At DAXEL we attended the business day organized by MARSH together with Expansión on 'Geopolitics and ESG, main risks to be taken into account by companies'.
Pablo Trueba, CEO of Marsh, shared with us an enlightening vision of the pillars on which good enterprise risk management is based:
- Protection of assets and resources.
- Ensuring business continuity through the development of contingency plans.
- Compliance with legal and regulatory requirements.
- Facilitation of informed decision making.
- Contribution to the improvement of the company's efficiency and profitability.
He also highlighted the main strategic decisions to be made in the face of risks:
- Identify potential threats, such as changes in government policies or trade conflicts.
- Assess the impact of these risks on the company's operations and profitability.
- Mitigate risks through measures such as market diversification and the adoption of strategies to ensure competitiveness.
During the course of the day, the excellent participants at the discussion tables addressed two crucial issues:
1. What is the impact of geopolitical risks?
It has been highlighted how trade tensions, international conflicts and changes in government policies can have a significant impact on companies' operations.
To address these risks, three key factors have been highlighted:
- Early identification of threats.
- Evaluation of the impact on operations and profitability.
- Proactive mitigation through appropriate strategies.
Strategies for managing geopolitical risks have been discussed, highlighting the importance of:
- Accelerate innovation as a competitive differentiator.
- Diversify the market, while preventing cost increases from damaging the competitiveness of companies.
- Supply chain assurance, through ''friendshoring'' as it can help in the evaluation of the supply chain to ensure efficiency and quality.
- Design plans to improve production efficiency.
- Create a standardized digital and green transition, developing measures to place limits on outside competition.
- Implement controls such as the Carbon Border Adjustment Mechanism (CBAM) with which the European Union wants to protect the competitiveness of EU companies, which pay for their CO2 emissions as opposed to imports, which do not.
2. ESG criteria as an opportunity for growth and value.
The second major theme focused on the importance of considering environmental, social and governance (ESG) aspects.
It has been highlighted how ESG risk management is essential to maintain reputation, comply with regulations and meet the expectations of investors and society in general.
In the context of the E (environmental), emphasis has been placed on the need to adopt policies related to the care of the environment and the fulfillment of the 2030 and 2050 objectives , among others, to Net Zero, all of which has been linked to the need to accelerate technological innovation.
Regarding the S (social), the importance of inclusion has been emphasized, as well as the quality of life in the areas where the companies operate has been another important point to be taken into account by the companies for the correct compliance and in terms of human rights.
From the G (governance), it has been pointed to the obligation of companies to promote the risks that affect the business, specifically in terms of cybersecurity of both the company itself, as well as customers and supply chains that may be affected.
The role of the insurance sector in promoting sustainability has been highlighted.
With respect to our sector, he referred to the importance and the certain obligation that insurance has as a 'policeman' of the system. The insurance sector must ensure compliance with ESG policies throughout its supply chain and suppliers, as well as with respect to the underwriting portfolio, which must be analyzed on the basis of ESG criteria.
Conclusion:
The day provided valuable insight into the main risks facing companies today. Risk management, particularly with regard to geopolitical and ESG risks. Adapting to an ever-changing business world, transitioning to more sustainable practices and seeking expert advice are key steps in risk management and future business success.
DAXEL offers advisory services and support to all our clients, reinforcing the importance of risk management in a constantly evolving business environment, with a significant emphasis on regulation and sustainability. The combination of appropriate risk management and consideration of geopolitical and ESG factors are essential for business success and sustainability.
