I am a big proponent of trying new things and thinking differently because it is not the low-hanging risks that will kill you but the ones you haven’t thought of yet. And where one finds these unknown unknowns is not books with the word “risk” in the title, but in material written about disparate things, including sustainability.
An Industry Update from 2007 by AON is just the type of document that I love reading. It opens: “Sustainability offers a new way of looking at risk that is broader than a traditional enterprise risk management (ERM ) framework.”
There is only so much we can do and say about treating earthquakes, hurricanes and twisters once identified and assessed. These may be unlikely events but they are certainly not emerging risks. Looking at sustainability frameworks offers up a buffet new ideas worth discussing by risk managers and risk committees. I believe that effective risk management is not about content like risk registers and heat maps or arguing about whether the likelihood of a risk is 10% or 20%, real risk management is about leaders – from all parts of an organization – having rich discussions about an organization’s risks during those meetings.
Here are some emerging risk pulled right out of sustainability frameworks which are worthy of discussion and possibly being assessed at your next risk committee, taken from the AON paper:
- climate change
- social justice
- depletion of non-renewable resources
- brand damage (including boycotts),
- shareholder actions related to sustainability issues and disclosure of historic environmental liabilities
- evaluation of energy consumption, emissions of greenhouse gases, water use and waste generation, etc.
If these are not on your radar, think about them, talk about them and even if they are assessed as unlikely, at least they are on your risk register for next quarter or next year. At some point they will resonate with someone and generate a tactical risk treatment.