A about four to five years ago management consulting firm Oliver Wyman looked at the largest emerging risks facing companies and climate was a standout.
From there, the firm began to work on, including its collaboration with the U.N. Environment Program Finance Initiative, to better manage and understand those risks, says Edwin Anderson, partner at Oliver Wyman.
"Something we've seen is a transition. We're seeing what we think of as ESG risks," Anderson says, noting that he wanted to differentiate that from ESG impact. Understanding what the risks are can include asking the following questions: "Am I exposed to water scarcity? To social instability? To issues of commodities I can no longer get?"
Anderson says those risks are becoming more common and there's a growing need for companies to understand their exposure to various risks.