Directors and officers face increasing scrutiny regarding their organisation's management of psychosocial hazards. This article examines the key elements of board-level due diligence and provides a framework for demonstrating reasonable care.
The evolving regulatory landscape
Workplace health and safety legislation across Australian jurisdictions now explicitly includes psychosocial hazards within the scope of a person conducting a business or undertaking (PCBU). This means boards can no longer treat workplace mental health as a discretionary wellness initiative but must address it as a core governance obligation.
Recent regulatory guidance from Safe Work Australia and state-based regulators has clarified expectations around systematic identification, assessment, and control of psychosocial risks. Directors who fail to ensure appropriate systems are in place may face personal liability under WHS officer duty provisions.
Elements of board due diligence
Demonstrating due diligence requires boards to move beyond passive reliance on management assurances. Key elements include:
- Knowledge acquisition: Understanding the nature of psychosocial hazards relevant to the organisation's operations, workforce composition, and industry context
- Resource allocation: Ensuring the organisation has adequate resources to identify, assess, and control psychosocial risks
- Process verification: Confirming that appropriate processes exist and are being implemented effectively
- Performance monitoring: Receiving regular reports on psychosocial risk indicators and response effectiveness
Systematic risk identification
A robust approach to psychosocial risk identification goes beyond incident-based reporting. Boards should expect management to implement proactive systems that identify risks before they result in harm, including:
- Regular psychosocial risk assessments covering all work groups
- Analysis of leading indicators such as workload patterns, roster compliance, and consultation effectiveness
- Integration with existing safety management systems
- Worker consultation and feedback mechanisms
Evidence requirements
In the event of regulatory investigation or legal proceedings, boards must be able to demonstrate that they took reasonable steps to ensure compliance. This requires maintaining clear evidence of:
Key evidence requirements
Board minutes reflecting psychosocial risk discussions, documented risk assessments with dates and methodology, control implementation records, and monitoring reports showing trend analysis and response actions.
The Safe Minds Index provides a standardised framework for generating this evidence, with documented maturity assessments that can demonstrate the organisation's systematic approach to psychosocial safety governance.
Governance structures
Effective board oversight typically requires dedicated attention to psychosocial risk within existing governance structures. This may include:
- Standing agenda items at board or risk committee meetings
- Clear reporting lines from operational management to the board
- Defined escalation thresholds for significant psychosocial risks
- Integration with enterprise risk management frameworks
The question is no longer whether boards should address psychosocial risk, but whether they can demonstrate they have done so with appropriate rigour and documentation.
Practical steps for boards
For boards seeking to strengthen their psychosocial risk governance, the following steps provide a practical starting point:
- Request a briefing on current psychosocial risk management arrangements and gaps
- Review the organisation's psychosocial risk register and assessment methodology
- Ensure board reporting includes leading indicators, not just lagging measures
- Consider independent assurance over psychosocial safety management systems
- Document board discussions and decisions relating to psychosocial risk
Conclusion
Board due diligence for psychosocial risk is now an established governance expectation. Organisations that implement systematic, evidence-based approaches to psychosocial safety management will be better positioned to meet regulatory requirements, protect their workforce, and demonstrate appropriate care to stakeholders.