Risks like disruption from flooding, crucial materials to manufacturing becoming more and more expensive and damage to reputation all need different handling, and risk management approaches haven’t evolved as fast as the changing landscape, PwC says.
The firm’s latest report, How can resilience prepare companies for environmental and social change?, address these issues and provide solutions for companies to deal with social and environmental risks.
According to PwC, sustainability executives have a great deal of knowledge about environmental and social risks but don’t always express issues in the language of risk executives. This language barrier prevents these valuable knowledge bases from creating synergy for their business. Risk, strategy, sustainability and opportunity all need to combine and not be managed in silos.
The report identifies five steps to bring social and environmental pressures into risk management:
- Adapt the process used to identify social and environmental risks
- Ensure the governance structure supports a new approach to risk
- Anticipate change and collaborate on risk mitigation
- Seize opportunities hidden within risk events
- Measure the value of strengthened risk resilience
PwC’s 17th Annual CEO Survey, published last month, found chief executives recognize the importance of measuring businesses’ whole footprint — environmental, social, fiscal and economic — but most companies still only measure and report on their financial performance.