How ESG factors are shaping risk management and the role of risk managers
WTW also examined how engaged risk managers are, and expect to be, in addressing ESG risks and pressures. We received responses from 312 companies around the world, employing more than two million people in total.
Our overarching conclusion from the results is that many risk managers have a clear role to play in developing and managing ESG strategies for organizations, but work is needed to define where best to focus efforts.
77% Believe the risk management function should take a more active role in ESG initiatives and strategy.
While more than 80% of organizations that have documented or are actively discussing climate goals say they have stated carbon or emissions targets, other climate and resilience risk management goals are frequently more vague or absent. Most respondents (54%) believe risk management practices in the environmental liability area influence their ESG standing. Accordingly, three quarters of respondents have taken actions to address environmental liability and climate risks. However, many have done so without specific goals or key performance indicators.
Three out of 4 respondents report having taken actions to address environmental liability, climate risk.
Over the past 3 years, has your organization taken actions to address any of the following areas?
Governance
Risk management and governance tend to intersect most frequently in due diligence linked to risk advisor and broker appointments and reviews. Wider risk management involvement in shaping governance policies is often patchier and compliance-focused. Only just over half of respondents, for example, say they work with procurement teams in areas such as assessing risks associated with supply chain management.
Lisa leads WTW’s Enterprise and Transition Risk Consulting practice for North America and has 15 years of experience in risk and insurance. Over the course of her career, she has led large strategic consulting engagements and pioneered the development of WTW web apps including Global Peril Diagnostic, a natural catastrophe and terrorism model, and Collateral Quantified, an actuarial reserving and negotiation tool. Lisa helps organizations navigate, quantify, and make efficient investments to control their strategic and enterprise risks. She is part of WTW’s Global Climate Strategy Task Force and takes a leading role shaping WTW’s Risk & Broking large account strategy.
Social
Many respondents identify key risk management priorities in areas such as data privacy and cyber risk (97%), workplace safety and product and employment liability, although they also acknowledge gaps their ability to influence procedures. There are concerns about the impact of hybrid work on employee safety and cyber risks. Many organizations also feel they need to develop a more comprehensive view of employee wellbeing to better promote employee resilience.