Environmental, social and governance factors in country risk management: a new horizon
This publication focuses on the core functions of the insurance industry: risk transfer and investments. In order to benefit long-term business success and investment performance and to help the reputation risk management of insurance companies, it proposes: (i) to integrate environmental, social and governance (ESG) factors relevant for country risk assessment into the business processes of an insurance company; (ii) to define the relation to the United Nations Global Compact principles; (iii) to implement ESG country risk management approach by assessing environmental, social and governance elements using appropriate factors such as disaster risk reduction strategies and coastal hazard countermeasures; (iv) some lessons learned and basic approaches using ESG factors; and (v) case studies, including a comprehensive ESG risk framework.
The ideas set out in this publication are intended to prompt risk professionals to include ESG country risk management in their toolkits in order to help create a proactive, pre-emptive risk management culture which enables disciplined risk-taking and will also assist in protecting the reputation of the companies undertaking it.
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