Page 28 - Insurance Times July 2023

Environment, Social

and Governance

challenges of the

Insurance industry in
Venkatesh Ganapathy
the Post Pandemic BSc (Tech). MBA. Diploma in SCM.FIII.,
Associate Professor (Marketing)
Presidency Business School, Bangalore
Environment

Managing ESG risks is becoming increasingly important for companies as stakeholders, including
investors and customers, become more focused on sustainability and corporate responsibility.
Companies that effectively manage ESG risks are better able to protect their reputation and
financial performance in the long term.

Introduction Governance risks: These include risks related to the
management and oversight of a company, such as risks
ESG risks refer to risks related to environmental, social, and
related to board diversity, executive compensation, and
governance factors that can impact a company's
risk management practices. For example, a company
performance and reputation. These risks can be financial in
with poor governance practices may face financial risks
nature, such as the risk of financial losses due to
if there are mismanagement or fraudulent activities
environmental damage or social unrest. They can also be
within the company.
non-financial in nature, such as the risk of reputational
damage due to poor environmental or social practices. Some Managing ESG risks is becoming increasingly important for
specific examples of ESG risks include: companies as stakeholders, including investors and
Environmental risks: These include risks such as climate customers, become more focused on sustainability and
change, natural disasters, and environmental corporate responsibility. Companies that effectively manage
regulation. For example, a company that relies on fossil ESG risks are better able to protect their reputation and
fuels as a primary source of energy may face financial financial performance in the long term.
risks if there is a shift towards renewable energy sources
or if there are stricter regulations on greenhouse gas ESG challenges faced by Insurance
emissions.
Industry
Social risks: These include risks related to issues such ESG risks can have significant implications for the insurance
as labor practices, human rights, and diversity and industry, as insurance companies are exposed to a wide
inclusion. For example, a company that has poor labor range of risks through their underwriting and investment
practices may face reputational risks or financial risks if activities. It is important for insurance companies to actively
there are boycotts or legal action taken against it. manage their ESG risks in order to protect their reputation

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