FERMA issues first sustainability risk guide

FERMA issues first sustainability risk guide | Insurance Business America

FERMA issues first sustainability risk guide

The Federation of European Risk Management Associations (FERMA) has released its first sustainability guide specifically targeting risk managers across the continent.

The document, titled “People, planet, performance – The contribution of Enterprise Risk Management to Sustainability”, provides practical guidance on incorporating sustainability goals into enterprise-wide risk management, FERMA said. It incorporates the best practices of sustainability risk management from leading risk managers around the world, and is now available for download from FERMA’s website.

“Part of the role of risk managers is to translate these initiatives into their implications for their organisations in terms of risks and opportunities,” said FERMA sustainability committee chair Valentina Paduano.

According to the committee, risk managers ought to encourage businesses to frame decisions in terms of financial, environmental (including climate and biodiversity), social and human effects, ensuring resilience and long-term value creation.

Sustainability risk management is a business process supporting the company’s sustainability goals, FERMA added. It aims to align sustainability with risk management by using the principles of enterprise-wide risk management.

While some risk managers have been doing it for years, the level of maturity at corporate level is quite varied in terms of managing sustainability. The guide will instruct risk managers on how a sustainability risk management process and strategic goals and risk appetite are linked.

The guide also includes a sample risk register/catalogue incorporating sustainability-related risks, such as environment, social and governance (ESG) issues, possible approaches to risk assessment, and guidance on risk communication, reporting and disclosure.

“One of the tools of the risk manager, enterprise risk management, provides a robust framework to identify and manage the impacts and opportunities coming from our evolution to sustainability,” said Paduano. “We believe that People, planet, performance will contribute to sustainability and, therefore, the resilience of our companies.”