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Mental health ranked alongside cybersecurity as a major risk to Australian businesses

Survey of HR and risk managers rank mental health deterioration and workforce exhaustion among top three people-related business risks

Australian businesses face urgent financial imperative to address mental health and other people risks with insurance premiums rising 10 to 40 per cent year-on-year

23 September 2021

A new study of Australia’s HR and risk managers has revealed that mental health has cemented itself on the C-suite agenda as a key business risk as a result of the pandemic. The Five Pillars of People Risk: Managing risks for workforce and business resilience report from people risk consultants Mercer Marsh Benefits found that cybersecurity, deterioration of mental health, and workforce exhaustion were the top three people-related risks facing Australian organisations.

Sarah Brown, Head of Mercer Marsh Benefits, Pacific, said that while the number one risk of cybersecurity was a known risk to businesses, mental health as a major risk to business continuity – and ultimately, the bottom line – was only now becoming more widely recognised by employers.

“COVID-19 has put people-related risks firmly on the boardroom agenda. While previously thought to be the remit of those in the people and culture function, the mental health of employees has emerged from the pandemic as a risk requiring C-suite attention,” Ms. Brown said.

“Across workers’ compensation and disability claims, mental health claims have been on the rise over the last three to five years. While it’s still too early for the data to demonstrate a correlation between the pandemic and mental health claims, our consultants have certainly seen a spike in mental health concerns from clients over the past 18 months.

“It’s clear that the prolonged impact of the pandemic has exacerbated mental health conditions, with feelings of anxiety and loneliness higher than ever. The loss of employment and social interactions, the stress of remote working and home schooling, domestic and international border closures, and the overwhelming sense of uncertainty have taken an enormous toll on the mental health of many Australians,” she added.

Workforce exhaustion is also an escalating concern among HR and risk professionals, ranked third highest among all people risks. Despite this, it was only 14th ranked risk for the extent to which firms are addressing it.

“Organisations that fail to address workforce exhaustion could experience an increasingly toxic work culture, low employee morale and engagement, errors and the need for rework, high employee turnover, low productivity, and higher disability and workers’ compensation claims,” added Ms. Brown.

The report also highlighted the rising cost of people risk protection, including workers’ compensation, disability and healthcare insurance, with typical increases in insurance premiums of 10 to 40 per cent, year on year. Forty-five per cent of businesses deem increasing health risk protection and wellbeing benefit costs as likely to impact their business in the next three years.

“While businesses must address people risks first and foremost for the health and wellbeing of their people, it has also become an urgent financial imperative. On top of the unsustainable rise in insurance premiums, there is a growing need to offer wellbeing programs, leading to a cost containment crisis,” said Ms Brown.

“But, if businesses take the time now to identify the risks impacting illness and injury of their workforce, and review their health and wellbeing initiatives in this light, they will in fact work to reduce costs, not add to them.”

About Mercer Marsh Benefits

Mercer Marsh Benefits™ is the global brand name for our network of Mercer and Marsh offices providing employee benefits solutions for clients around the world. In Australia we are Marsh Pty Ltd trading as Mercer Marsh Benefits™. The business is a collaboration between Marsh Pty Ltd and Mercer Consulting (Australia) Pty Ltd. Together we represent one of the largest employee benefits consultancy and brokerage businesses in Australia, with more than 50 years’ combined experience in employee benefits broking, consulting and HR outsourcing. With the shared experience of over 350 clients and 30 consultants, we place more business in the corporate life market than any other broker in Australia. Marsh Pty Ltd trading as Mercer Marsh Benefits™, ABN 86 004 651 512 AFS Licence #238983 (“Mercer Marsh Benefits™”).

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Amie  Calvert

Marketing and Communications Leader, Pacific

  • Australia

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”