Sustainability professionals have leaned on various aspects of risk for years – reputational risk and climate risk being two of the headliners. But – as I’ve written many, many times before – sustainability professionals rarely understand risk management in general, or how it works within their own companies. Having spent a number of years in the Global Environmental Practice in Marsh USA, the world’s largest risk management firm, this is something with which I have first hand experience.
I’m not the only one who recognizes this gap. The World Business Council for Sustainable Development (WBCSD) report Sustainability and enterprise risk management: The first step towards integration, found that:
- Although companies have sustainability professionals working to address ESG-related risks and issues, those staff struggle to get these into risk management discussions.
- Little collaboration exists between a company’s risk and sustainability practitioners.
- ESG risks managed and disclosed by internal sustainability staff are considered less significant than conventional risks, leading to a bias against ESG-related risks.
There are absolutely benefits in working closely with internal risk management departments and staff to credibly address and communicate the downsides of sustainability issues. But now, according to Crawford, there are increasingly upsides to sustainability buried in risk management that you may not see unless you dig a bit. An article from InsuranceBusiness reported
“Andrew Bart, CEO of Crawford International Operations, said insurers now view sustainability as an essential component of strategy, driven by climate-related claims, talent considerations, and client expectations. He noted that over the past four to five years, sustainability has moved from a ‘nice-to-have’ to a core factor in claims and underwriting decisions.”
A recent report from Crawford that was a “survey of claims leaders from carrier and broker partner organizations globally to assess how sustainability priorities are shaping industry practices and corporate strategies”
“highlighted that insurers are embedding sustainability into claims handling, product development, and operational decisions, reflecting both regulatory and customer expectations, while addressing long-term risk exposure from climate change and other emerging factors. This growing emphasis on sustainability is shaping how insurers assess risk, structure policies, and manage claims, indicating that environmental and social considerations will increasingly influence the direction of the insurance industry.”
Are you proactively assisting your risk management department in communicating with brokers, underwriters and claims personnel to improve your insurance costs, claims management and find other direct financial benefits of your sustainability programs?
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