Ineffective leadership. Improper rewards decision making. Increasing health benefits and costs. According to the recently released results of a Mercer and Marsh report, these are the top issues weighing on the minds of Risk and human resources (HR) professionals. They were closely followed by risk managers’ concerns about lack of cybersecurity knowledge and mismanagement of artificial intelligence (AI), which were described as “key people threats” in 2024.
Here, we’ll dig into report results — as well as the firm’s recommendations for addressing them.
US People Risk 2024 Report
Mercer and Marsh are businesses of Marsh McLennan — which touts itself as “the world’s leading professional services firm in the areas of risk, strategy and people.” In an Executive Summary of the report, Mercer provides an overview, including growing challenges within an ever-evolving business landscape:
“People risk practitioners, both HR and Risk professionals, sit at the apex of a delicate balancing act. Disruptive technologies, changing talent requirements and emerging benefit needs all require careful mitigation with effective risk frameworks and people management strategies. However, many of those same factors are at the core of future business innovation: new skills and knowledge opportunities, the potential of AI, better stewardship of businesses, and evolving employee healthcare for a new generation of workers. … In this changing landscape, how do HR and Risk leaders create safe workplaces, support productive teams and build resilient enterprises that stay healthy and engaged in the face of ongoing disruption? The 2024 People Risk Report provides perspectives and data-based insights from the US People Risk Survey, which is part of our Global People Risk study conducted in twenty-six markets across eight regions.”
The global survey included over 4,500 risk and HR professionals and was conducted from October to November 2023 to capture the “greatest people risks facing organizations and how risk and human resources managers can collaborate to limit organizations’ exposure and mitigate risk.” The U.S. survey included 509 HR and 515 Risk professionals with a range of titles.
For the study, 25 people risks were analyzed across five categories:
- Technological change and disruption
- Talent, leadership and workforce practices
- Health, well-being and safety
- Governance, compliance and financial
- Environment, sustainability and protection
Drilling down, here are the 25 risks according to the five categories that were described in the U.S. report.
1. Technological change and disruption
- Lack of cybersecurity knowledge
- Mishandling of data/IP
- Suboptimal HR technology
- Tech skills shortages
- Mismanagement of AI
2. Talent, leadership and workforce practices
- Ineffective leadership
- Misconduct
- Labor shortages
- Uncompetitive talent strategies
- Disengaged workforce
3. Health, well-being and safety
- Pandemics
- Unsafe working conditions
- Mental health deterioration
- Healthcare system deterioration
- Chronic illness
4. Governance, compliance and financial
- Improper rewards decision making
- Increasing health and benefit costs
- Poor management of benefit exposure
- Changing legislation and scrutiny
- Weak benefits administration
5. Environment, sustainability and protection
- Lack of DE & I
- Disparities in executive/worker rewards
- Absence of HR in decision making
- Inadequate personal catastrophe coverage
- Natural disasters and extreme weather
The firm notes that risk calculation and ranking were performed with the use of a Risk Rating Score (RRS), which “captures the likelihood of a risk impacting an organization in the next two years and the severity of its impact on the business if it occurs.” The RRS is depicted in further detail in the Executive Summary.
Top concerns
As noted previously, the three top concerns revealed in the findings include ineffective leadership, improper rewards decision making, and increasing health benefits and costs.
Ineffective leadership
There were several concerns about ineffective leadership, according to the report:
- “A third (34%) of employers are concerned about significant dependencies on key people and inadequate succession planning.”
- “Only 30% feel they currently have an effective workforce strategy where talent can be acquired, grown, and deployed based on skills.”
- “One out of three (35%) respondents say they are concerned ineffective leadership will lead to negative organizational culture or work environment, tense team dynamics, and mistrust.”
Improper rewards decision making
According to the report, improper rewards decision making was the “second most highly-ranked risk for both HR managers and the US overall,’ with findings revealing:
- “Four in ten shared concerns with making benefit decisions without considering long-term cost impact.”
- “39% voiced concerns about making benefit decisions without considering the impact on employees.”
Increasing health benefits and costs
Citing a recent Mercer survey indicating that the “average per-employee cost of employer-sponsored health insurance rose by 5.2% in 2023,” the firm says the People Risk Report revealed that:
- “More than one in three risk and HR professionals are concerned about significantly increasing medical costs beyond general inflation.”
- “Nearly a quarter (24%) said their organizations do not have an articulated cost containment strategy in place.”
- “37% cited concerns about limited available strategies to control costs beyond benefit reduction.”
Other top concerns
In addition to the top three, the findings revealed concerns related to cybersecurity and the use of artificial intelligence (AI):
- “Nearly half (43%) of respondents said they are concerned about the increased risk of cyber-attacks due to lack of cybersecurity awareness among their people.”
- “34% said they are concerned with employees’ over-reliance on and complete trust in AI-generated content.”
Mitigating people risks
Mercer and Marsh say that despite the challenges cited in the report, “97% of risk and HR managers say 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.’”
In light of these results, the firm says “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,” said Michelle Sartain, Marsh’s US and Canada President in the announcement. “Through collaboration, they can better analyze and address the people risks inherent in the business environment.”
“The breadth and depth of intersecting risks organizations face today is staggering,” said Susan Potter, Mercer’s US 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.”
For a more detailed look at findings and recommended key actions, download the report.
