Your Parallels Desktop 16 for Mac is one version behind and is not fully optimized or compatible with the new macOS release, Monterey 12.
Please check this Knowledgebase Article for known compatibility issues prior to upgrading to macOS Monterey.
To avoid these issues, upgrade to Parallels Desktop 17. The latest version is fully optimized and enhanced for macOS Monterey, delivers better graphics performance and faster Windows resume time.
As a loyal user, you are eligible to upgrade to a more powerful Parallels Desktop Pro Edition at a 50% discount for just $49.99/year (normally $99.99/year).