According to WTW’s 2022 ESG Global Risk Managers Survey, more than half of risk managers are actively involved in their organization’s ESG efforts, but 77% believe they should play a more active role in ESG strategy and initiatives.
WTW polled 312 corporate risk managers from around the world. One-third said ESG is already influencing risk management strategy, and another 9% said it will in the next two years. However, only 35% of risk managers in North America – and even fewer in other regions – expect to have documented ESG risk management targets and milestones within the next two years.
Nonetheless, ESG is high on corporate agendas, with 74% of respondents saying that improving their ESG score is a top priority for their company. Regional differences are significant, with Asia Pacific companies prioritizing ESG more than North American companies, according to the survey. In total, 24% of US companies have established ESG risk management goals with specific deadlines.
The majority of respondents believe that managing environmental liability risks has an impact on ESG standing, and three-quarters have taken steps to address environmental liability and climate risks (four fifths in APAC). Many, however, have done so without establishing specific goals or key performance indicators.
Due diligence related to risk advisor, broker, and insurance-carrier appointments and reviews is where risk management and governance intersect the most frequently. Two-thirds of risk managers say they are heavily involved in these areas, compared to around 40% who do similar work on suppliers and investment opportunities. Data privacy and cyber risk (97%), workplace safety (88%), product liability (79%), and employment practice liability (78%), were identified as key social-risk-management priorities by risk managers.
“Many organizations equate ESG risk with reputational risk,” said Lisa Lipuma, Director of Enterprise Risk Consulting, North America, WTW. “However, to manage ESG effectively, it must be broken down into measured, manageable risks, and a risk management process established around them.” Companies should first define ESG, then use a risk-mapping exercise to identify the specific risks they face. Finally, before incorporating each risk into the enterprise risk management framework, they should assess its impact, likelihood, and velocity. Our ESG analytical capabilities can assist our clients in understanding their ESG exposure and implementing ESG risk mitigation strategies.”
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