Environmental and physical risks pose a growing threat to organisations, particularly as the world is faced with climate change, massive environmental challenges, increasing natural disasters and terrorism.
These risks arise from natural disasters, weather events, environmental degradation or other physical risks to the assets or operations of an organisation These can also emanate from regulatory non-compliance, socio-economic or crime events.
Businesses will become increasingly vulnerable to climate change and responsible for becoming good environmental citizens. There are ever-increasing physical threats to business both from natural disasters and risks that now transcend physical boundaries such as diseases and viruses.
The impact of environmental breaches can manifest in regulatory breaches, fines and reputational damage. These can impact adversely on the operations of the organisation, its financial position and on its balance sheet.
Environmental and Physical risk management typically starts with a review of the businesses environmental footprint, its use of water and power, recycling policies, vulnerability to and reliance on scarce resources, effluent and waste disposal and compliance with applicable policies. The owners and managers then need to do a high-level assessment of the vulnerability to the physical threats facing the business.
Effective management of environmental and physical risks will ensure that the business makes deliberate and conscious decisions about its environmental impact and that it will become consciously aware of all the physical threats facing it.