From assessing control frameworks to creating KRIs, here are four tips from risk leaders who are driving a risk-based approach to addressing these risks
Are climate-related risks and environmental sustainability a top principal risk?
These risks may rank somewhere between 2 and 5 in terms of priority – reflective of the World Economic Forum’s Global Risk Report 2021, which found that climate accounts for all of the report’s top long-term risks.
And they’re very likely to be treated as strategic risk, with board level attention. Indeed, this is certainly the case for many of our members.
In and among the global debate on climate risk, the Task Force on Climate-related Financial Disclosures (TCFD) will keep the risk top of the business agenda.
In fact, the UK government has announced its intentions to make TCFD-aligned disclosures fully mandatory – across all economies – by 2025.
This marks an important step in establishing consistent global climate and sustainability reporting standards.
And our members are playing a key role in driving forward the whole climate risk agenda – from TCFD reporting to developing a risk-based approach to managing environment and sustainability risks.
We’ve captured their thinking, approaches and viewpoints – shared during a member-only meeting held this week – in our Intelligence platform.
And we'll be hosting regular member meetings on this topic (to find out how you can get involved, email me: vicky.windsor@riskleadershipnetwork.com)
In the meantime, for colleagues who currently do not have membership to our network, I’ve summarised, in brief, four tips shared at a recent member meeting on environmental sustainability.
1. Integrate sustainability into your control framework
Take a look at your company’s control frameworks and make moves to integrate sustainability into the controls for strategic areas such as investment and acquisitions. For many members, this has helped drive engagement with senior and executive management.
2. Appoint sustainability champions
Appoint sustainability champions from various departments who can best articulate the risk and opportunity in language that resonates with their department. Their role is to drive conversation, challenge and ask questions around sustainability and any associated risks.
One member took it a step further and is in the process of hiring a sustainability risk analyst. The idea is to combine sustainability responsibilities with risk and data analyst skills to get more incisive data on environment-related risks and opportunities.
3. Think about your KRIs
Identify projects that have a bigger stake on the environment, climate and sustainability and begin establishing key risk indicators. The end goal would be to embed these indicators into the project’s approval process as well as investment requests to better aid decision-making. This is also a key step towards establishing a risk and sustainability culture.
4. Provide the right information at the right time
Try and have empathy for decision-makers – because sustainability is hard to get right. Our role is to provide them with the right information at the right time to aid their decisions.
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