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No one immune to environmental risks.

If one topic stood out from all others at OK '92, it was the environment. Today, risk managers must deal with a whole host of risks arising from their organizations' impact on the environment. Such risks include major industrial accidents, directors' and officers' liability, and accidents involving the transportation of hazardous goods. While some sessions tackled these environment-related topics directly, others more broadly covered environmental audits and impact assessments, risk communication and the public's perception of risk, strategic management approaches to protecting against environmental risk and the specialty nature of the environmental insurance market.

In one of those sessions, Lynn Johannson, director of E2 Management Corp. in Georgetown, Ontario, noted several examples of Canada's environmentally progressive outlook: Canada was the first nation to have a Green Plan, hosted the Montreal Protocol, developed a global water quality data base, and is to host the upcoming ECO-ED, a world congress follow-up to the global environmental summit in Brazil. She also noted that it has been as a result of the Canadian economy's reliance on the environment and natural resources that the nation has been a global leader in this area: "Historically we have not had an extensive manufacturing base compared to our original Free Trade partner [the United States]. Therefore, to ensure if nothing more than the status of our own standard of living, we must manage these resources extremely carefully."

Further making the case for managing environmental issues was Lloyd Brown, senior vice president for Sedgwick James Inc. in Toronto, who stated, "environmental liability is increasing and at an accelerated pace. Moreover, environmental liability is not well defined and certainly not something that we can quantify." Ms. Johannson noted specifically that if your business fails to effectively manage the environmental issue, it will find it difficult to do such things as: maintain good public relations; recruit the best people; borrow money; obtain insurance at a reasonable cost; retain able and reliable staff; sell its product; be invited to tender for new work; dispose of waste (at any cost); limit liability; avoid prosecution; and stay out of jail. As such, Mr. Brown adds, "risk managers will become the focus of their company's business strategy with regard to the identification, evaluation and management of environmental risks."

Since it is difficult, if not impossible, to know what the potential liabilities are - and therefore difficult to fully protect against them - sustainable development will likely become a fundamental method of environmental loss protection. Mr. Brown concluded that "businesses that do not put environmental issues at the top of their corporate agenda simply are putting their very economic survival at stake."

One method Ms. Johannson suggested to manage the environment is applying the philosophy and principles of total quality management. Some of the benefits to be derived from such an approach include: "an alignment of business strategy with the laws of nature; continuous improvement with measured results; and a customer, supplier and stakeholder alignment." Ms. Johannson noted several benchmarking programs that have been developed to manage the environment, one of which is the International Chamber of Commerce's Business Charter for Sustainable Development.

Some recommended changes included educating oneself about the surrounding environment that your operations impact, listening carefully to public concerns and "defining what a sustainable strategy is for your company, one that balances economic and ecological realities." Taking up this last point was Steve Osselton, senior vice president and national environmental coordinator for Sedgwick James Inc. in Toronto. He believes that sustainable development, defined as "economic activity that increases prosperity without the destruction of the environment from which all prosperity ultimately derives," should be accepted as "the ultimate corporate goal of an environmental management program."

The attainment of this goal requires the full acceptance of environmental strategic management by everybody in the corporation, from the board of directors on down.

Therefore, Mr. Osselton notes, the board should develop a clear, well-defined vision that the chief executive officers and senior managers must translate into specific goals and policies and fully back so that mid-level managers can integrate and effect them. "All employees must become keenly aware of what the corporate goals are, how they are to be met, and what everyone's environmental responsibilities are," he adds.

Exactly where does the risk manager fit in? Mr. Osselton believes the risk manager, who brings expertise in risk identification and control, "should play a vital part in the communication of risks to all levels of the organization," and assist with establishing priorities based upon his or her risk assessments that "serve as a springboard for all environmental risk activities." One warning did come from Mr. Osselton: there is a danger in relying on compliance as the environmental goal. Since government legislation is a moving target, you would no longer be managing -"instead you're playing catch-up. Compliance is a check, not a goal."

Conference Chair Len Marks noted that the 1991 conference in Edmonton began the focus on environmental impairment: "All we tried to do this year was expand upon that." J.A. Tony Bridger, risk manager for the Bank of Montreal and RIMS first vice president, found that the environmental emphasis "sparked an exchange of ideas between the U.S. and Canadian participants," demonstrating how this is an issue without borders.

Program Chair Grant Suffel added that "the environment is an issue that we felt needed to be addressed and that is why we gave it a high profile emphasis by choosing the opening plenary speakers that we did." Those plenary sessions featured the renowned scientist and environmentalist, Dr. David Suzuki, and Richard Underwood, former technical assistant to the director of photography and television technology for NASA. Mr. Marks adds that Dr. Suzuki, also known to many in Canada as "Dr. Gloom & Doom" for his pessimistic environmental forecasts, was chosen as a speaker to help inform risk managers of "the basic problems and origins of environmental impairment that today exhibit a long-term effect and destruction" so graphically depicted by the satellite pictures presented by Mr. Underwood.

True to his nickname, Dr. Suzuki drove home his point of the need for a radical change in the way businesses - and the public in general - view the environment by stating that "the very fabric of the planet's life support system is being radically altered by human activity. And this is creating an uncertain future in which the use of past data becomes far less reliable" to predict the consequences of ozone depletion, global warming, deforestation, species extinction and ocean pollution.
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Title Annotation:Canadian Risk Management Conference
Author:Kurland, Orin M.
Publication:Risk Management
Date:Dec 1, 1992
Previous Article:Canada's kaleidoscope.
Next Article:Risk communication, mitigation and uncertainty.

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