Recent changes to system requirements for Windows 11 make it mandatory to have a TPM chip (for both physical and virtual machines).
Your Parallels Desktop 16 for Mac is one version behind and does not support the TPM chip required for upgrading to Windows 11 and installing the latest updates. Please check this Knowledgebase Article for known compatibility issues.
To be able to upgrade to Windows 11 and install the latest updates, we recommend upgrading to Parallels Desktop 17. Our latest version enables full compatibility with Windows 11, delivers better graphics performance, faster Windows resume time and dozens of other improvements.
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).