What psychosocial risk reveals about modern work and WHS

In recent years, psychosocial safety has moved to the centre of Work Health and Safety (WHS) regulation. Amendments to the WHS Regulations across jurisdictions now make it explicit that psychosocial hazards must be identified, assessed and controlled, and that officers are required to exercise due diligence by ensuring these risks are managed so far as is reasonably practicable.

Psychosocial risk management is now a clearly articulated regulatory expectation. New South Wales’s new landmark Act, the Work Health and Safety Amendment (Digital Work Systems) Act 2026 (NSW), is one of the most recent developments. The Act extends the duties of persons conducting a business or undertaking (PCBUs) to address WHS risks arising from the use of digital work systems. Key psychosocial hazards include excessive workloads, unreasonable performance metrics, and intrusive surveillance.

Critically, failures to identify and manage these risks can expose organisations to regulatory consequences, including civil and criminal penalties where serious harm occurs. Directors and officers are expected to exercise due diligence by actively ensuring psychosocial risks are identified, controlled, and reviewed in practice. This is indicative of the growing awareness of psychosocial harm in the workplace and reflects the need for WHS obligations to evolve alongside work practices.

Psychosocial harm is largely preventable

A psychosocial hazard is defined by Safe Work Australia as anything that could cause psychological harm, ranging from lack of role clarity, through to bullying, harassment and violence. The confronting reality is that many of the underlying drivers of psychosocial harm are preventable. In many cases, it does not arise from individual vulnerability or lack of resilience, but from organisational design and management decisions.

Across industries, the most commonly reported psychosocial hazards remain remarkably consistent: high job demands, low job control, and inadequate support. The way that work is designed, resourced, paced, and supervised has a significant influence on worker health and safety.

While initiatives such as resilience training, wellbeing programs, and Employee Assistance Programs (EAPs) play an important supportive role, they are at the lower end of the hierarchy of controls and not a substitute for prevention. These measures tend to focus on helping individuals cope with harm once it has already occurred, rather than addressing its root causes. Effective psychosocial risk management requires deliberate attention to workload allocation, role clarity, decision‑making authority, leadership practices and team capability. This, in turn, places accountability squarely with those who design and manage work.

The accountability question

Accountability for psychosocial risk management is often unclear. Responsibility commonly touches multiple functions, including WHS, people and culture, employee or industrial relations, operations and direct line managers. Without clear ownership, psychosocial risk can fall between the cracks.

A particular risk emerges when psychosocial safety is perceived as the sole responsibility of the WHS function. When this occurs, direct managers, who have the greatest day‑to‑day influence over work design and team conditions, can become disengaged. The result is a well‑intentioned framework that has limited impact on how work is planned and performed.

Effective management of psychosocial risk requires shared accountability, with clear expectations for leaders at all levels and strong integration across functions. Taken together, these challenges point to a central truth that managing psychosocial risk is less about new obligations, and more about how organisations already design, lead, and govern work.

Measuring what we can’t easily see

Unlike physical hazards, psychosocial risks do not follow simple, visible cause‑and‑effect pathways. As a result, designing meaningful performance indicators is inherently challenging.

Organisations often rely on proxy indicators such as psychosocial injury claims, absenteeism, turnover, EAP utilisation, and employee survey results. While these data points provide useful insights, they can be actively misleading if taken at face value. For example, low EAP usage may be interpreted as evidence that psychosocial risk is low. In reality, it may reflect stigma, lack of trust or concerns about confidentiality. Psychosocial safety data must be actively interrogated, triangulated, and contextualised. This requires judgement and a willingness to challenge reassuring narratives.

Capability before frameworks

Another significant barrier to effective psychosocial risk management is the gap in leadership capability. Many organisations have made progress in developing strategies, policies, and frameworks in response to regulatory change. However, without the underlying psychosocial competency to deliver them, implementation remains inconsistent.

Psychosocial risk management demands skills that many leaders have not been formally trained in, such as recognising early warning signs, having difficult conversations, balancing competing demands, and designing work that is both productive and sustainable. Without targeted capability improvements, even well‑designed frameworks will struggle to translate into safer outcomes. Leading organisations are investing in targeted capability uplift such as psychologically safe leadership behaviours and early intervention skills.

From reactive to embedded

Organisations also face ongoing challenges in moving from reactive management of psychosocial hazards to proactive prevention and early intervention. Two factors commonly drive this:

• Psychosocial risk is not sufficiently integrated into enterprise risk management or cross functional decision making
• Psychosocial considerations are rarely embedded into core business processes such as planning, change programs, performance management, and workforce design.

When psychosocial risk is treated as an “add‑on” rather than a core business consideration, it remains vulnerable to competing priorities and short‑term pressures.

Governance, culture and regulatory resilience

Organisations that take a proactive, integrated approach to WHS governance and psychosocial risk management are far better positioned to withstand regulatory scrutiny. Regulators increasingly expect clear compliance and evidence chains that demonstrate how risks are identified, assessed, controlled, and reviewed in practice.

However, governance effectiveness is inseparable from culture and not just “WHS culture” in isolation. In environments of high pressure, aggressive KPIs or “win at all costs” mentalities, psychosocial risks are inherently higher. In these settings, early warning signs can be normalised and workers may be reluctant to have difficult conversations about workload, behaviour or capability.

Sustainable psychosocial safety depends on broader organisational culture and leadership capability. Leaders with high emotional intelligence are better equipped to recognise early indicators of distress, balance competing demands, and respond constructively when risks are raised. Equally important are reward and recognition frameworks that value well-rounded leaders who model safe and sustainable ways of working.

How BDO can help

Addressing these challenges requires an integrated approach across governance, risk, culture, and capability. BDO’s risk advisory services team works with organisations to strengthen psychosocial risk management in a way that aligns regulatory expectations with how work is designed, led and delivered.

Contact us for a WHS gap analysis, psychosocial risk assessment or specialist support to clarify accountability, build practical leadership capability, and embed psychosocial risk considerations into core business processes.