Putting risk management into the corporate sustainability context

Abstract

Purpose This research investigates what is driving corporate sustainability within South African organisations and to what extent these drivers intersect with risk management. This is important as new and emerging business risks are proving to be directly linked to sustainability issues having implication on long-term organisational performance. This implies that sustainability and risk should not be mutually exclusive. Design/methodology/approach By means of semi-structured interviews, sustainability managers of 11 South African organisations were engaged to gain insight relating to the immediate sustainability issues, risk landscape and the possible intersection between these issues within their organisations. Questions posed were around drivers of sustainability, risks to an organisation, changes in risks, relationship between sustainability and risk. By means of thematic analysis key issues emerging from the responses of the sustainability managers could be identified and themes determined based on similarities. This was followed by trend analysis of the frequency of responses to different sustainability and risk themes to interpret the data. Findings Results reveal that sustainability and risk management are similar in their intent purpose and output both aligned towards reducing impacts and managing uncertainty. However even though sustainability has increasingly become integral to business its value contribution and linkage with risk management differ significantly amongst organisations. This suggests that sustainability and risk management remain two distinct frameworks for managing uncertainty in business. Originality/value Research on integrating a sustainability perspective in risk management is at an early stage. To understand and respond to emerging risks, organisations need to integrate sustainability and risk management into their decision strategies – not only to minimize potential losses but also to exploit new business opportunities arising from the sustainability agenda. Future research should be directed towards advancing systematic methods for identifying and managing sustainability risks such that key sustainability challenges are firmly embedded in the risk management of the business. In this regard, organisations would be in a position to build resilience into their business models and operations.

Sustainability, Uncertainty, and Risk: Time-Frequency Relationships

“…The second research trend examines the topic concerning corporate sustainability and risk management [20][21][22][23]. For example, reference [21] is essential for understanding the drivers of corporate sustainability within South African organizations and how they intersect with risk management.…”

“…The mention of internal and environmental factors reinforces the complexity of the relationships, indicating that implementing sustainability initiatives involves considering various influences. Furthermore, reference [20] emphasizes the need to explore the impact of corporate sustainability assessments on risk exposure, specifically focusing on the ESG paradigm. By investigating the relationships between sustainability performance and firm risk, the study contributes to risk management research and helps understand the role of sustainability disclosures in decision making.…”

Sustainability risk management: Are Malaysian companies ready?

“…The recent implementation of sustainability risk management (SRM) is becoming more integral, as conventional risk management could not effectively manage sustainability issues [ 14 , 15 ]. Based on a survey by the World Business Council on Sustainable Development in 2017, 70 % of practitioners highlighted the inadequacy of current risk management strategies in mitigating sustainability issues.…”

Enterprise risk management and firm performance: Exploring the roles of knowledge, technology, and supply chain

“…The modern business world faces challenges like rapid technology changes, global supply chain uncertainties, and the impact of macroeconomic events (Fierro Hernandez & Haddud, 2018;Lüscher & Lewis, 2008;Peker et al, 2022). These challenges, including both traditional and emerging risks, can negatively affect business performance and sustainability (Haywood, 2022). To tackle these issues, many companies are adopting ERM, a comprehensive system successfully applied across various industries and company sizes, positively impacting value, size, and profitability (Hoyt & Liebenberg, 2011).…”