The pandemic is a wake-up call for companies: risk management to pursue development goals
1 july 2020
Covid-19 has kept entrepreneurs very busy the past few months. According to Managing Partner for Riskonet Turkey, Özlem Emgen, the pandemic has raised a renewed awareness in the corporate world that we have to address the issues facing our world and the environment in a sustainable way. “Companies want to align their risk management with the sustainable development goals of the United Nations (UN). It goes without saying Riskonet supports them in doing so.”
By actively pursuing the UN Sustainable Development Goals (SDGs), we make our earth a better place to live for everyone. When individuals, companies, institutions, governments and authorities actively pursue these goals, they contribute positively towards eradicating poverty, reducing inequality and combating climate change.
Growing awareness among entrepreneurs
Özlem: “The pandemic has changed the way business leaders look at the world. Many have become much more aware of their role, responsibility and influence on the world. I also see a growing awareness regarding the importance of ‘purpose’, of the need to make a positive contribution to the world and of the vulnerability of reputations. Sustainability receives much more serious and sincere attention than it did before the pandemic. Personally, I think Covid-19 is a wake-up call. Companies reflect on the question whether they are doing business in a way that does not harm the world, wonder whether they can start using cleaner producing methods and what this crisis means for their risk management. On an individual level, people are also looking what they themselves can do towards achieving a better world and how they can reduce their own footprint.”
More and more companies measure their performance against the seventeen UN Sustainable Development Goals. “Many of these goals overlap with aspects of our risk management consultancy. For instance goal number 7: affordable and clean energy and goal number 8: ensuring inclusive and sustainable economic growth and decent work. But also goals 9 and 12: innovation and sustainable infrastructure and ensuring responsible consumption and production patterns. Anyone choosing to actively pursue these goals must also be prepared to concentrate efforts on improving their risk management policy and framework, for which we can offer support.”
Clean sustainable world
In practice, goals and risk management overlap more often than you might think. A clean, sustainable world with a minimum of pollution and the lowest possible CO₂ footprint requires vision. But also the courage to make decisions and to invest in cleaner production processes, storage, transport and distribution. “The use of raw materials and fuels, for instance. All areas in which risk management experts can provide valuable advice with Sustainable Development Goals in mind.”
Helping risk management experts assess fire safety
A concrete example: anyone who wants to use renewable energy by installing solar panels on factory premises will have to arrange for the proper assembly and fire safety of the installations, often because it is an insurance company requirement. In this respect, Riskonet risk management experts can help assess fire safety and propose sensible measures. The pandemic and lockdown also got business leaders thinking about something else. “It is striking to see that many companies have become aware of the vulnerability of their supply chain as a result of the pandemic. Many companies in Turkey and elsewhere have suffered losses because goods could not be brought in from Asia for weeks because the economy and air traffic were at a standstill.”
“In many organisations, the pandemic has made people much more aware of their dependency.”
Managing Partner for Riskonet Turkey
Many questions for Riskonet
The vulnerability of the supply chain has led to a remarkable number of questions for Riskonet. “In many organisations, the pandemic has made people much more aware of their dependency. Clients are asking us to provide assessments of supply chain risks and to provide input on alternatives with less risk of dependency. For instance by focusing more on local suppliers,” Özlem adds that governments in an increasing number of countries are developing incentive tools to reward companies with cleaner production processes.
Increasing risk of serious reputational damage
Responsible consumption and production patterns – goal number 12 – are not only driven by business economics. “They go beyond turnover, profit, shareholders and financial risks. They are about future generations. Companies have been wanting to ‘do good’ for some time, for instance by taking on corporate social responsibility projects. Directors feel more than ever before that they are viewed with a critical attitude: do they have the intention to work towards a better world and are they succeeding? Doing good, and embedding this in your vision, mission as well as actions, is more important than ever. In addition, demands are higher than even before; society is holding companies accountable. In other words: if you have not organised this properly, you will be more likely to suffer serious reputational damage. It has become clear to many directors that reputation is one of a company's most important assets, but is also easy to damage and difficult to repair.”
Özlem notices that Turkish and many European companies seem to have definitely made the switch. “During the Covid-19 lockdown awareness has grown significantly. Almost all of our customers have gained new insights about the way they work. We like to provide input, as sustainability has always been part of our integral approach. It is just that the big picture has become bigger!”
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