Why a solid ERM framework should include sustainability
The evidence is undeniable on both fronts.
One of the first empirical studies on enterprise risk management (ERM), showed firms that have implemented ERM enjoy an average 16.5 percent premium in market valuation.
The Journal of Risk and Insurance reported that poignant statistic in its 2011 article titled “The Value of Enterprise Risk Management.” The statement also helps explain why Chief Risk Officer (CRO) appointments have become commonplace as organizations adopt some type of risk management framework, so many companies are beginning to adopt some type of risk management framework.
In addition to ERM, sustainability has become a top priority for executive boards. In the last few decades, the concept of sustainability has matured beyond a mere statement of a company's carbon footprint. Sustainability affects nearly every aspect of the business.
You might be asking, why put ERM and sustainability in the same discussion?
As industries expand and economies become exponentially more complex, the convergence of these topics becomes more obvious—better, more informed business decisions.Academic studies find companies with high ratings for corporate social responsibility and environmental, social, and governance factors enjoy a lower cost of capital for debt and equity.
From reputation to strategic gains, sustainability should directly bolster any ERM program.
The white paper, The Role of Sustainability in Enterprise Risk Management, explores how integrating these two concepts can lead to making better business decisions and add value to your organization. Authors James Lam, President of James Lam & Associates, and Francis Quinn, Director of Sustainability Technologies at Workiva, provide their expertise on how sustainability and ERM can work together.
Get your copy of the white paper here.