Risk management: 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 some 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. The concept of triple bottom line suggests that businesses are driven by three major objectives or 3Ps i.e. people, planet and profit. When a business is determined to meet all these objectives, its risk management process requires a precise consideration to all the three dimensions with respect to any business or project.

This paper elaborates the concept of triple bottom line risk management and tries to analyze this concept with the help of triple bottom organizational model and triple bottom line measurement matrix. Triple bottom line risk management process has been evaluated with the help of RISQUE method propounded by Martin, Bowden and Lane (2002). This method encompasses several steps involved in risk management process. This paper encompasses the risk management process within the perspective of financial as well as environmental and societal objectives.

Extraits

[...] Risk management: Triple bottom line concept Introduction 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 some risk management strategies, a company can either avoid the occasion of risk bearing event or limit losses in the consequence of high risk. [...]

[...] For example, factories and warehouses where there is a high risk of fire, the risk can be limited by effectuating strategies such as banning smoking etc in order to prevent the level of risk. However, there still remains a significant probability that loss might happen due to fire. In such cases, strategies such as fire extinguishing facilities etc could be employed so as to minimize the occurrence of losses. In this perspective, losses that could occur should be analyzed in different dimensions for triple bottom line risk management. [...]

[...] and Lane, Malcolm R. (2002), “Triple Bottom Line Risk Management Triple Bottom Line Risk Management: Enhancing Profit, Environmental Performance, and Community Benefit,” John Wiley and Sons Waddock, Sandra (2000), Multiple Bottom Lines of Corporate Citizenship: Social Investing, Reputation, and Responsibility Audits,” Business and Society Review, 105(3), pp. [...]

[...] Such a risk can easily be managed by a finance manager with the help of various risk management strategies such as hedging, future contracts etc. 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. [...]

[...] Some examples of companies utilizing the triple bottom line approach are Trillion Asset Management, SustainAbility etc (Waddock, 2000). Triple bottom line allows businesses to follow and accomplish the social and environmental goals along with the economic objectives. Businesses operate for the aim of profitability; however their social responsibility cannot be ignored. Hence, triple bottom line management enables businesses to achieve all the three crucial goals (Brown, Dillard and Marshall, 2006). Not only that triple bottom line requires businesses to think three dimensional in setting and achieving their objectives, but also it necessitates the risk management process to consider all three Ps. [...]