We utilise a framework of inter-related processes and methodologies to aid us in the assessment and management of business risks. The application of these processes to the risks associated to sustainability practices allows a defined strategy for managing a portfolio of social, environmental and economic risks.
The Priority Risk Management Process
A four-stage cyclical process serves as our framework for assessing business risks:
Identification: By considering the three elements of sustainability (social, environmental and economic responsibilites), an extensive list of possible risks to the business is compiled with no preference to priority.
Prioritisation: The prioritisation of risks is undertaken separately but in parallel for the three elements, as their severities are not necessarily directly comparable. Risks with a high consequence are identified and taken forward for senior management attention. To ensure timeliness, risks are reviewed periodically and as material events take place.
Action: For each priority risk, ownership is agreed, actions identified and key performance indicators assigned. While risks are identified and prioritised by senior management, the actions to be taken are identified within the relevant division(s).
Monitor and Report: The implementation and effectiveness of the system and actions are monitored on an ongoing basis using key performance indicators wherever possible. Senior management is informed of risk, action status and applicability of the system through regular reporting. A corporate sustainability report is issued demonstrating robustness of the system and achievement of indicators.
Linking business risk to stakeholder engagement is an issue that invites universal discussions amongst sustainability business experts. For the Corporation, our strategy for competitive advantage illustrates the synergies between these two factors. Based upon the accepted Michael Porter model for competitive advantage we position the principal inputs, components of risk (cost leadership) and engagement (adding value), to develop the process for corporate focus/strategy. Through this application, we align and prioritise our resources to provide value leadership, positive stakeholder buy-in and the end strategy of sustainable competitive advantage.
