Risk Ready: New Approaches to Environmental and Social Change

November 12, 2012

Recent natural disasters around the world have highlighted obvious areas of risk in global supply chains. But many companies are beginning to realize that less visible elements of supply chain risk can have equal or greater long term impacts on their organizations. I am referring to environmental and social issues. Hurricane Sandy and its aftermath are a great example.

A new report from PwC titled – “Risk ready: New approaches to environmental and social change” explores these dynamics. “The world is in a state of flux, and environmental and social issues are posing greater commercial risks than ever. Risk management must evolve to help their organizations track these issues and respond. In fact, some 83% of S&P 500 companies report they’re integrating one of the biggest issues— climate change—into their enterprise risk management processes. Yet the risk management community is only starting to shape notions of what it means to lead effectively in this area. Risk managers must have a structure in place to help them think broadly and proactively about such risks.”

Why is it time for attention to risk?

Faster change: Environmental and social issues—like resource scarcity, labor concerns, climate change, social unrest, and extreme price volatility in commodities markets—are no longer singular and rare but persistent and growing challenges in the global environment. It’s up to each company to determine which of those issues present risks or opportunities—for their businesses.

Unsynchronized responses: Too many companies manage environmental and social issues in functional silos and on short-range time horizons. That approach perpetuates the belief that identifying, mitigating, and governing major risks are the responsibilities of others.

New expectations: Companies are revising their expectations about where to look for risk and how far into the future the search for risk should go. It’s not a separate step but one that extends the reach of existing enterprise risk management and business continuity planning.

Read the full report here: PwC

1 Comments to “Risk Ready: New Approaches to Environmental and Social Change”

Navdeep Sidhu says:

November 15, 2012 at 9:25 am

“some 83% of S&P 500 companies report they’re integrating one of the biggest issues— climate change—into their enterprise risk management processes.”

Very interesting. I’d be very interested in hearing what the biggest effects of climate change are having the biggest impact on supply chains around the world. Obvious natural disasters like Hurricane Sandy have a major impact and effectively stop supply chains, but what about things like drought or extreme temperature changes?
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