Article:

Risk managers to save the planet

31 January 2019

As delegates to the 2019 World Economic Forum fly away on the closing day of the summit, critical voices denounce the conference’s environmental impact. Climate change and extreme weather are nonetheless cited by the WEF’s Global Risks Report 2019 published this week as both the highest and greatest impact risks, well ahead of cyber-attacks and biodiversity calamities.

Risk managers, a new report by The Nature Conservancy points out, are among the 10 key change agents to watch in 2019.

The Conservancy, a global organisation dedicated to conserving land and water, and one of America’s most trusted organisations, warns that to achieve a sustainable future, strong leadership from other than the usual suspects is needed. The conservancy’s top 10 cites risk managers, together with other unusual change makers such as teenagers, town mayors, women, and investors.

The Nature Conservancy goes on to specify that insurance and infrastructure are needed by all, and yet, that ‘no one’s excited about them’. ‘The opposite’s true of beaches and coral reefs, except that coral reefs are infrastructure, protecting 200 million people from storms and reduce expected storm damage by over $4 billion annually. That’s why organisations like the International Red Cross are funding reef restoration in the Caribbean and hotel owners in Mexico are investing in regular maintenance of reefs and beaches and setting up a reef insurance policy to protect their communities from storms.’

Reflecting the same sense of urgency, BDO in its Global Risk Landscape report points out that the two areas of risk that have increased most since 2017 – supply-chain and environmental risk – are reflective of the wider risk environment. Politically, trade barriers are going up and environmental challenges are increasing, says BDO.

BDO also finds that high-performing businesses face a different type of risk from mid to low-performing businesses; for them, ‘macro’ risks are the greatest challenge, and they embrace innovation. For low performers, the capacity to innovate is reduced, and internal challenges are the more pressing issue.

Risk managers generate long-term value by creating an adequate system in which opportunities and risks are balanced. Sustainable risk management leads to short-term results, without jeopardising future value creation.

Nigel Burbidge, Partner and Global Chair of BDO’s Risk & Advisory Services comments: “Complacency has always been a killer. Sustainability is the greatest challenge facing a small-to medium enterprise. If a business is not agile right now, it may find that it is not a viable business in the medium to long term.”

BDO Risk Advisory Services