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ESG, risk and the role of risk managers

Risk managers have a clear role to play in developing and managing ESG strategies for their organizations, but work is needed to define where best to focus efforts according to a new survey conducted by WTW.

The survey saw participation of over 310 corporates globally and employing more than 2m people in total, was conducted between April and August 2022. The primary question that the survey looked at was on how ESG factors are impacting corporate risk management.

The survey also examined how engaged risk managers are, and expect to be, in addressing ESG risks and pressures. It found that risk managers have a clear role to play in developing and managing ESG strategies for organizations.

Three quarters of respondents (74%) said improving their organization's ESG score was a core focus for the business. However, while the majority of risk managers say their organizations have ESG goals, only 17% have documented targets with clear milestones for ESG risks.

While just over half of respondents say the risk management function (55%), and they personally (54%), are significantly involved in their organization's ESG 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 performance indicators.

Many respondents identify 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.



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