Environmental risks outweigh operational risks for CXOs, finds study

The study is based on responses from 75 executives covering directors, managing directors, chief executive officers, chief technology officers and chief financial officers

In a change of risk perception among Indian businesses, a higher number of business leaders now anticipate environmental risks to occur more frequently than operational risks, according to a study by Bloomberg LP.
 

The study collated responses from 75 executives, including directors, managing directors, chief executive officers, chief technology officers, and chief financial officers.
 

Approximately 38 per cent of all respondents expressed concern over the high frequency of events tied to environmental risks. In contrast, smaller percentages—31 per cent, 32 per cent, and 36 per cent—anticipated such frequency for operational, regulatory, and technological risks, respectively (chart 1).

 

Over the past decade, leaders' readiness for climate-related risks has notably improved. Overall, 83 per cent of the CEOs, directors, and managing directors are more confident in their sector's risk preparedness compared to ten years ago. Nonetheless, 17 per cent remain doubtful about the efficacy of their safeguards against climate change risks (chart 2).

 

Close to 19 per cent of respondents from smaller companies, valued between Rs 500 and 1000 crore, also identified environmental risks as their principal concern. Companies are increasingly acknowledging the impact of climate change, with a substantial portion of business leaders asserting that ESG (Environmental, Social, and Governance) risks account for more than half of the risks in their respective sectors (chart 3).