The Critical Importance of Sustainability Risk Management

Sustainability risk management deals with emerging environmental and social justice risks. Risk managers will need to anticipate these risks and develop appropriate risk mitigation and financing strategies for them, but since many sustainability risks are new and emerging, the best strategies for dealing with corporate sustainability might not be apparent. But in a world where the rules of business are changing faster than ever, now is not the time for ignorance.

Examples of emerging sustainability risks are useful in demonstrating their broad scope. The Exxon Valdez Alaskan oil spill in 1989 was catastrophic in terms of environmental damage and disruption of local businesses. The $5 billion punitive damage award, which has still not been settled, was one of the largest at the time. Asbestos resulted in the worst product liability toxic tort to date, and instead of abating as was expeered, claims have begun to increase again. Superfund liabilities have been incurred for over 20 years, and continue to disrupt organizations. New litigation involving silicosis, MTBE (a gasoline additive), perchlorate (a main ingredient in rocket fuel) and PFOA (a chemical used in the production of Teflon), have the potential to create additional liabilities.