Sustainability Risk Management

Until recently, the concept of Enterprise Risk Management (ERM), as it pertains to sustainability and green buildings, has been largely one sided, focusing only on managing risk.

This is changing with the understanding that ERM is also an excellent tool for maximizing green and sustainable value.

As climate risk becomes mainstream, ERM tools become even more important. Indeed, professionals in the insurance, green building or sustainable business fields who need to prepare for the challenging landscape of green risk and enterprise risk can benefit from a greater understanding of how to connect green and sustainable practices, review current and future sustainability risks and how insurance companies quantify, underwrite and mitigate risks.

As regulators, insurance and debt rating agencies increasingly scrutinize the sustainability readiness and risk management practices of companies, evaluating green risk transfer and management techniques and introducing sustainable business, green building design and operations that directly mitigate risks can provide significant protection against exposure for enterprises of all types.

Natural disaster risk, often the result of a changing climate, is contemplated within the framework of SRM, with emphasis being placed on resilience as a risk mitigation and adaptation best practice. An effective SRM framework will provide empirical proof that green buildings present less risk than conventional buildings, introduces green insurance concepts and coverage products and offers a path to reduce insurance premiums through sustainable business practices.

Sustainability Risk Management offers a combination of ERM and resilience principles as the most effective tools to adapt to climate risk.