Oh god, this could be my DH. And I’ll just say that managing the situation is impossible. I’d this is someone younger (55ish), early dementia or FTD combined with other existing disorders that are commonly comorbid with those diagnoses means they will have no idea that it’s happening.
Here’s the thing: saying something to them won’t get them to suddenly realize what’s going on, have an epiphany, and resign. And it won’t change the trajectory of their decline. It’s likely their family knows what’s going on and is trying to muddle through on the other side and trying to project how long they can stretch the job to maintain income and healthcare before it all blows up.
If this was a colleague I loved dearly and I was in a position to gently guide them out of imminent danger/disaster and/or steer them to a role that felt like something they could handle, that would be my objective. But the way orgs work now I’m guessing that you don’t have the power nor security to attempt that.