Companies’ people-related risks are, unfortunately, like many other types of business risks: increasing in number and riskiness.
In that environment, the nature of people risk management is unsurprisingly evolving, posing increasing challenges for HR and risk managers.
“It is no longer sufficient to have a strategy and evidence that risks with an organization’s control are contained,” wrote MercerMarsh Benefits in “People Risk 2024,” a new report. “Risk management now requires a wider ecosystem view that identifies and addresses issues, such as those with supply chains, and takes account of the wider communities in which a business operates.”
The report was based on a survey of 4,575 HR and risk professionals worldwide. Both groups of participants, which were evenly divided in number, identified “increasing health and benefits costs” as the top people-related risk.
Those groups weren’t in lockstep, though. For example, where labor shortages were the second concern for HR managers, for risk managers that ranked only seventh. And while risk managers tapped “lack of cybersecurity knowledge” as the second-greatest risk, it didn’t rank in the top 10 for HR managers.
A closer look at regional survey results (aggregating both groups of participants) shows remarkable differences around the world. Health benefit costs were the leading worry in Asia, Canada, Latin America and the Middle East/Africa.In the United States, such costs ranked 3rd among people risk issues, while the top two concerns pointed squarely at executive behaviors: “ineffective leadership” and “improper rewards for decision-making.”
Mental health in spotlight
On the health and benefits front, the report advised HR and risk professionals to broaden the scope of how they define well-being at work, “prioritizing the mitigation of psychological risks alongside physical safety.”
In fact, HR managers rated mental health deterioration as the top health-related concern, while risk managers ranked it second, choosing pandemics as the greatest health risk.
According to Mercer’s 2024 Global Talent Trends study, 40% of employees expected to experience exhaustion in the following 12 months from the high mental and emotional demands of work, while 37% said they expected to burn out over a heavy workload.
MercerMarsh Benefits suggested that HR managers “seize the opportunity to advance employee health by supplementing strained health systems” with new models of care and benefits inclusivity.
To combat employees’ lack of cybersecurity knowledge, the report recommended that companies engage their full workforces around efforts to protect against cyber threats, data breaches, misinformation, and intellectual property theft.
In particular, HR and risk managers were urged not to delay on addressing AI. Leaders should collaborate to “understand the risks and benefits of AI, evaluate uninsured scenarios, encourage safe adoption, and build a digital-first people strategy.”
The report asks, where is the right balance between putting too much trust in AI and under-investing in a transformative technology? One thing companies should not due, the report stresses, is simply ban the use of generative AI, as it’s already readily available.
“Instead, employers should navigate the challenge of enabling employees to leverage generative AI for work-appropriate use while mitigating risks involved.”