Cyber Literacy Gaps and Leadership Failures Drive People Risks Across Organizations
Inadequate cyber threat literacy ranks as the top people risk facing organizations globally, according to Marsh's People Risk 2026 report. Labor shortages and technology skills gaps follow closely behind.
The survey of more than 4,500 HR and risk professionals across 26 markets assessed 25 people risks across five categories: technological change, talent and leadership, protection and sustainability, governance and compliance, and health and safety.
More than 70% of organizations experienced at least one material third-party cyber incident in the past year. Phishing and social engineering remain the most common entry points for attackers.
AI Spending Outpaces Employee Readiness
Organizations are investing heavily in artificial intelligence without seeing meaningful returns, the report found. The gap lies not in the technology itself but in people and processes.
Forty percent of risk and HR professionals cite inadequate employee training and upskilling as their top concern. Meanwhile, 63% of employees said they would trade a 10% pay raise for better AI and digital reskilling opportunities.
AI anxiety is emerging as a material risk. Forty percent of employees now worry about losing their jobs to AI, while 61% of risk and HR professionals said their organizations do not provide highly effective employer-sponsored mental health care.
Ravin Jesuthasan, Mercer's Global Leader for Transformation Services, said: "AI will only deliver value when organizations rethink how work is done and how people are supported. Treating AI as a simple add-on to existing work processes creates real risk and inefficiency."
Leadership Gaps Multiply Downstream Risks
Inadequate leadership skills trigger or worsen more risks than any other people risk, acting as a multiplier that cascades through organizations. Poor leadership can lead to labor shortages, unsafe working conditions, deteriorating mental health, and flawed investment decisions.
Employee thriving has plunged to its lowest level since 2018. Twenty-six percent of employees are unsatisfied at work but believe they cannot leave, while another 12% plan to depart within six months.
Organizations with advanced or transformative levels of risk maturity reported talent risk mitigation measures that were on average 15 percentage points more effective than those at early stages.
Only 14% of respondents believe their organization's risk maturity is "transformative" or fully embedded in strategy and culture, despite 40% citing increased productivity and efficiency as positive outcomes of effective risk management.
Financial Insecurity Emerges as Top-Five Risk
Employee financial insecurity ranked as the No. 4 people risk globally and appeared in the top 10 across all regions. Inflation, high interest rates, and rising costs for housing, food, and healthcare are straining household finances.
Greater reliance on variable pay and gig-style work has increased income volatility. One in five employees said they are not confident they can afford the healthcare they and their families need.
Financial insecurity can trigger or worsen risks including uncompetitive talent strategies, misconduct, and weakened cybersecurity behaviors.
Health Benefits Present a Strategic Paradox
Ninety percent of risk and HR leaders said rising health and benefit costs are the most likely risk to materialize in the next one to two years. Yet unaffordable or inaccessible healthcare ranked last - 25th out of 25 risks globally.
The report warned that cutting benefits to manage costs often increases risk over time through higher turnover, lower productivity, and more volatile claims.
Amy Laverock, Mercer Marsh Benefits' Global Advisory Specialties Leader, said: "Those that act now - investing in leadership and technology skills, as well as employee health and financial security - will be best equipped to turn uncertainty into advantage."
For insurance professionals, these findings signal that workforce risks are now material business exposures. AI for Insurance professionals should consider how these people risks intersect with claims processing, underwriting, and risk assessment. HR leaders managing these issues may benefit from an AI Learning Path for CHROs to address the technology and talent challenges outlined in the report.
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