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A new challenge in the risk management: sustainability risks

Author

Listed:
  • Corina Graziella Bâtcă-Dumitru

    (Bucharest University of Economic Studies, Bucharest, Romania)

  • Cleopatra Șendroiu

    (Bucharest University of Economic Studies, Bucharest, Romania)

  • Lavinia Denisia Cuc

    (Aurel Vlaicu University of Arad, Arad, Romania)

Abstract

Sustainability risk management has become increasingly pertinent in the modern corporate landscape. It recognizes that environmental, social, and governance (ESG) factors are pivotal in shaping a company's long-term viability. Sustainability risks encompass a broad spectrum of issues, ranging from climate change and resource scarcity to labor practices and supply chain disruptions. These risks can have a significant impact on a company's financial performance, reputation, and stakeholder relationships. This paper examines the fundamental concepts and methodologies related to sustainability risk management, offering a structured framework for identifying, assessing, and mitigating such risks effectively. This process involves evaluating both existing and potential sustainability risks that could affect the company in the future. Additionally, the paper explores the potential role of accounting professionals in these efforts. Accounting professionals bring a unique skill set that can be instrumental in sustainability risk management. Their expertise in financial reporting, data analysis, and compliance is critical for ESG reporting and risk evaluation. They can aid in developing key performance indicators (KPIs) aligned with sustainability goals and assist in crafting comprehensive sustainability reports for stakeholders. Their involvement is essential for ensuring transparent and accurate ESG reporting, thereby bolstering the company's credibility and attractiveness to responsible investors. In summary, sustainability risk management is a crucial aspect of contemporary corporate strategy, addressing the growing impact of ESG factors on business success. Engaging accounting professionals in sustainability risk management is a strategic move that can drive long-term value and contribute to a more sustainable and equitable future for businesses and society as a whole.

Suggested Citation

  • Corina Graziella Bâtcă-Dumitru & Cleopatra Șendroiu & Lavinia Denisia Cuc, 2023. "A new challenge in the risk management: sustainability risks," Journal of Financial Studies, Institute of Financial Studies, vol. 15(8), pages 13-28, December.
    • Handle: RePEc:fst:rfsisf:v:15-special-december:y:2023:i:8:p:13-28
    DOI: 10.55654/JFS.2023.SP.15
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    References listed on IDEAS

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    1. Giovanni Catello Landi & Francesca Iandolo & Antonio Renzi & Andrea Rey, 2022. "Embedding sustainability in risk management: The impact of environmental, social, and governance ratings on corporate financial risk," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 1096-1107, July.
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    4. Jesko Schulte & Sophie I. Hallstedt, 2018. "Company Risk Management in Light of the Sustainability Transition," Sustainability, MDPI, vol. 10(11), pages 1-25, November.
    5. Bahamonde-Birke, Francisco, 2020. "Who will bell the cat? On the environmental and sustainability risks of electric vehicles: A rejoinder," Transportation Research Part A: Policy and Practice, Elsevier, vol. 135(C), pages 358-360.
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    More about this item

    Keywords

    sustainability risks; sustainability risk management; general frameworks for sustainability risk management; accounting professionals.;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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