On 31 March, FERMA releases the first guide specifically for European risk managers on sustainability risks.
People, planet, performance – The contribution of Enterprise Risk Management to Sustainability provides practical guidance on incorporating sustainability goals into enterprise-wide risk management.
What is an ESG Audit?
Environmental, social and governance (ESG) risks are inevitable for every business. But how these issues are collected, managed and reported are what will make the difference between a company that is prepared or not.
What is an ESG Audit?
Environmental, social and governance (ESG) risks are inevitable for every business. But how these issues are collected, managed and reported are what will make the difference between a company that is prepared or not.
This Research Spotlight provides a summary of the academic literature on environmental, social, and governance (ESG) activities including:
• The relation between ESG activities and firm value
• The impact of environmental and social engagements on firm performance
• The market reaction to ESG events
• The relation between ESG and agency problems
• The performance of socially responsible investment (SRI) funds
This Research Spotlight expands upon issues introduced in the Quick Guide “Investors and Activism”.
Enterprise Risk Management - Aligning Risk with Strategy and PerformanceResolver Inc.
COSO, which has provided global thought leadership and guidance on internal control, enterprise risk management, and fraud deterrence for over three decades, recently released a draft update to the original COSO ERM Framework. This framework is widely used by organizations to enhance their ability to manage uncertainty, gauge risk, and increase stakeholder value. However, significant new risks have emerged since the Framework was released, demanding heightened board awareness and oversight of risk management, as well as improved risk reporting. For those organizations exploring ESRM – these themes will be strikingly familiar and the lessons learned, highly relevant.
Presentation by: Bob Hirth, Global Chairman of COSO.
Green GDP as an indicator of environmental cost of economic growth in UkraineMykola Shlapak
The article provides the results of the environmental adjustment of the traditional macroeconomic indicators for Ukraine taking into account depletion of natural capital, environmental degradation due to atmospheric pollution and governmental expenditures on environmental protection. For the first time the calculation of “Green GDP” and environmentally adjusted net domestic product (NDP) for Ukraine has been elaborated for the period 2001-2010. Depletion of natural capital has been estimated based on the official data on the net operational income and specific taxes of the extraction industry of Ukraine and applying the Hartwick's rule on the reinvestment of the resource rent. Environmental degradation due to atmospheric pollution has been estimated based on the results of the research on the economic cost of pollution from thermal power stations in Ukraine. The general conclusion is that the economic growth of Ukraine is significantly dependent on natural capital and has substantial environmental drawbacks.
Risk management is an integral part of business management. This set of principles was developed by the industry for the industry. They have been drafted to make them so practical that they will resonate with any financial organization.
Intuition can be misleading!
This short presentation demonstrates that the occurrence of events changes people's perception of the outcomes to which they may be exposed. After an event has occurred once, it will be perceived as much more frequent even though in reality, its recurrence probability has not changed.
Every organization needs to adapt to the ever-changing business environment. Sensing this need, we have come up with these content-ready change management PowerPoint presentation slides. These change management PPT templates will help you deal with any kind of an organizational change. Be it with people, goals or processes. The business solutions incorporated here will help you identify the organizational structure, create vision for change, implement strategies, identify resistance and risk, manage cost of change, get feedback and evaluation, and much more. With the help of various change management tools and techniques illustrated in this presentation design, you can achieve the desired business outcomes. This business transition PowerPoint design also covers certain related topics such as change model, transformation strategy, change readiness, change control, project management and business process. By implementing the change control methods mentioned in the presentation, you will be able to have a smooth transition in an organization. So, without waiting much, download our extensively researched change management framework presentation. With our Change Management Presentation slides, understand the need for change and plan to go through it without any hassles.
European Risk Management Seminar 2018 - Sustainability ReportFERMA
FERMA’s aim in focussing on sustainability in our 2018 European Risk Management Seminar and in publishing this report is to strengthen the risk manager in ensuring the sustainability of our organisations and ultimately our societies.
Sustainability has always been at the heart of the role of the risk manager, so that their organisations are resilient to shocks and can continue to fulfil their objectives. In the 21st century, that vision has widened, because companies are increasingly asked to be good corporate citizens and to play a part in our overall adaptation to climate change.
This Research Spotlight provides a summary of the academic literature on environmental, social, and governance (ESG) activities including:
• The relation between ESG activities and firm value
• The impact of environmental and social engagements on firm performance
• The market reaction to ESG events
• The relation between ESG and agency problems
• The performance of socially responsible investment (SRI) funds
This Research Spotlight expands upon issues introduced in the Quick Guide “Investors and Activism”.
Enterprise Risk Management - Aligning Risk with Strategy and PerformanceResolver Inc.
COSO, which has provided global thought leadership and guidance on internal control, enterprise risk management, and fraud deterrence for over three decades, recently released a draft update to the original COSO ERM Framework. This framework is widely used by organizations to enhance their ability to manage uncertainty, gauge risk, and increase stakeholder value. However, significant new risks have emerged since the Framework was released, demanding heightened board awareness and oversight of risk management, as well as improved risk reporting. For those organizations exploring ESRM – these themes will be strikingly familiar and the lessons learned, highly relevant.
Presentation by: Bob Hirth, Global Chairman of COSO.
Green GDP as an indicator of environmental cost of economic growth in UkraineMykola Shlapak
The article provides the results of the environmental adjustment of the traditional macroeconomic indicators for Ukraine taking into account depletion of natural capital, environmental degradation due to atmospheric pollution and governmental expenditures on environmental protection. For the first time the calculation of “Green GDP” and environmentally adjusted net domestic product (NDP) for Ukraine has been elaborated for the period 2001-2010. Depletion of natural capital has been estimated based on the official data on the net operational income and specific taxes of the extraction industry of Ukraine and applying the Hartwick's rule on the reinvestment of the resource rent. Environmental degradation due to atmospheric pollution has been estimated based on the results of the research on the economic cost of pollution from thermal power stations in Ukraine. The general conclusion is that the economic growth of Ukraine is significantly dependent on natural capital and has substantial environmental drawbacks.
Risk management is an integral part of business management. This set of principles was developed by the industry for the industry. They have been drafted to make them so practical that they will resonate with any financial organization.
Intuition can be misleading!
This short presentation demonstrates that the occurrence of events changes people's perception of the outcomes to which they may be exposed. After an event has occurred once, it will be perceived as much more frequent even though in reality, its recurrence probability has not changed.
Every organization needs to adapt to the ever-changing business environment. Sensing this need, we have come up with these content-ready change management PowerPoint presentation slides. These change management PPT templates will help you deal with any kind of an organizational change. Be it with people, goals or processes. The business solutions incorporated here will help you identify the organizational structure, create vision for change, implement strategies, identify resistance and risk, manage cost of change, get feedback and evaluation, and much more. With the help of various change management tools and techniques illustrated in this presentation design, you can achieve the desired business outcomes. This business transition PowerPoint design also covers certain related topics such as change model, transformation strategy, change readiness, change control, project management and business process. By implementing the change control methods mentioned in the presentation, you will be able to have a smooth transition in an organization. So, without waiting much, download our extensively researched change management framework presentation. With our Change Management Presentation slides, understand the need for change and plan to go through it without any hassles.
European Risk Management Seminar 2018 - Sustainability ReportFERMA
FERMA’s aim in focussing on sustainability in our 2018 European Risk Management Seminar and in publishing this report is to strengthen the risk manager in ensuring the sustainability of our organisations and ultimately our societies.
Sustainability has always been at the heart of the role of the risk manager, so that their organisations are resilient to shocks and can continue to fulfil their objectives. In the 21st century, that vision has widened, because companies are increasingly asked to be good corporate citizens and to play a part in our overall adaptation to climate change.
European risk management sustainability seminar reportFERMA
Sustainability has always been at the heart of the role of the risk manager, so that their organisations are resilient to shocks and can continue to fulfil their objectives. In the 21st century, that vision has widened, because companies are increasingly asked to be good corporate citizens and to play a part in our overall adaptation to climate change.
In June 2019, the Commission issued new Guidelines on reporting climate-related information as a supplement to the 2017 non-binding Guidelines on non-financial reporting. What are the main takeaways?
ESG & Impact Investing: Navigating the EssentialsJedrick Theron
A report that will help readers navigate the world of ESG and Impact Investing. It will help readers with coming to an understanding of development finance institutions, the benefits of ESG in investing and company management and how best to implement ESG and impact investing into practice.
The financial industry has historically
played a number of fundamental roles in
shaping the modern world.
The activities of the industry supported the development of
the free market, economic expansion, improving the quality of
life, personal and national security, and enabled individuals and
organizations to save and invest. Fulfilling these functions requires
the financial sector to constantly take care of its reputation
and trust in the financial system and respond to the changing
expectations of an increasing number of stakeholders. Today,
the industry is at a key point in its evolution. In the face of climate
change and the consequent changes in investment preferences,
stakeholders expect financial institutions to contribute to a
fairer and more sustainable world and to create a new face of
the financial services sector in which profit and social impact can
coexist.
Why now? The pandemic has reinforced the need to build
a sense of purpose, strengthen confidence in banks,
and help address global issues the economy faces, such
as transformation in the face of climate change. The
accumulation in the public debate of issues such as prosperity,
development, social responsibility, justice, conflict, security, ecology
and sustainable development has created a turning point in
history. To continue to grow, the financial services industry needs
to take care of making profits in tune with multiple stakeholders,
keeping consumers at the center of everything they do. And these
consumers are more concerned than ever about climate change
and expect real action from business.
More: https://www2.deloitte.com/pl/pl/pages/zarzadzania-procesami-i-strategiczne/articles/sustainable-finance-magazine/sustainable-finance-magazine-wydanie-pierwsze.html
Recognizing that climate-related financial reporting is still evolving, the Task Force’s recommendations provide a foundation to improve investors’ and others’ ability to appropriately assess and price climate-related risk and opportunities. The Task Force’s recommendations aim to be ambitious, but also practical for near-term adoption. The Task Force expects to advance the quality of mainstream financial disclosures related to the potential effects of climate change on organizations today and in the future and to increase investor engagement with boards and senior management on climate-related issues.
Improving the quality of climate-related financial disclosures begins with organizations’ willingness to adopt the Task Force’s recommendations. Organizations already reporting climaterelated information under other frameworks may be able to disclose under this framework immediately and are strongly encouraged to do so. Those organizations in early stages of evaluating the impact of climate change on their businesses and strategies can begin by disclosing climate-related issues as they relate to governance, strategy, and risk management practices. The Task Force recognizes the challenges associated with measuring the impact of climate change, but believes that by moving climate-related issues into mainstream annual financial filings, practices and techniques will evolve more rapidly. Improved practices and techniques, including data analytics, should further improve the quality of climate-related financial disclosures and, ultimately, support more appropriate pricing of risks and allocation of capital in the global economy.
Recognizing that climate-related financial reporting is still at an early stage, the Task
Force’s recommendations provide a foundation to improve investors’ and others’ ability
to appropriately assess and price climate-related risk and opportunities. The Task Force’s
recommendations aim to be ambitious, but also practical for near-term adoption. The Task
Force expects to advance the quality of mainstream financial disclosures related to the
potential effects of climate change on organizations today and in the future and to increase
investor engagement with boards and senior management on climate-related issues.
Improving the quality of climate-related financial disclosures begins with organizations’
willingness to adopt the Task Force’s recommendations. Organizations already reporting
climate-related information under other frameworks may be able to disclose under this
framework immediately and are strongly encouraged to do so. Those organizations in early
stages of evaluating the impact of climate change on their businesses and strategies can
begin by disclosing climate-related issues as they relate to governance, strategy, and risk
management practices. The Task Force recognizes the challenges associated with measuring
the impact of climate change on an organization or an asset, but believes by moving climaterelated
issues into mainstream financial filings, practices and techniques will evolve more
rapidly. Improved practices and techniques, including data analytics, should further improve
the quality of climate-related financial disclosures and, ultimately, support more appropriate
pricing of risks and allocation of capital in the global economy.
Environmental Liability Directive: FERMA’s views on the Multi-Annual Work Pro...FERMA
On 11 April, the Secretary General of the Federation of European Risk Management Associations (FERMA) Gilbert Canaméras presented FERMA’s views on the future of the European Environmental Liability (ELD) to a public hearing held at the European Parliament.
FERMA welcomes Commission actions to improve ELD implementation The Federation of European Risk Management Associations (FERMA) today welcomes publication by the European Commission of a three-year programme to improve implementation of the European Environmental Liability Directive (ELD). The Multi-Annual rolling Work Programme 2017-2020 is based on the evaluation of the ELD concluded in April 2016 in which FERMA participated.
Presentation shared at Boards Impact Forums webinar Aug 26, 2021 on Strategic Competence for Sustainable Business https://www.youtube.com/watch?v=4oOx5kwM2xY
FERMA contribution to the French Presidency agendaFERMA
FERMA thought paper highlights the links between its work and the priorities of the French Presidency in three key areas :
Economic recovery (systemic risks and risk transfer, including captives)
Digital issues (cyber risks and cyber insurance)
Ecological transition (sustainability and insurability)
For each of these categories, FERMA presents the challenges faced by European businesses, explains how risk management contributes to the ambitions of the French Presidency and asks European policymakers for specific measures during this period.
The role of risk management in corporate resilienceFERMA
The report presents the views of risk and insurance professionals and senior executives about a post-pandemic view of resilience management in their organisations across sectors globally in the summer of 2021.
Webinar: the role of risk management in corporate resilience FERMA
FERMA and McKinsey will present the findings of our survey into resilience and risk management. The objective is to give risk and insurance professionals a richer understanding of resilience in a strategic and practical way. Two leading risk managers will discuss the results of our survey and will reflect more broadly on the link between risk and resilience. By the end of the webinar, you will be well versed in resilience from an enterprise risk management perspective.
Collaboration of the Year Award winner 2020: Pim Moerman and Rob van den Eijn...FERMA
Philips Global Resilience Platform: Breaking down silo approach of departments by collaborating in multidomain platform making our company more resilient
Argo Group: entry for emerging risk initiative of the year Award 2020FERMA
Adam Seager, Chief Risk Officer of Argo Group demonstrates the context, challenges and solutions he put in place for Agor Group during the time of crisis like the Covid19 pandemic.
George Ong, Chief Risk Officer, Northern Ireland WaterFERMA
Nominations for the Public Sector Risk Manager of the Year for the European Risk Management Awards 2020.
George Ong is the Chief Risk Officer for Northern Ireland Water (NIW), a Government Owned Company (GoCo). George joined the business in 2006 with a clear remit of implementing a risk and insurance management system given that the ‘Government Protection’ was to be removed from 1st April 2007. Since then George has worked to adapt, enhance and embed risk management arrangements within NIW, developed partnerships with businesses, communities and institutions to improve resilience for the Company and the community. #euroriskawards
Webinar: Risk management in a global pandemic - Early lessons learned, EU – U...FERMA
FERMA's joint webinar with RIMS on 1 December provided insights into the way risk managers have experienced and dealt with the global pandemic and its consequences.
FERMA and RIMS teamed up to bring you content from both sides of the Atlantic Ocean. The webinar began with a presentation of the results from FERMA’s COVID-19 survey, and then took a Transatlantic view on commonalities and differences.
Speakers:
Athina Pehrman, Group Risk Manager at Electrolux Professional Group, a sustainability leader in the appliance industry
Melanie Steiner, Board Member, US Ecology, Inc. a leading provider of environmental services to commercial and government entities. Former CRO
Typhaine Beaupérin, CEO of FERMA, moderator.
European Risk managers have helped maintain the continuity of their organisations during the pandemic crisis. They have participated in task forces and crisis units, promoted communication, supported new working practices, pursued insurance recoveries where possible and begun work on recovery, according to a survey published by the Federation of European Risk Management Associations (FERMA): https://www.ferma.eu/publication/covid-19-ferma-survey-shows-risk-managers-contributions-to-response-and-resilience/
GDPR & corporate Governance, Evaluation after 2 years implementationFERMA
FERMA’s live joint webinar with ECIIA on Monday 28 September gathered more than 300 participants
The objective of this joint webinar was to take stock of where we stand after 2 years of GDPR implementation and the practical consequences on businesses. For this, FERMA and ECIIA (European Confederation of Institutes of Internal Auditing) invited the following speakers:
- Olivier Micol, Head of Data Protection Unit at the European Commission, Directorate-General for Justice. He highlighted key elements of the recent GDPR evaluation report of the European Commission, shared the latest data and feedback from companies and civil society. He also gave an overview of future planned initiatives.
- Jérôme Avot, Group Risk Officer and Data Protection Officer at Faurecia, a global leader in automotive technology.”The GDPR served as a common thread from the start to the end of the project. We feel we have turned what might have been perceived as a constraint into an opportunity. “
- Ralf Herold, Senior Vice President, Corporate Audit BASF, a leading chemical company. He is an expert in GDPR as Germany was a pioneer in this piece of legislation.
Jérôme Avot and Ralf Herold shared their experience as a Risk Manager and DPO and as an Internal Auditor by exchanging on the changes that the GDPR involved within their companies.
https://www.ferma.eu/webinar-replay-gdpr-corporate-governance-evaluation-after-2-years-implementation/
The European risk manager report 2020: webinar presentationFERMA
This 2020 edition is the opportunity to deepen four challenges that the Risk Manager is facing today:
his growing role in digital transformation
his contribution to sustainability
tougher insurance market conditions
education and skills evolution
The objective of this report is to launch the discussion on the new challenges posed by the European transition to climate neutrality and digital leadership for Risk Managers. How are the roles and responsibilities of European Risk Managers evolving in the face of this new reality? Are Risk Managers equipped to support their organizations in achieving this double transformation?
Our live webinar was scheduled on Monday 29 June 2020: risk managers from different backgrounds shared their experiences on the below themes and reacted to the results of the survey, in particular before and after the Covid-19 crisis.
The speakers were:
Adriana Cavaliere : Corporate Risk Manager at Skeyes, Belgium
Oliver Wild: Group Chief Risk, Insurance and Internal Control Coordination Officer at Veolia, France
Charlotte Hedemark: Chairman of the 2020 FERMA Survey Committee and Board Member of FERMA
Françoise Bergé: PwC Partner
FERMA European Risk Manager Report 2020: full set of results FERMA
This 2020 edition is the opportunity to deepen four challenges that the Risk Manager is facing today:
his growing role in digital transformation
his contribution to sustainability
tougher insurance market conditions
education and skills evolution
The objective of this report is to launch the discussion on the new challenges posed by the European transition to climate neutrality and digital leadership for Risk Managers. How are the roles and responsibilities of European Risk Managers evolving in the face of this new reality? Are Risk Managers equipped to support their organizations in achieving this double transformation?
Webinar: Why risk managers should look at Artificial Intelligence now?FERMA
Risk Managers can be key actors in highlighting to the organisation leadership the opportunities and challenges of AI technologies
On 19 May, the objective of this webinar was to discuss:
How AI can be implemented into the risk management practices?
Which opportunities is AI creating for better risk management?
What are the highlights of the European Commission’s risk-based approach to Artificial Intelligence?
Speakers were:
Philippe Cotelle, Head of Insurance Risk Management at Airbus Defence and Space and FERMA Board member, will highlight the key findings from FERMA’s report on “AI applied to Risk Management”.
Irina Orssich and Eric Badiqué are both working for the European Commission as Team leader and Adviser for Artificial Intelligence in the Unit for Technologies and Systems for Digitising Industry. They will present the Commission’s White Paper on AI and the other EU initiatives which aim at strengthening the EU legal framework regarding AI applications, especially in the field of privacy.
GDPR & corporate governance: the role of risk management and internal audit o...FERMA
The webinar discussed the full results and recommendations of a joint project between FERMA and the European Confederation of Institutes of Internal Auditing (ECIIA), to assess how the EU General Data Protection Regulation (GDPR) impacted our professions, one year after its enforcement. This webinar helped to know:
- To which extent the risk manager and the internal auditor are involved in the GDPR corporate implementation
- How GDPR has affected the interactions between risk management, internal audit and Data Protection Officer (DPO)
- What are the best practices and recommendations to embed personal data protection in the risk and audit governance of your organisation
After one year of GDPR implementation, FERMA and ECIIA sent in May a common basis of five questions to their risk and internal audit members.
The objectives were to:
- Evaluate the roles of the risk management and internal audit functions regarding the GDPR and personal data related risks
- Provide a unique insight into the implementation of the GDPR by companies to the European policymakers
GDPR & corporate governance: The Role of Internal Audit and Risk Management O...FERMA
This paper is a collaboration between FERMA and the European Confederation of Internal Audit Institutes ECIIA and focuses on the impacts of the GDPR on corporate governance practices in the year following its implementation. Most specifically, it looks at the roles played by internal audit departments and risk management functions.
Ferma report: Artificial Intelligence applied to Risk Management FERMA
FERMA brought together a group of experts from within and beyond the risk management community to develop the first thought paper about AI applied to risk management.
Their aim was to perform an initial assessment of the potential value of AI to improve enterprise risk management (ERM), and second, to understand how risk managers can be key actors in highlighting to the organisation leadership the opportunities and challenges of AI technologies.
The working group expects that corporate risk management will benefit from AI in several areas. “From its ability to process large amounts of data to the automation of certain risk management repetitive and burdensome steps, AI could allow risk managers to respond faster to new and emerging exposures. By acting in real time and with some predictive capabilities, risk management could reach a new level in supporting better decision making for senior management.”
This paper aims to guide risk managers on applying AI from a basic understanding to developing their own strategy on the implementation of AI. It includes an action guide and a template for risk managers to develop their own AI risk management roadmap.
Webinar: how risk management can contribute to sustainable growth?FERMA
This webinar will help risk management and sustainability practitioners apply enterprise risk management (ERM) concepts and processes to environmental, social and governance-related risks (ESG)
FERMA Webinar: At the Junction of Corporate Governance and Cyber SecurityFERMA
The recommendation for a cyber risk governance model came in a report published 29 June 2018 by the Federation of European Risk Management Associations (FERMA) and the European Confederation of Institutes of Internal Auditing (ECIIA).
FERMA and ECIIA presented their report at a high-level event at the European Parliament with representatives of the EU institutions, the World Economic Forum, risk and audit practitioners from European businesses, and other European stakeholders.
The report, At the junction of corporate governance and cybersecurity, aims primarily at supporting European organisations in meeting their obligations under the EU General Data Protection Regulation and Network Information Security Directive. Recent cyber attacks, however, increased concerns on what the risk experts see as a wider lack of focus on risk governance in cyber security.
More information here:
https://www.ferma.eu/ferma-webinar-junction-corporate-governance-and-cyber-security?type=events
What will you learn from this presentation?
- Compare and assess your own governance of cyber risks against the proposed cyber risk governance model
- Know where you stand in the evolutionary journey towards cyber resilience: reactive, proactive, predictive...
- Define the key stakeholders for cyber security and conditions for success
- Find mechanisms that help leadership determine effective and efficient resource allocation
- Plan for the next move to improve your cyber risk governance
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Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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People, Planet & Performance: sustainability guide for risk and insurance managers
1. PEOPLE, PLANET
& PERFORMANCE
FERMA FOCUS
SUSTAINABILITY
The Contribution of Enterprise
Risk Management to Sustainability
40+
YEARS
As the single
recognised voice
of European
risk managers
21
COUNTRIES
5000
RISK MANAGERS
IN EUROPE
22
MEMBER
ASSOCIATIONS
www.ferma.eu
2. 02
About FERMA
The Federation of European Risk Management Associations
brings together 22 national risk management associations in 21
European countries. FERMA represents the interests of nearly
5000 risk and insurance managers in Europe active in a wide
range of business sectors from major industrial and commercial
companies to financial institutions and local government bodies.
More information can be found at www.ferma.eu
3. 03
FERMA presents this guide on sustainability in the midst of the
global COVID-19 pandemic. Less than a third of risk managers
had a global pandemic as part of their risk register in September
of 2019. Yet, in 2020, that risk became reality. The financial and
societal impacts have been far-reaching already and will be felt
for years to come.
Among the many consequences of this pandemic, FERMA has
observed a renewed focus on 1) the risk environment; and 2)
how to make businesses more resilient. We, risk managers, are
being looked to – perhaps more than ever – for our insights on
what will come next and how to better manage the associated
risks, with a view to making our companies more resilient.
Risk managers provide their organisations with an enterprise-
wide view of both the potential impacts and the opportunities
related to the various risks that can materialise. One of the
tools of the risk manager, Enterprise Risk Management (ERM),
facilitates this process. ERM provides a robust framework to
identify, assess and mitigate risks. Inherent in the risk manager’s
role is also the ability to prioritise risks that should be at the
forefront for the Board.
More is happening on sustainability every day. This is set
against a policy background of the European Green Deal, in
which the EU makes a legal commitment to climate-neutrality
by 2050. There are other initiatives in many parts of the world.
Part of our role as risk managers is to translate these initiatives
into their implications for our organisations. Some risk
managers have been doing this for years, but organisations
vary in their maturity on the topic.
Our European Risk Manager Report 2020 revealed that 60%
of risk managers were not yet involved in ESG-related risks
in their organisation. To help fill this gap, as well as to take
stock of where we are now, FERMA’s Sustainability Committee
has created this guide with two goals: 1) as a practical guide
for risk managers who wish to embed more sustainability
considerations into their processes and into their organisations.
2) as examples of good practices from work that risk managers
have already carried out on sustainability.
Our guide can, therefore, be both a starting point and material
for reflection for risk managers. It cannot provide guidelines
on every aspect of the increasingly vast range of topics that
broadly belong to the term sustainability.
Finally, a warm thank you and congratulations to the FERMA
Sustainability Committee for its hard work in producing this
guide. We also thank the risk managers who generously
contributed their knowledge and experience.
FOREWORD
Valentina Paduano, Chairwoman of the Sustainability Committee
"In our view sustainability should now be front and centre of everyone's mind."
4. 04
INTRODUCTION
Existing guidance and best practices
• World Business Council for Sustainable Development
(wbcsd) and COSO, Applying Enterprise Risk Management to
Environmental, Social and Governance-related Risks
• Task Force on Climate-Related Financial Disclosures (TCFD),
Implementing the Recommendations of the TCFD
• ISO 31000 ‘Risk Management' and ISO 26000 ‘Social
Responsibility’
Aim and approach
This document aims to provide corporate risk and insurance
managers with guidance on dealing with the increasingly
significant topic of sustainability. Corporate Social Responsibility
(CSR) and Environmental, Social and Governance (ESG) issues
are not new. They are increasingly blending into the inclusive
term sustainability. We, therefore, believe it is an important
moment to assemble current thinking on these topics and what
they mean for risk management.
Over the winter 2020/2021, FERMA polled its members on
what they would find useful in a guide on sustainability. The
risk managers who responded have generally been involved in
some way with their organisation’s approach to sustainability.
Therefore, the feedback received can be considered as
reflections on the ‘sustainability journey’ to date.
Then, to help us further develop the guide we organised
exchanges of good practice among members of the FERMA
Sustainability Committee. To complement this, we also sought
views from other experienced risk managers through nine
semi-structured interviews.
It is important to stress that this guide is not meant to replace
existing guidelines or processes. It is intended as a reference
point for further consideration and exploration.
Context for the risk manager
Companies have been communicating on non-financial matters
such as CSR for decades, widening into ESG matters more
recently. An enterprise-wide approach to sustainability that
incorporates opportunities and risks over the long term is one
of the latest parts of this evolution.
According to the input received, many risk managers have
been involved in their companies’ reporting on sustainability,
for example the preparation of their non-financial reporting
disclosures, annual reports, or reports on sustainability. But
evidently, a risk manager’s primary role is to warn and anticipate
rather than to report.
Organisations are at different stages of maturity in their
sustainability approach and have different ways of identifying,
analysing,assessinganddealingwiththerisksandopportunities.
Our focus in this report is how the risk management function
fits within this picture.
FERMA makes the following observations on the state of play
between risk management and sustainability.
• A corporate culture that embraces enterprise-wide risk
management is a fundamental factor in determining how
organisations approach and deal with sustainability.
• Managing sustainability requires mature risk management
as a long-term project to build resilience and take
advantage of opportunities from the green transition.
5. 05
• Risk management can help identify and communicate
sustainability issues that are specific to the company.
• Risk management is in a strong position to support
specialist functions’ knowledge of activities and operations
across the enterprise and methods of treating risk.
• Risk management can facilitate cross-function
communication.
• The ERM framework may offer a consolidated model of
good governance and practices that can eventually allow
the integration of sustainability into risk management.
A brief policy context
The increase in speed in pursuit of sustainability goals through
policy post-financial crisis can be, broadly speaking, traced back
to the UN Sustainable Development Goals. Ultimately, the aim
of these goals is to promote prosperity while protecting the
planet, achieving a better and more sustainable future.
On this front, the EU is particularly ambitious. In 2020, the EU
announced its strategy for climate neutrality by 2050 as part
of the European Green Deal, which is a key pillar of European
Commission President Ursula von der Leyen’s strategy for her
time in office.
The European Green Deal is a response to climate and
environmental challenges. It is intended, in the words of the
Commission, as a new growth strategy to transform the EU into
a fair and prosperous society, with a modern, resource-efficient
and competitive economy. It expects businesses to behave not
just as good corporate citizens, but also to use their operations
and assets to strengthen the resilience of the community.
Significantly, the Green Deal has for the first time set out a legal
commitment for the EU to target climate-neutrality by 2050,
with the European Climate Law. This act will also ensure that all
EU policies contribute to this overall goal, and that all sectors of
the economy and society play their part.
To support the green transition, the EU aims to channel more
investment into greener activities. This aim has been formalised
in the European Commission’s Strategy for Sustainable Finance.
In this strategy, the Commission identified the financial sector
as a key enabler to support economic growth, while reducing
pressures on the environment and taking into account social
and governance aspects. There will be a renewed strategy on
sustainable finance before the Summer of 2021. It is expected
6. 06
to pick up the theme of reorienting capital towards more
sustainable activities.
An important enabler of ‘greener’ investments is data. In a bid to
improve both supply and quality of data on the sustainability of
economic activities, the Commission has encouraged increased
disclosure of climate and environmental data so that investors
– and stakeholders – are better informed. More specifically,
organisations are increasingly required to disclose information
on how and to what extent their activities are associated with
environmentally sustainable economic activities.
Vital in this regard is the Non-Financial Reporting Directive
(NFRD), which is an instrument aimed at enhancing the
transparency of social and environmental information provided
by undertakings (of a certain size) in all sectors. The NFRD is
currently under review and an updated proposal is expected
for Q2 2021.
Further, the ambition to ensure transparency on risks related
to ESG factors that may impact the financial system and the
mitigation of such risks through the appropriate governance
of financial and corporate actors is articulated through the
Commission’s work on the EU Taxonomy. This taxonomy is an
effort to provide a common classification system for sustainable
economic activities (by ESG).
It is also anticipated that the Commission will propose an
initiative on sustainable corporate governance in the first half
of 2021. Stemming from this initiative we could see mandatory
supply chain due diligence and a duty of care for directors. This
work has taken inspiration from legislation at national level,
e.g. Article 169 of the French law on Business Growth and
Transformation (the PACTE law), as well as that at supranational
level, such as the OECD’s work on due diligence guidance for
responsible business conduct.
More recently, the political agreement reached by the European
Parliament and the Council on the EU economic recovery
package requires Member States to devote at least 37% of their
expenditure to investments and reforms that support climate
objectives. The so-called Recovery and Resilience Facility will
also require Member States to support the green transition by
obliging them to apply the ‘do no significant harm’ principle on
all measures.
The above is a selection of the various strands of public
policy aimed at reorienting the economic system away from
short-term maximisation of shareholder value and towards a
longer-term, more sustainable vision. They provide a short and
targeted context for this guide.
7. 07
For the sake of clarity in this publication, we outline here what
we mean by some key terms, since sustainability and ESG
tend to be used inter-changeably. Ideally, the definition will be
principles-based and not try to cover every eventuality.
Sustainability: encouraging businesses to frame decisions in
terms of financial, environmental (including climate, biodiversity),
social and human effects ensuring resilience and long-term value
creation. – FERMA Sustainability Committee1
Sustainability risk: Uncertain social or environmental event
or condition that, if it occurs, can cause significant negative
impact on the company. It also includes the opportunity that
may be available to an organisation because of changing social
or environmental factors (wbcsd and COSO).
ESG-related risks: Environmental, social and governance risks
and/or opportunities that may impact an entity are commonly
referred to as sustainability, non-financial or extra-financial
risks. (wbcsd and COSO) .
As a broad term, sustainability has different implications for
different companies. The risks associated with it will relate to
the ESG practices of the business, its strategy and the sector
and territories in which it operates. By saying that, we consider
that ‘ESG’ belongs to sustainability—i.e., that sustainability is
the broader concept. To illustrate what we consider as ESG,
we provide the following classification agreed by the FERMA
Sustainability Committee:
1 Inspired by the European Commission’s definition of sustainability in the consultation on Sustainable Corporate Governance: Sustainability encompasses
encouraging businesses to frame decisions in terms of environmental (including climate, biodiversity), social, and human impact for the long-term, rather
than on short-term gains
2 Diagram adapted from MSCI what is ESG? https://www.msci.com/what-is-esg
DEFINITIONS
Environmental Social Governance
Climate
Resources
Pollution/waste
People and communities
Products and services
Internal and external
stakeholders
Corporate governance
Business ethics
and behaviour
FERMA classification of ESG2
:
WHAT DO WE MEAN BY SUSTAINABILITY AND SUSTAINABILITY RISKS?
8. 08
For me, it is actually the
umbrella for most things
you do as a business…it is
not limited to environment.
– Risk manager, Sweden
It’s part of responsibility in our company. It is better to
understand that it is part of being a responsible person in
a responsible company. This includes the compliance-based
requirements and then it goes into ‘how’ you operate.
– Risk manager, Finland
Perhaps sustainability has always existed in companies as
financial sustainability in order to avoid bankruptcy? Nowadays
the meaning is around ESG, but the aim remains to survive, thus
adapt and transform the company to a rapidly changing context.
Whateverthedomainis,theroleofERMistoanticipateandavoid
negative impacts, and set up a risk culture that is key to enable
all stakeholders’ contribution to the aim of collective goals.
– Risk manager, France
As a risk manager, sustainability is really an important issue.
The first point I want to mention is that when you are a risk
manager, you need to mitigate risk, and you need to make
your best effort to avoid a claim and business interruption…
the second point is that today there is a green wave, which is
coming in our companies.
And, we want our businesses to be low-carbon impact, so
we want to reduce the impact of our activities. Here the risk
manager can help the company to find and evaluate the risk
associated with that.
– Risk manager, France
Sustainability is a target to be considered. These are strategic
targets, like business targets. I consider it as something that
could be impacted by a risk. So we have to manage ESG like
other topics that are important to the continuity of business.
– Risk manager, Italy
Sustainability is everything that allows us to create value, not
just taking into consideration actual needs, but also taking into
our needs into the future. It is not just economic and financial,
but we also take into account additional aspects, such as
environmental, social, and all the possible ways of improving
wellbeing.
– Risk manager, Italy
We have three elements when we talk about it. There is the
financial sustainability element of it, of course. It is a huge part.
Then there is the environmental one, which we have captured
for many years in that we always ask in risk management for
the non-financial impact and risks. We ask everyone in the
company, independent from the financial threshold for this
calculation. Then it is also in the social part and there we talk
about health and safety, human rights, supply chain topics.
- Risk manager, Sweden
Risk managers on sustainability
9. 09
SUSTAINABILITY RISK MANAGEMENT PROCESS
Sustainability risk management is a business process supporting the company’s sustainability goals.
It aims at aligning sustainability with risk management by using the principles of enterprise-wide risk management.
– FERMA Sustainability Committee
There is no one size fits all solution for sustainability risk
management. But based on our exchange of views, there are
some key themes that emerge, which we will explore in this
section.
We propose a template to consider these issues based on the
common risk management process:
• Preliminary settings
• Risk identification and prioritisation
• Risk assessment and treatment
• Risk reporting, communication and disclosure
Those that are well underway in their ‘sustainability journey’
take an enterprise-wide approach to ESG risks and link them
to overall strategic objectives. This is done by focussing on
material ESG issues that could threaten the strategic goals of
the organisation (as well as offer opportunities).
At the other end of the scale, some organisations may be
starting to consider how to integrate sustainability risks into
their overall approach, or may consider starting with a different
approach to sustainability before integrating it at a later date.
“Do not re-invent the wheel! Sustainability risk management
should use the same methodology as for other risks.”
– Risk manager, Italy
10. 10
Illustration of the sustainability risk management process
Risk reporting,
communication
& disclosure
Internally for decision making
Externally to meet regulatory
requirement and inform
stakeholders
Risk assessment
and treatment
High priority risk focus
Stakeholder input,
internal and external
Risk responses
Preliminary settings
and context
Internal factors
External factors
Time horizon
Risk identification
and prioritisation
Risk register/catalogue
Commitees
Data
Strategic goals
& risk appetite
11. 11
It is better to have a light
procedure to sustainability
risk management since you
cannot be prepared for
everything, as the COVID-19
pandemic crisis has shown.
It is better to be pragmatic.
– Risk manager, France
In our organisation, the risk management and sustainability
departments were merged some months ago, under the
same director (myself). We are now studying a way to create
continuous synergies between the two activities with the aim of
developing a Sustainability ERM in the next months.
– Risk manager, Italy
For me it means that the tasks and the understanding of
enterprise risk management and risk management in a
company should change. At least what I observe is that many
are still struggling to find that right way. There are many old
ways of thinking that are an obstacle. For example, a core
financial risk manager might say something like risk is deviation
from business plan. But this doesn’t capture the problem we
are talking about. It does not deal with the fact that there could
be child labour in the supply chain, or the climate change impact
on our company…The sustainability topic is really key not just
talking about it but really implementing it and changing ways
of working where it is really necessary, and risk management
is one of those, I think.
– Risk manager, Sweden
For ERM practitioners, the process is similar to all other risks.
Specificities come with 1/ the long-term effects of most ESG
risks (though we may wonder whether it is still long-term!) and
2/ the laws on reporting and information for companies ESG
risks. From my perspective it is absolutely the case that ESG/
sustainability has led risk management (and risk managers) to
work in depth and even more with functions such as corporate
social responsibility / human resources / health and safety /
security / business continuity and crisis management / etc.
– Risk manager, France
As our CEO says, we do not
have a sustainability strategy.
Our strategy is sustainable.
For us sustainability is fully
integrated into our processes.
We do not have a dedicated
category of risks defined as
sustainability.
– Risk manager, Sweden
We have to go beyond traditional risk management. For me
traditional risk management is that we as a company are
doing these activities, and if we are going to do that what are
the risks going to be? But now, we have to switch from these
post-strategy risks to a pre-strategy mindset. And that is really
looking at what is happening in the world, now and in the future
and how that can be translated to us as a company. For each
company that’s going to be different.
– Risk manager, Belgium
The identification and assessment of sustainability risk are
an integrated part of our company’s process for identifying,
quantifying and managing risk. Hence ESG concerns are in
focus at all levels and functions of the organisation. ERM is
also part of the team putting together the annual sustainability
report.
– Risk manager, Sweden
Risk managers on integrating sustainability into
risk management
12. 12
Preliminary settings
Context
A foundation for any of the next steps is first establishing the context in which you operate. A good way of looking at this is to consider
both internal and external factors confronting your organisation.
Most of the risk managers we have spoken to have emphasised
the enterprise-wide perspective they can take as being a
foundational part of their sustainability approach. It is good to
analyse and map out the key elements to your own organisation
before looking outside of it. Risk should be aligned with the
other sustainability related functions.
In several instances, we have spoken with risk managers who
are also the head of their sustainability function. Wearing
these two hats may be a good strategy. However, it also can
come with pitfalls. Potentially the advantage of having a risk
manager ‘independent’ from sustainability is that they can offer
a different perspective.
We have also heard risk managers regularly mention the
importance of ‘culture’, which is difficult to define but also – and
crucially – hard to change. This is why it is important to establish
the context and analyse the key people in your organisation to
effect change in the realm of sustainability.
For external matters, the effect of changes in public opinion
and policy, with EU and international goals for carbon
neutrality, sustainable investments and social responsibility,
are less specific. The effect on the business may be gradual or
could happen all of a sudden (as in the case of the COVID-19
pandemic). These unforeseen events could be more serious in
the long term.
Internal factors to consider
Map your internal stakeholders
Is there a sustainability colleague or department?
Who else would be good to involve?
Who needs to be involved?
Consider your governance structure
Is there an important committee to influence/be part
of? What are your reporting lines? Who are the key
influencers or sponsors of risk and sustainability?
Consider organisational culture
Do you have to push this, bottom-up? Is the
direction coming from the top management?
External factors to consider
Map your external stakeholders
Suppliers, customers, investors, but also since
sustainability is broader this also means
considering the communities you operate in
Local, national, and international environment
Rules and regulations, cultures and norms, etc.
Your organisations industrial sector
For instance, if in energy is there a heightened
scrutiny on environmental performance?
13. 13
The time horizon is a necessary clarification to address the management discussion on which topics to focus attention and balance
the expected impacts.
The impact of external factors – difficult to map and estimate -
could be a ‘reputational’ risk for the company to be qualitatively
evaluated by the management.
Time horizon
It is important to analyse sustainability risks by their potential
impacts on operations and strategic goals while applying a
time scale. This is standard risk management practice, but for
sustainability, the time element is likely to be more important
than for most fortuitous risks. This means a strong case for
resource allocation will need to be made.
In the diagram below, we provide a visual idea of areas for
consideration in setting the time horizon. Fundamentally, the
sustainability approach should be aligned with the overall
strategic plan of the organisation. You can try setting your
horizon on sustainability risks the same as for other risks. The
longer-term risks will likely be part of the company risk profile,
but may not currently fall into the heat-map due to not being
as immediate as other risks.
Align with organisational
strategic plan
Align with same time
horizon as other risks
Align with policy/
regulatory targets
· Often 3-5 years in range
· Where do you want to be with
sustainability in short, medium
and long term?
· Keep in mind that sustainability
implies 'longer term'
· This also allows comparison with
other risks mapped through ERM
· Such as the 2050
climate-neutrality goals
· This orients towards
longer-term thinking too
14. 14
Risk Identification and Prioritisation
The key question to ask is how would you normally identify
risks?
• If your approach is based on keeping a risk register, then
you can consider thinking about ESG/sustainability risks in
this register or catalogue.
• If the approach is to set-up a committee of colleagues and
discuss the various perspectives, then perhaps the best
idea is to also bring in a sustainability perspective.
• Several risk managers sort their risks into buckets, such
as ‘strategic – operational – external’. If this is the case,
then adding a sustainability overlay to this existing process
could be helpful.
• Or, you may wish to think about it differently and set up a
deep analysis of all sustainability risks on your radar.
ESG category Risk area Risk events
ENVIRONMENT Climate change Changes in policy and regulatory context
Timely development of innovative and eco-responsible products and
technologies, supporting reduction of CO2 emissions and consumer preferences
Effective deployment of industrial and logistics carbon footprint, supporting
reduction of energy consumption in production processes in favour of
renewable energy, etc.
Business interruption due to chronic (e.g., temperature increase, precipitation,
etc.) or extreme events (e.g., floods, cyclones, etc.) on key company assets – i.e.
physical risk
Responsible use of
natural resources
Optimisation of material cycles in industrial processes, in terms of recycling,
re-using parts, reconditioning components and waste management
Preservation of biodiversity and land use
Sustainable water management
Table idea for ESG risk identification
15. 15
The above list should be adapted, customised and finalised through consultation with your colleagues and management.
ESG category Risk area Risk events
SOCIAL Human resources
management
Protection of occupational health and safety
Attraction, retention and professional development of talents
Diversity, equal opportunities and well-being within the organisation
Product liabilities Product reliability, guaranteeing the compliance with quality and safety
regulations
Company impact
in communities in
which we operate
Breach of trust in local areas
Balanced governance and distribution of added value
GOVERNANCE Business ethics and
integrity (corporate
behaviour)
Prevention, detection and countering any unlawful behaviour by employees
and collaborators (incl. corruption, extortion and bribery) and compliance with
related national and international legislation
Adoption of responsible procurement practices across global value chain,
preventing ethics violations
16. 16
Weestablishedanassuranceworkinggroupwhereallassurance
parties work together. We start from risk-based topics and
follow-up and report on those. This group meets quarterly. And,
we have a dashboard on this, where we look into prevention,
monitoring and reaction/action (including remediation action
taken those) on the sustainability topics that can affect us.
– Risk manager, Finland
The identification and assessment of sustainability risk are
an integrated part of [our company’s] process for identifying,
quantifying and managing risk. Hence ESG concerns are in focus
at all levels and functions of the organisation. ERM is also part
of the team putting together the annual sustainability report.
– Risk manager, Sweden
Environmental risk: We
have worked with other
departmentstoidentifysome
key environmental risks,
such as a water shortage.
– Risk manager, Sweden
We are now working on improving this activity of risk analysis
concerning ESG-topics. We will do this by surveying our top- and
middle- management on their view on potential risks related to
ESG in their department. By doing so we aim to improve and
expand our risk universe and to have all of these events for
consideration in our risk analysis
– Risk manager, Italy
Social risk: The Covid-19 situation allowed risk managers to
showtheiraddedvalueintheprotectionofhumancapital,which
is key. For instance, last year I worked with the HR Department
to improve travel risk for our employees abroad. The problem
we had was to follow our travellers, to localise them and to
communicate with them. The travel tracker tool provide by
our supplier allows the HR Director and me to assess risky
situations more quickly and know who can be affected by them.
– Risk manager, France
Governance risk: For governance risks, I work closely with the
CSR Department, and it is a good point, since it is not always
the case in other companies. I bring them the risk mapping
methodology, a non-specialist view and my knowledge of other
related risks. We build a strong and complementary team.
– Risk manager, France
We have to encourage our
people to be sustainability-
minded and make it part of
our DNA. We have formalised
the CSR role, and we also
work with external parties
to look into various aspects
of how we operate. For
example, how much paper
we go through, how much garbage we produce, how much
electricity we use, etc. This was part of our normal being and
doing, but now we have formalised the role, so it makes sure
that there is really someone looking into these types of risks.
– Risk manager, Belgium
Risk identification and ways of looking at ESG
risks - examples from risk managers
17. 17
The above sample of ESG risks will also support the development of a common language on ESG risks within the organisation. It
should allow the risk manager to see whether there are gaps in the existing risk catalogue.
This analysis should leave the risk manager with a picture of how ESG risks are currently managed and treated within the organisation.
Once discussed with the top management, the identified risks can be tracked in the overall risk register (or catalogue, however it’s
defined within your organisation), together with other business risks. A specific classification as ‘ESG-related risks’ could be highlighted
as below.
Sample of risk register/catalogue integrated with ESG-related risks:
Since the aim of the ERM model is to focus on the main critical risks could negatively affect the achievement of strategic targets, the
results of the risk Identification phase will be a list of high priority risks on which to focus the next steps. Such sustainability risks will
be part of that list.
N° Risk description ESG-related
Priority
current year
Changes
from previous year
1
Timely development of innovative and eco-responsible
products and technologies, supporting new mobility
solutions in the automotive industry
Yes High New risk
2
Dependence on key critical suppliers that are in a single
sourcing relation and/or not financially reliable that
could compromise the business operations
- Medium Confirmed
3
Unfavourable change in public opinion regarding
organisation's product due to perception it is no longer
green or sustainable.
Yes Medium No change
18. 18
Risk Assessment and Treatment
The risk assessment phase aims at estimating the potential
exposure of a risk by quantifying its likelihood and impact. With
regards to sustainability, the assessment must be broader.
It must also consider the potential effects on the company’s
stakeholders, the reputation of the company and its longevity.
Matching the risks and possible impacts to the strategic
objectives of the company is fundamental in the area of
sustainability. This also requires the strategic objectives to be
clear!
From our discussions with risk managers, we see that a key
impediment to getting the risk assessment right at this stage
is a shortage of precise information. While you could argue
that there is more information available on sustainability than
ever before, the trick is finding the specific information that
is going to tell you most about that risk. It may be relatively
straightforward to assess the short-term consequences of
some risks, such as a fire in a factory, but secondary impacts
can be difficult to quantify.
The risk management function can be the centre of
competence for risk assessment and treatment drawing on
other expertise within the organisation and reducing silos.
Improving cross-function collaboration may involve building
stronger relationships with other functions, such as research
and development and engineering, etc.
If need be, the risk scoring scales defined in the ERM framework
should be revised to provide more weight to those longer-term
risks.
19. 19
Some examples of approaches to sustainability risk assessment
ESG Risk Analysis Approach Output
Risk of business
interruption due
to extreme events
(e.g., floods,
cyclones, etc.)
on key company
assets
Objective: Identify the key/strategic production plants potentially exposed
to extreme weather events and evaluate the related resilience level.
How: Using a specialised weather forecast service and related modelling
of the evolution of natural catastrophic risks (NatCat) on a worldwide scale,
it is possible to match the geographical location of each production plant
with the NatCat exposure.
Each plant and specific NatCat risk should be evaluated along with the
existing counter-measures that could mitigate the consequences (e.g., site/
buildings elevation, presence of underground floors, etc.). Finally estimate
the potential business interruption in case of risk occurrence.
Note – A second level of analysis, more structured and locally managed,
could be useful, depending on available resources, to evaluate potential
consequences on the company supply chain, availability of roads and
transport, etc.
• List of production plants
potentially exposed to
specific NatCat risks.
• List of existing
countermeasures
mitigating the risk
exposure
• Business interruption
estimate (economic
impact)
• Action plan with further
countermeasures to
implement
Social uprising/civil
disobedience in
multiple countries
(inspired by
France’s Gilets
Jaunes, for
example)
Objective: Identify any concrete effects in terms of people, business
operations and company performance that this kind of event could
generate.
How: Map the potentially affected company perimeter (e.g., locations,
countries, number of involved employees, expected timing, etc.).
Define a risk scenario estimating the potential interruptions to business,
key possible physical impacts to physical infrastructure and supply chain,
and quantification of related economic-financial losses and any indirect
effect. Map any existing/timely implemented countermeasures, such
as business contingency plan, adoption of teleworking / health & safety
arrangements, etc.
• Map of company perimeter
potentially exposed to risk
• List of existing
countermeasures
mitigating the potential risk
exposure
• Risk estimate (economic/
financial impact and any
other indirect effects)
• Action plan with further
countermeasures to
implement
20. 20
1. They can become part of regular risk reporting to top
management and the board of directors
› the responsible committee at working-level (which may be
audit, risk, governance or CSR) will analyse sustainability topics
with a view to making the sustainability risks relevant to the
overall strategic direction of management and the board.
2. Sustainability risk could be treated separately until it
becomes more understood within the organisation
› for consideration is to have a different report for the
sustainability-type risks to raise attention to them. A
pitfall here could be that it creates reporting overlap.
3. They will be input for sustainability self-assessment
questionnaires, such as for the Carbon Disclosure
Project, that require companies to describe the main
risks and opportunities with regard to ESG topics.
› Negative events may be at the same time translated in
business opportunities. For example, the development of
disruptive technological innovation and a consequent loss of
market share could generate an opportunity to invest in other
innovations that increase volumes, margins and market share.
4. They will be disclosed in the Non-Financial Reporting
Statement and used as input to the materiality
assessment process.
› identified ESG risks can be associated with specific ESG
aspects, then subject to a materiality evaluation in compliance
with the EU Non-Financial Reporting Directive.
Risk reporting, Communication and Disclosure
How do you report, and what do you report normally? Communication and collaboration are vital. A pre-requisite is to create and
use a common language. This starts with fundamental questions such as what is sustainability to your organisation and what is a
sustainability risk?
These terms must then be defined within the context of a methodology and framework, such as by integrating ESG-related risk
assessment into a consolidated ERM framework. To create coherence, the company’s sustainability goals should be mapped with
the risk framework across the enterprise.
The results of sustainability risk assessment can be communicated for different purposes:
21. 21
FERMA SUSTAINABILITY COMMITTEE MEMBERS
Chair
Valentina
Paduano, ANRA
Tapio Huovinen,
FINNRIMA
Leopold Larios,
AMRAE
Maria Isabel
Martinez Torre-
Enciso, AGERS
Maja Sustersic,
SI.RISK
Zhetcho Kalitchin,
BRIMA
Mario Ramírez
Ortúzar, AGERS
Adriana Cavaliere,
BELRIM
Nataliya Todorova,
AIRMIC
Annemarie
Schouw, NARIM
Alberino
Battagliola, ANRA
Secretariat
Typhaine
Beauperin, FERMA
Adri van der Waart,
NARIM
Philippe Noirot,
AMRAE
Secretariat
Charles Low,
FERMA
22. 22
REFERENCES
Page 3
FERMA COVID-19 Report 2020
https://www.ferma.eu/publication/covid-19-ferma-survey-
shows-risk-managers-contributions-to-response-and-resilie
nce/
FERMA European Risk Manager Report 2020
https://www.ferma.eu/publication/the-european-risk-
manager-report-2020-key-findings/
Page 4 in the green box
World Business Council for Sustainable Development
(WBCSD) and COSO, Applying Enterprise Risk Management to
Environmental, Social and Governance-related Risks
https://www.wbcsd.org/Programs/Redefining-Value/Business-
Decision-Making/Enterprise-Risk-Management/Resources/
Applying-Enterprise-Risk-Management-to-Environmental-
Social-and-Governance-related-Risks
Task Force on Climate-Related Financial Disclosures (TCDF),
Recommendations on the Task Force on Climate-related
Financial Disclosures https://www.fsb-tcfd.org/
ISO 31000 ‘Risk Management’ https://www.iso.org/iso-31000-
risk-management.html
ISO 26000 ‘Social Responsibility’ https://www.iso.org/iso-26000-
social-responsibility.html
Page 5
UN Sustainable Development Goals, https://sdgs.un.org/goals
European Green Deal https://ec.europa.eu/info/strategy/
priorities-2019-2024/european-green-deal_en
European Climate Law https://ec.europa.eu/info/law/better-
regulation/have-your-say/initiatives/12108-Climate-Law
Overview of sustainable finance, https://ec.europa.eu/info/
business-economy-euro/banking-and-finance/sustainable-
finance/overview-sustainable-finance_en
Page 6
Directive 2014/95/EU of the European Parliament and of the
Council of 22 October 2014 amending Directive 2013/34/EU as
regards disclosure of non-financial and diversity information by
certain large undertakings and groups Text with EEA relevance
(aka the NFRD) https://eur-lex.europa.eu/eli/dir/2014/95/oj
EU taxonomy for sustainable activities https://ec.europa.
eu/info/business-economy-euro/banking-and-finance/
sustainable-finance/eu-taxonomy-sustainable-activities_en
European Commission’s public consultation on Sustainable
Corporate Governance, https://ec.europa.eu/info/law/better-
regulation/have-your-say/initiatives/12548-Sustainable-
corporate-governance/public-consultation
PACTE, the Action Plan for Business Growth and Transformation,
https://www.gouvernement.fr/en/pacte-the-action-plan-for-
business-growth-and-transformation
OECD Due Diligence Guidance for Responsible Business
Conduct https://www.oecd.org/investment/due-diligence-
guidance-for-responsible-business-conduct.html
Questions and answers: The Recovery and Resilience Facility
https://ec.europa.eu/commission/presscorner/detail/en/
qanda_21_481
Page 7
MSCI, ESG 101: What is ESG? https://www.msci.com/our-
solutions/esg-investing/what-is-esg
23. Further reading:
European Parliament ‘Environment policy: general principles
and basic framework’ https://www.europarl.europa.eu/
factsheets/en/sheet/71/environment-policy-general-principles-
and-basic-framework
NGFS ‘first comprehensive report: a call for action’ https://www.
ngfs.net/en/first-comprehensive-report-call-action
BaFin ‘The Guidance Notice on Dealing with Sustainability Risks’
https://www.bafin.de/SharedDocs/Veroeffentlichungen/EN/
Meldung/2019/meldung_191220_MB_Nachhaltigkeitsrisiken_
en.html
OECD Business and Finance Outlook 2020: Sustainable
and Resilient Finance, Chapter 3 “Corporate governance
and the management of ESG risks” https://www.oecd-
ilibrary.org/sites/306482b9-en/index.html?itemId=/content/
component/306482b9-en#section-d1e5121
Schulte, Jesko and Sophie I. Hallstedt ‘Company Risk
Management in Light of the Sustainability Transitition’ from
Sustainability journal Sustainability 2018, 10, 4137; doi:10.3390/
su10114137
CRO Forum ‘The heat is on: Insurability and Resilience in a
Changing Climate’ https://www.scor.com/en/download/