Managing environmental risk in today’s changing business world

Thought leadership

The world is waking up to the fragility of its ecosystems, and the world’s leaders are taking action – from US president Barack Obama’s determined action on climate change to the Chinese authorities’ move to repair the environmental damage caused by decades of rapid industrialisation.

There are now estimated to be 17,000 pieces of environmental legislation in place around the globe.

New laws are emerging all the time, while old laws – which may not have been enforced effectively for years – are suddenly being enacted with renewed vigour.

At the same time, a more developed appreciation of the interconnectedness of business, society, health and environmental wellbeing is bringing more and more companies into the spotlight. Industrial sectors such as retail and financial services, which may never before have been associated with ‘pollution’ in the traditional sense, are suddenly discovering new environmental liabilities and risks.

Meanwhile, the world waits on social media, ready to expose any industrial accident to a global audience within minutes, shooting holes in brand and reputation in the process.

With these kinds of challenges, risk managers in all sectors need to look to their risks and interrogate their insurance.

Without dedicated environmental cover there are very likely to be exposures. The time to discover those is now. Risk managers must be confident that their international insurance programmes are structured for this multinational risk.

They must also ensure that their insurer has the footprint to act on the ground immediately and that it has the capacity to address claims at the pace demanded by the modern world.

In the end, this is not just about self-protection. In a world where brand and reputation are everything, choosing the right environmental insurance is an opportunity for a company to make a positive statement to the rest of the world about the way it does business.

Customers and shareholders are increasingly interested in seeing that the organisations in which they spend their money are doing the right thing and behaving responsibly, and many in the C-suite recognise this.

More and more companies are now seeing that managing their environmental risk is about doing more good than harm.

It is an opportunity to demonstrate that risk managers are adding value to the world and delivering on the company’s corporate values.

In the end, the choice is simple. At the very least, businesses must be compliant. But they can also choose to do the best they possibly can to show the world that they take the environment seriously – and proactively cover their risks.

By Dorothée Prunier, environmental risk manager Continental Europe, ACE

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