The COVID-19 pandemic has elevated mental health issues to a business risk requiring the attention of boards and top executives, Mercer Marsh Benefits says.

A survey of human resources personnel and risk managers released last week ranks mental health deterioration and workforce exhaustion among the top three people-related business risks, along with cybersecurity.

Mental health claims have been rising over the last three years and Mercer Marsh Benefits Pacific Head Sarah Brown says, while it’s too early for data to demonstrate a correlation between the pandemic and claims, consultants have seen a spike in concerns from clients over the past 18 months amid the outbreak.

“COVID-19 has put people-related risks firmly on the boardroom agenda,” she said. “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 says 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 said.

The report says costs are rising for people risk protection, including workers’ compensation, disability and healthcare insurance, with typical premium increases of 10-40%, year on year.

Some 45% of enterprises expect increasing health risk protection and wellbeing benefit costs are likely to impact their business in the next three years.

The top barriers to managing risks are a lack of skilled resources to understand and address exposures, budget constraints and confusion over which department is responsible.

The report, The Five Pillars of People Risk: managing risks for workforce and business resilience, is available here.