| | JUNE 20198CIOReviewThe evaluation of sustainability practices and risk management belong together. Here is why: combined, they deliver enhanced enterprise value ­ across sectors, across geographies and across regulatory regimes.The integration of sustainability dimensions within a company's risk function has not yet received the attention it deserves by corporate observers. Most likely, it is due to the fact that it challenges the ultimate mandate of traditional enterprise risk management (ERM) frameworks, namely, to minimize (or transfer) the residual risk of the business. By "residual risk" we mean the amount of aggregate risk exposure that does not respond outright to standard mitigation practices. It also typically emerges as a byproduct of a company's evolving business model. In that context, credit, market or interest rate risks are well analyzed and observable real time while non-traditional risks such as sustainability are harder to consistently quantify. Yet, they create significant residual risk potential for an organization.While harder to consistently quantify, sustainability dimensions introduce significant residual risk potential for an organization along with a novel list of business opportunities. Sustainability risks have direct impact on enterprise value in the form of reputational risk, brand equity erosion, employee retention, customer satisfaction, not to mention the economic burden of legal proceedings to clear competitive market behaviors and instances of alleged corporate complacency over socio-environmental remediation. Recent headlines provide tangible evidence of the near-term effects of sustainability DELIVERING ENTERPRISE VALUE: THE CASE FOR SUSTAINABILITY AND RISK MANAGEMENT INTEGRATIONBy, Alessia Falsarone, SASB FSA, Managing Director, Portfolio Strategy and Risk, PineBridge InvestmentsIN MYOPINION
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