Risk managers need to play more prominent ESG role
Source: Middle East Insurance Review | Oct 2023
Sixty-four percent of senior business leaders believe ESG risks are among the top two most impactful threats to their organisation, yet only 19% report that their chief risk officers are playing a leading role in setting climate and net-zero strategies according to a new survey by research and advisory firm Verdantix.
The company said the results suggest that risk professionals will need to adapt rapidly to help companies manage climate and other ESG risks. The survey included polling 200 global senior leaders across financial and industrial sectors.
The findings reveal that 52% believe climate issues represented ‘very material’ risks to their firm over the last 12 months, with more than two-thirds seeing it as a top two risk.
The survey also found that just half of risk executives have incorporated ESG and sustainability factors into their risk management frameworks. Verdantix said this leaves businesses vulnerable and risk managers need to start playing a more prominent role.
Verdantix vice president of risk Bill Pennington said, “While two-thirds of our survey respondents recognise the physical and financial risks of ESG and climate change to their organisations over the next seven years, they have yet to quantify these challenges and build them into broader risk frameworks.”
Mr Pennington said, “Our view is that risk professionals will now have to adapt rapidly, broadening their responsibilities, engaging with new stakeholders and leveraging technological solutions and external expertise.”
He said in-house risk teams and their advisers are placed to play a prominent role in helping their organisations navigate the changing operating environment. “However, to meet these challenges, risk professionals will have to adapt their approaches, develop new skills and get buy-in from their boards,” he said. M