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Getting ahead of people risk: a step-by-step guide

We take a look at where organisations are potentially missing the mark, and provide tips and guidance on how you can take a smarter approach to people risk.
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By Gretchen Masters , 

Head of Advisory, Australia, Mercer Marsh Benefits

13/02/2025 · 11 minute read

Discover where organisations are potentially missing the mark, and learn tips and guidance on how you can take a smarter approach to people risk. 

In today’s rapidly evolving business environment, understanding the key people risks in your organisation isn’t just beneficial—it's essential for success. The stakes are high. With multiple crises that can compound the challenges faced by both employees and organisations, the need for a strategic approach to managing people risks has never been more pressing.

Organisations across all industries are grappling with how best to tackle this constantly evolving risk landscape. From keeping up with legislative changes and addressing employee mental health deterioration, to battling talent shortages and managing multi-generational workforces, there’s always a new risk that needs attention. In this article, we take a look at where organisations are potentially missing the mark and provide tips and guidance on how you can take a smarter approach to people risk.

People risk today

Organisations that tend to take a simplistic approach to people risk often neglect to address the root causes of their problems.

We often see organisations rush to implement a solution without genuinely understanding the problems they need to solve. The 2024 People Risk Report from Mercer Marsh Benefits  emphasises that a comprehensive understanding of your organisation's specific challenges and priorities is essential for developing effective risk management strategies.

Another consequence of rushing to solutions is that these efforts can be siloed. This fragmented approach can lead to a lack of impact, as initiatives misalign with the broader organisational strategy. According to the People Risk Report, 62% of organisations reported that their people risk initiatives were not integrated into their overall business strategy, resulting in missed opportunities for synergy and impact. For example, a wellbeing program launched to improve wellbeing and engagement could have the opposite effect if there are other underlying critical issues, such as excessive job demands or insufficient leadership capability.

Another common mistake companies make is assigning responsibility for people risk management to individuals without the appropriate background or sufficient capacity. The report highlights that 54% of organisations have wellbeing initiatives led by HR professionals who lack specialised training in health and safety. Understanding the nuances of people risk is essential to ensure that the right people are in the right roles.

How to set your organisation up for success

It is imperative for organisations to understand the multifaceted nature of people risks. Without this foundational knowledge, organisations may invest time and resources into initiatives that are misaligned with their actual needs. The 2024 People Risk Report indicates that organisations with a proactive approach to people risk management experience 30% lower turnover rates compared to those that react only after issues arise. We also know that a correlation exists between robust investment in workforce health and company performance. This was evidenced by stock values for a portfolio of companies that received high scores in the HERO Scorecard (a Mercer Marsh Benefits collaboration wellbeing benchmarking tool) appreciated by 235% compared with the S&P 500 Index appreciation of 159% in the same 6-year period1.

To help your organisation adopt a more effective approach to people risk and prepare for future challenges, we recommend you start by creating a solid foundation and establish clear priorities through the following five steps:

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Understand your current state

  • Bring stakeholders together to document your current state. This can be relatively high-level and should include a summary of your organisational environment, a definition of success and a list of barriers. The end-goal is an organisational snapshot on a page that can become a long-term living document.
  • If tackling the big picture isn’t realistic right now, focus on just one theme, such as diversity, equity and inclusion (DEI) or mental health.

How to approach this

  • Facilitate your current state workshop to ensure this is an efficient, unbiased process.

Analyse

  • Prioritise deeply understanding the problem.

“If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.”

            – Albert Einstein

  • Consolidate existing data. This should include external sources, such as global, local and industry trends, as well as internal data including your Employee Assistance Program (EAP) utilisation, insurance data, engagement survey results and other relevant data you have available. The 2024 People Risk Report emphasises the importance of data-driven insights in understanding these risks. Organisations that leverage analytics are 40% more likely to identify and mitigate people risks effectively.
  • It is best practise to deepen your understanding of your current offering through the use of benchmarking tools. The 2024 People Risk Report found that 70% of organisations that benchmark their people risk strategies achieve improved outcomes in employee satisfaction and retention. Listening to your employees is another valuable source of information.

How to approach this

  • Benchmark your benefits and wellbeing to see how your organisation compares to competitors.
  • Evaluate your organisation’s health to understand the cost of your current state and the potential ROI of investment.
  • Implement health modelling that overlays your organisational demographics with population data.

Strategise

  • Define your guiding principles and strategic priorities. It’s important to ensure that these align to your broader organisational strategy. If people risk has been overlooked on your organisational strategy in the past, this is the opportunity to bring the focus back.
  • Breakdown these strategic priorities into tangible actions. Consider what needs to be done internally to bring your strategy to life, including resourcing, communications, stakeholder engagement and performance metrics. 

How to approach this

  • Informed strategic priorities and actions based on the first two steps and facilitate workshops to build a shared understanding of these priorities within your organisation.

Design

  • This step is about turning the information into a roadmap of initiatives. We recommend a multi-year roadmap (e.g. three years) compiled of meaningful steps.
  • The first year will likely include foundational work. This could include a deeper dive into some of your analysis from the previous steps, initiating culture change and securing additional funding.
  • The design should reflect your commercial reality. If there are funding constraints, other options should be considered.
  • Remember to define your success and then include implementation of metrics and strategic reviews in your roadmap.

How to approach this

  • Develop a roadmap with high-impact initiatives, supported by success metrics and ongoing analysis.

Implement, manage and measure

  • This step is about executing your strategy. It’s important to implement and maintain a disciplined approach to governance and ongoing monitoring. Even the best initiatives need to be reviewed and assessed over time to ensure they remain relevant, cost-effective and impactful. Your understanding of the problem you aim to solve and clear articulation of success will guide this evaluation process, enabling you to make effective changes to keep ahead of people risk.

How to approach this

  • Outsource vendor management and ongoing program analysis to ensure that these processes are prioritised.

Learn more

Understanding and managing people risks is a multifaceted challenge that requires a structured and strategic approach. By taking the time to deeply understand the current state and commit to clear strategic priorities, your organisation could avoid common pitfalls.

We encourage you to adopt this 5-step approach to mitigating people risk. Mercer Marsh Benefits have the capability and advisory services to support your business in all the above areas. From helping you define and prioritise your people risk problems, to designing a cost-neutral roadmap, to securing insurer funding or sourcing cost-effective options, we are here to support you regardless of where you are in your people risk journey. If you’d like to learn more or have any questions, please contact your Mercer Marsh Benefits representative.

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LCPA 25/047. This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modelling, analytics, or projections are subject to inherent uncertainty, and any analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change.