Why you should educate yourself before speaking to the Board
Following on from a new Munich Re report on climate change, StrategicRISK spoke to our 2018 Asia-Pacific Risk Manager of the Year and Ayala Corp’s group risk management and sustainability head, Victoria Tan, about why climate change needs to be a top priority in your business.
Climate-related losses in 2017 were the highest on record at US$340 billion dollars, as reported by StrategicRISK earlier this week. Severe flooding from Hurricane Harvey in Houston in combination with the accumulated losses from hurricanes, Harvey, Irma and Maria was rare and costly. Disaster events claimed more than 11,000 victims in 2017.
Climate experts predict that this intensity of extreme weather events is likely to become the norm, with raging wildfires and heatwaves also increasing losses.
Climate change and sustainability are within your remit as a risk manager at Ayala. What future issues do you foresee if all businesses don’t make this a top priority?
Climate change presents both risks and opportunities. Businesses should work together because no one will be spared from the effects of climate change.
What are the risks?
Climate change will impact resources that the businesses need in their product and service delivery. In addition to this, businesses are facing higher costs of product and service delivery. There is also a probability of business disruptions from flooding, typhoon, earthquake, social migration)
What are the opportunities?
There is an opportunity for savvy businesses to find solutions for responsible consumption policy, for example when it comes to sse of water, electricity, materials.
There is also an opportunity for businesses to engage in better stakeholder engagement which may help mitigate social issues such as child labour, inequitable distribution of wealth, among others.
One other that comes to mind is solutions for a circular economy that may be developed to another business model.
What initiatives have you helped the business put in place to tackle this issue?
We are starting the discussion on the integration of risks and sustainability. The more concrete initiative that we are doing is to include sustainability risk in our annual risk assessment process.
Based on our annual sustainability reporting process – we identified groupwide projects that we can carry to address issues that may be considered as climate change mitigation and adaptation.
We are reviewing our framework and align it with the on-going conversation on integration of risk and sustainability with global firms.
How can risk manager make sure the c-suite and Board listen and take action on climate change and sustainability?
Risk managers should read and educate themselves about climate change before talking to the C-Suites. Risk managers should also create scenarios together with the business units and agree what are the most pressing issues and if they can quantify it so that they will know what is the impact to the bottom line.
Remember, it is important to socialise the results with the CSO and CRO and other business units head. Practice and different points of view will enrich the exercise before going to the board.