Final Assignment: Triple Bottom Line Concept

Résumé du document

Risk is an important part of all businesses in the world. No business can exist without confronting with high and low, evitable and inevitable risks. For this purpose, the process of risk management is one of the most crucial activities of a business. Risk management is one of the most preeminent activities carried out in any business in order to eliminate and mitigate various risks involved in its operations. With the help of risk management strategies, a company can either avoid the occasion of risk bearing event or limit losses in the consequence of high risk. The risk management concept has increasingly been extending its focus from typical financial perspective to environmental and societal perspective, known as the triple bottom line.

Extraits

[...] However, under triple bottom line, the gold mining company's business risk will extend to community, social and environmental risks associated with the gold mining operations. For instance, public or community reaction to any change in the company's gold mining operations etc would also be say as risky (Martin, Bowden and Lane, 2002). Triple bottom line risk management encompasses the evaluation of risk of a business or a project with respect to its impact on the financial side i.e. income statement, balance sheet and cash flows, environmental aspect i.e. [...]

[...] For instance, Dupont followed environment friendly procedures by eradicating carbon emissions by over 60%. (Dean and McMullen, 2007). The triple bottom line risk management strategy implementation can be accomplished by providing the customers with right information on the environmental friendly use of products (Dean and McMullen 68). If usage of some products bears the potential to cause harm to the community, it is important to provide right information helping the customers to make informed decision. For example, Horizon Organic Diary took the initiative to inform the customers about organic and conventional milk printed right on the carton of milk. [...]

[...] The financial aspect of the triple bottom line approach includes factors like ROI, stock returns, profitability and pricing etc. The environmental dimension of the 3P goals encompasses ecological concerns such as green management, safety, sustainability, biosphere and natural diversity. Societal facet of a company's triple bottom line objectives includes considerations such as community, culture, development and humanity. The total costs and profit accounting of environmental, societal and economic objectives at the end in order to assess and evaluate the results of organizational actions There are several risks that a company confronts with while pursuing its triple bottom line objectives: Triple Bottom Line Risk Management Traditionally businesses have focused only on the financial bottom line in their risk management activities. [...]

[...] Triple bottom line is increasingly being used by corporations for some reporting purposes in order to communicate that the organization is concerned about the three facets of social responsibility viz. economic, environmental and social (Brown, Dillard and Marshall, 2006). Triple bottom line approach says that an organization's profitability and business future depends on its performance in the three areas viz. profit, people and planet. It is also increasingly becoming a significant concern on the part of environment conscious consumers, government, investors and regulators (Brown, Dillard and Marshall, 2006). [...]

[...] Some of these techniques are Scenario analysis, Sensitivity analysis and Monte Carlo Simulation etc. All these techniques allow the risk analyst team to understand and measure the impact of risk in financial figures. It could be seen as measuring the extent of loss that could occur not only financially but socially and environmentally in a quantified form (Martin, Bowden and Lane, 2002). With the help of quantitative risk analysis techniques, a risk analyst could be able to recognize the position of the company with respect to the impact of various risky factors. [...]