HR and Risk Leaders Identify Most Pressing People Risks in 2024

As the war for talent intensifies, a new report sheds light on the biggest risks companies face when it comes to their most valuable asset: their people.

The Mercer Marsh Benefits 2024 People Risk Report identifies the top 25 people risks facing organizations today, based on a survey of 4,575 human resources and risk professionals globally. Their responses of the risks most likely to impact their business were categorized into five key areas: technological change and disruption; talent, leadership and workforce practices; health, wellbeing and safety; governance, compliance and financial; and environment, sustainability and protection.

“The breadth and depth of intersecting risks organizations face today is staggering,” said Susan Potter, Mercer’s U.S. and Canada Region president. “People are an organization’s most important asset, but they can also expose organizations to risk without the right culture, policies, and training. By taking a proactive, predictive, and disciplined approach to people risk management, businesses will be better prepared to help their people and businesses thrive in this increasingly complex risk environment.”

Nearly all — 97% — risk and HR managers said their organization is collaborating to mitigate various people risks, and respondents at organizations with a great deal of collaboration overwhelmingly report higher numbers of risks being managed “very well.”

The survey results indicate that the stronger the partnership between risk and HR teams, the more effective risk mitigation measures will be. “Leaders should encourage risk and HR professionals to work together to build a risk management culture,” commented Michelle Sartain, Marsh’s U.S. and Canada president. “Through collaboration, they can better analyze and address the people risks inherent in the business environment.”

Technological Change

The rapid pace of technological change is not only creating new opportunities for businesses, but also introducing new risks while deepening existing ones. As technology forges new jobs, delivery channels and products, it simultaneously ushers in fresh challenges that organizations must navigate, according to the report.

Two of the most pressing technology-related risks facing companies today are technology skills shortages and a lack of cybersecurity knowledge. In fact, technology skills shortages ranked as the top risk in this category, and No. 4 overall, while lack of cybersecurity knowledge came in second and had a risk rating of 9th.

“As technology forges new jobs, delivery channels and products, it also introduces new risks and deepens existing ones,” the report stated. “Technology skills shortages make job vacancies difficult to fill, from board-level executives with digital transformation expertise to cyber experts who can confidently adapt to a corporate environment.”

Compounding the challenge of tech talent gaps is a widespread lack of cybersecurity knowledge across organizations. As the frequency and sophistication of cyberattacks continues to grow, having personnel at all levels who understand cybersecurity best practices and can identify potential threats is critical.

Talent, Leadership and Workforce Practices

Business practices are transforming at extreme speed, as are the skills needed to remain competitive and forge ahead through future innovation, the report noted.

However, many companies are struggling in this critical area. Labor shortages were the top risk in this category, and rank as the second-highest risk overall in the report. Finding workers with the right skills and experience is a major challenge, especially in high-demand fields.

Uncompetitive attraction and retention strategies come in next for this category, and ranked as the 6th top risk, as organizations grapple with how to appeal to top talent and minimize turnover in a tight labor market. The third risk in this category is ineffective leadership, which ranks 7th overall, highlighting the importance of having strong leaders who can navigate change and guide their teams to success.

“Organizations can only remain competitive and plan for the future if they can recruit and develop the right skills, talent and leadership,” Mercer stated.

Health, Well-being and Safety

While employee health and safety has long been a key consideration in people risks, today it is expanding beyond employee physical safety to put psychological safety on an equal footing, according to the report.

The top people risks in the health and well-being category underscore why a more comprehensive approach is needed. Mental health deterioration ranks as the highest risk in this category, and the No. 8 risk overall. Pandemics and infectious diseases come in at number 11. Unfortunately, serious issues like suicide, workplace conflict and burnout are all trending in the wrong direction.

As the report cautioned, “Employee health and safety is a staple of any people risk agenda, but organizations should broaden the scope of how they define well-being at work. As suicide, conflict and burnout trend in the wrong direction, psychological safety now demands equal recognition with physical safety in terms of risk mitigation.”

Governance, Compliance and Financial Risks

As companies navigate an uncertain economic landscape, governance, compliance and financial risks are top of mind for business leaders. Two risks in particular stand out in this category according to Mercer’s latest report – increasing health and benefit costs, which ranked as the No. 1 people risk overall, and changing legislation and heightened scrutiny, coming in at No. 5.

“As inflationary pressures persist, organizations should plan for a mix of rising prices and ongoing changes to their benefit programs, ideally prioritizing long-term cost containment without just shifting the burden to employees,” the report stated.

On the compliance front, staying on top of evolving legislation and regulations is critical to mitigate risks, according to the report.

Environment, Sustainability and Protection

The connections between climate events and risks to employee health and wellbeing are becoming increasingly apparent, the report noted.

The top two risks in this area were: disparities in executive and worker rewards and values, which ranked No. 3 overall, and natural disasters and extreme weather, which placed 14th.

“Environmental risks have traditionally been interpreted as related to property, but the potentially catastrophic impact of extreme weather events and natural disasters on the health of employees and their families is perhaps viewed as a distant threat,” the report noted.

At the same time, perceived gaps between executive and employee priorities around sustainability and social responsibility could undermine trust and engagement if not proactively addressed, per the report.

To obtain the full 2024 report, visit the Mercer website. &