewer people ask what this blend of chronic urgency and low predictability does to judgement, safety, and retention.

In this landscape, adopting a risk-based approach to psychosocial factors is not about copying Western models. It is about making an honest assessment of where the real vulnerabilities lie:

• Public systems cannot yet absorb the mental health needs of the working-age population.
• Regulatory enforcement on psychosocial hazards is light, but reputational and operational risks are real.
• Talent is mobile, especially younger and more skilled workers; they have options abroad and in digital sectors.
• External volatility is a given; how organisations use or buffer pressure internally is still a leadership choice.

For CEOs and CHROs in Nepal and similar economies, that choice is the real pivot. Either psychosocial risk is understood, named, and managed as part of core business, or it remains an unpriced liability that slowly erodes capability.

A Board-Level Playbook: Owning Psychosocial Risk
Once leaders accept that psychosocial risk is material, the next question is practical: where does it sit, who owns it, and how is it managed month to month?
A credible response does not require a new tower of policy. It requires clear governance, a simple system, disciplined routines, and a willingness to look closely at work as people actually experience it.

Governance comes first. Psychosocial risk should live where other material risks live: with the board and its risk or audit committee. That does not mean the board runs surveys or designs rosters. It means psychosocial risk appears as a defined category in the risk register, with a statement of appetite, named accountabilities, and periodic reporting. In many organisations, the CHRO and COO are natural executive sponsors; one holds the people systems, the other holds operations. Together, they can ensure psychosocial hazards are considered in strategic initiatives, major projects, and restructurings; just as cyber risk and safety risk already are.

Underneath that, the organisation needs a simple, ISO 45003-aligned system (ISO, 2021):

• Identify psychosocial hazards in key areas of the business through surveys, exit data, near-miss reports, focus groups, and manager debriefs, using the HSE dimensions as a common language (Health and Safety Executive, 2024).
• Assess who is at risk and how: recognising that night shifts, customer-facing units, field staff, and project teams under intense pressure often carry higher risk profiles.
• Control the risks by redesigning work: adjusting staffing, clarifying roles, tightening conduct expectations, pacing change, and building supervisors’ capability.
• Review performance using leading and lagging indicators; integrate lessons from incidents and complaints into the next cycle.

Manager routines are where this becomes real for employees. Without them, frameworks stay in binders.

A weekly and monthly routine can be straightforward:

• Weekly, in teams, managers hold short check-ins that go beyond numbers. They ask: “Where is workload becoming unsustainable?”, “Where are we unclear on who decides what?”, “What has felt unfair this week?” These are risk-sensing conversations, not counselling sessions.
• Monthly, at unit level, leaders review a small set of metrics: short-term absence, overtime concentration, rework rates, safety incidents, exit patterns. Looked at together, these indicators often reveal psychosocial hot spots.
• Quarterly, at executive level, the CHRO and COO share a concise psychosocial risk view with the executive committee and risk committee: current hotspots, controls in place, early impact, and issues requiring board attention.

Frontline involvement is essential. Global evidence and WHO–ILO guidance highlight that interventions work better when workers help spot hazards and shape solutions (World Health Organisation & International Labour Organisation, 2022). In a Nepali context, that can include:

• Short, anonymous pulse surveys aligned with the HSE dimensions, in English and Nepali.
• ‘Risk walks’ where managers and OSH representatives visit branches, plants, or sites, asking staff about pressure points and listening without defensiveness.
• Credible speak-up channels; formal and informal, where employees can report bullying, overload, or unsafe practices without fear of retaliation.

Measurement ties it back to the P&L. The aim is not a complex dashboard; it is a small set of indicators that the board can track over time:

• Leading indicators: survey scores on demands and support, participation in team risk discussions, number of improvement actions implemented in high-risk units.
• Lagging indicators: stress-related absence, turnover in critical roles, quality escapes, safety incidents where fatigue or conflict played a role, serious conduct complaints.

These numbers should be understood in business terms. Deloitte’s analysis shows that poor mental health carries large costs through absence, presenteeism, and turnover, while comprehensive strategies usually deliver a positive return (Deloitte, 2022). WHO’s global estimates on productivity losses reinforce that these are not marginal leakages but material drags on performance (World Health Organisation, 2024). In Nepal, where public mental health spending and facility readiness are low (Nepal Health Research Council et al., 2020; Acharya et al., 2025), internal action is not just good practice; it is often the only effective lever available.

An executive team that takes this seriously can move quickly on a quarterly agenda:

• Put psychosocial risk on the map. Add it as a defined category in the risk register. Assign a board sponsor and an executive owner.
• Name two hotspots. Use existing data and judgement to identify at least two areas; perhaps a call centre unit and a project team; where workload, conflict, or attrition are visible. Commit to running a basic psychosocial risk assessment there.
• Set expectations for managers. Communicate that workload sanity, respectful conduct, and realistic change pacing are now treated as part of a manager’s risk responsibilities, not just personal style.
• Prepare a board briefing. Ask the CHRO and COO to table a concise briefing at the next risk committee: current state, initial hotspots, proposed indicators, and a 12-month plan.

Over the following quarters and years, that initial move can mature into a full management system aligned with ISO 45003 principles and integrated into OSH and HR policies (ISO, 2021; International Labour Organisation & Ministry of Labour, Employment and Social Security, 2022). The path will not be linear. Adjustments will be needed as leaders and employees negotiate what is realistic in a specific business model. What matters is that psychosocial risk stops being invisible.

The first article in this series, ‘The Unseen Balance Sheet of the Mind,’ framed mental health as an unseen balance sheet of the mind, where assets and liabilities quietly shape performance. This article has argued that some of those liabilities are not just hidden costs; they are unmanaged risks that can damage people, disrupt operations, and stain reputations. Choosing to see them, to instal routines that surface them, and to fund controls that reduce them is not a ‘nice-to-have.’ It is part of what stewardship looks like in organisations that expect to survive turbulence rather than be surprised by it. Psychosocial risk should start to show up in the same disciplined frame that governs finance, safety, and compliance, then the unseen balance sheet will begin, slowly but decisively, to move in the right direction.

(Khatri is Management Consultant and Educator)

References
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