Human capital risks will transform the future of European businesses, making it imperative for companies to rethink talent strategies, employment models and long-term workforce planning.
Organisations that prioritise adaptability, lifelong learning and well-structured workforce policies will be best positioned to navigate an increasingly complex labour market. Meanwhile, society as a whole needs to adapt to an ageing world, including securing sustainable funding for retirement.
New work-life symbiosis
The evolving relationship between work and personal life is redefining human capital risks for European companies. Younger generations increasingly prioritise careers that they deem to have a greater purpose and work-life balance over traditional job security. Organisations that fail to adapt to this shift risk reduced employee loyalty, lower engagement and difficulty in attracting top talent.
The growing focus on employee well-being means that organisations that offer greater job flexibility will have a competitive edge in talent retention. Businesses need to create environments that accommodate hybrid work models, prioritise mental-health support and foster a culture of trust and autonomy to enhance employee satisfaction and long-term commitment
The changing expectations of employees require organisations to rethink traditional career paths. Instead of linear progressions within a single company, many professionals now seek varied experiences across industries and geographies. Employers that offer cross-functional training, career mobility programmes and internal entrepreneurship opportunities will be better positioned to retain talent and mitigate the risks associated with high turnover rates.
Employees may frequently switch jobs and many will opt for multi-employer engagements, leading to challenges in workforce stability. This volatility increases the likelihood of knowledge loss, which can affect the quality of products, services, and business processes. Organisations therefore need to be adaptable in their approach to talent and human capital.
Longevity and multigenerational teams
People are living longer. And this means that European companies must navigate the complexities of multigenerational teams. Project groups may include employees spanning three or more generations, each with different approaches to technology, communication and work structures. Integrating these diverse perspectives can lead to innovation but requires intentional management and tailored workflows/structures to avoid conflicts that might arise from differing work habits and expectations.
Lifelong learning initiatives will become critical to ensure that employees across all age groups and fields of expertise stay relevant in rapidly evolving industries. Organisations must prioritise continuous reskilling and upskilling programmes at all levels to help workers adapt to new technologies and industry shifts. Additional education can no longer be perceived as a bonus but must be treated as a necessity. New approaches to knowledge management, such as reverse mentoring programmes can foster an intergenerational knowledge exchange in addition to more formal continuous training.
An ageing workforce requires companies to rethink employment policies and pension structures. Employers may need to implement phased retirement plans, offering part-time opportunities to older employees who wish to remain engaged in the workforce while reducing their workload. Creating incentives for later-life employment can help retain valuable expertise while alleviating pressure on renumeration and pension systems.
Task definition and value assessment
The increasing integration of artificial intelligence and automation means that humans will primarily manage and oversee processes rather than perform routine tasks themselves. As a result, companies will need to redefine job roles, shifting from execution-based responsibilities to strategic oversight and problem-solving functions. This will require more focus on humans to define workflows, monitor execution and assess output quality, for example.
Organisations must recognise the growing importance of soft skills—such as emotional intelligence and creative problem-solving—in a world increasingly dominated by uncertainty. As technology takes on more routine tasks, human capital will be valued primarily for its ability to navigate complexity and adapt to unexpected developments. Employers would benefit from increasing their focus on and investments in leadership development programmes and cross-disciplinary training to ensure their workforce remains agile in the face of changing circumstances and demands.
Pension protection gap
As Europe’s population ages, the need for private pension schemes is increasing as public systems become less sustainable. In light of the growing proportion of public debt that will be allocated to fund the ageing population, governments may be forced to reform pension structures, potentially increasing corporate tax obligations.
A shift toward automation will reduce the number of pension-eligible employees, raising ethical and financial questions about future workforce contributions. Some proposals suggest implementing taxation on robotic labour or introducing universal basic income models to compensate for lost human income-generating employment, and corresponding losses in savings as well as income taxes.
The broader challenge remains ensuring solidarity within an evolving economic landscape. Companies that take a proactive approach to pension planning—by offering hybrid financial support structures, incentivising lengthier participation in the workforce, or collaborating with policymakers on sustainable pension models will be better equipped to navigate these demographic shifts.
Key risk management takeaways
Integrate human capital into risk frameworks
Human capital risks should form part of ERM frameworks and dependencies on talent should be mapped. Workforce resilience metrics, including HR trends, should be included in risk registers.
Scenario plan for workforce disruption
Risk teams should run simulations on workforce volatility, AI displacement or generational shifts. This should include scenarios in which up to 30% of functions are impacted by talent shortages or automation.
Collaborate on strategic workforce planning
Risk Managers should work with HR counterparts and business units to assess long-term skills gaps, identif vulnerable roles and functions and support upskillng/reskilling investment decisions.
Assess and monitor pension liabilities
Risk Managers should evaluate the impact of demographic trends on pension commitments and labour costs and collaborate with finance and legal teams to address exposures and regulatory risks.
Monitor legal and ESG trends in employment
Risk teams should track human rights-related litigation and ESG expectations linked to employment practices, diversity and fairness as part of a growing reputational and liability risk.
Scenario
Example: Applying scenario planning to climate change risk
Axes:
1. Level of global climate policy alignment
Steady as you go
Predictable, structured paths, clear roles, continuity across time and generations
Liquid careers
Fragmented gigs, frequent job changes, fluid teams, uncertain paths
2. Pace of physical climate impact
On our toes
Agile, inclusive, proactive in learning, tech, multigenerational needs
Employees will adapt
Static org models, weak learning culture, rigid structures
A
B
D
C
On our toes
Fragmented
efforts
Steady as
you go
Employees will adapt
A . Liquid careers & On our toes: “Patchwork Futures”
Here, jobs are fluid and careers are built across projects, platforms and employers. Orgnisations adapt by building agile learning cultures, using short-term contracts and portfolio-based teams. Ageing workers must continuously reskill or risk marginalisation. Some thrive as flexible experts, while others struggle with fragmented pensions and inconsistent work.
Implications:
Firms stay competitive by embracing change, but must invest in continuous onboarding and health support. Cross-generational equity becomes a flashpoint, especially around retirement security.
B. Steady as you go & On our toes: “Silver Synergy”
In this scenario, organisations create strong internal talent pipelines, valuing both experience and agility. Long-term career models are refreshed through constant upskilling and cross-generational mentoring. Ageing workers phase into part-time and advisory roles while younger talent thrives in structured but evolving career tracks. Intergenerational collaboration is seen as a competitive edge.
Implications:
Organisations maintain deep expertise while fostering innovation. They reduce turnover, manage pension burdens proactively and leverage longevity as an asset—not a cost.
C. Steady as you go & Employees will adapt: “Legacy Gridlock”
Organisations retain traditional structures and career models but fail to keep pace with changing needs. Ageing employees dominate senior roles, with limited upward mobility for younger generations. Skills become outdated, and knowledge transfer lags. Resistance to hybrid work, new tech and agile processes creates internal friction.
Implications:
Workforces stagnate. Costs rise, engagement falls and companies struggle to attract talent aged under 40. Pension liabilities grow unchecked, and productivity plateaus.
D. Liquid careers & Employees will adapt: “Human capital hunt”
In this scenario, the labour market is chaotic and companies are unprepared. Jobs are short-lived, learning is self-funded and ageing workers are sidelined. Younger workers churn frequently; older employees are seen as too expensive. No one feels secure. Trust in employers collapses.
Implications:
Talent shortages worsen. Knowledge loss is rampant. Organisations face reputational risk, operational fragility and growing legal and political pressure to fix systemic workforce failures.
