Sustainability and resilience rise to prominence in Italy

As a country that suffers drought, flood and earthquake, Italians are well used to the challenges posed by natural catastrophes. So, it comes as no surprise that a group of risk managers meeting in Milan for our Risk Frontiers Europe survey said they have had resilience on their agenda for many years.

Several major Italian corporations are listed on the Dow Jones Sustainability Index and have resilience, climate change and broader sustainability at the core of their businesses.

Alessandro De Felice, president of Italian risk management association Anra and chief risk officer at Prysmian Group, said his own company produces an annual report on non-financial disclosures, which includes natural disaster risks but also social welfare and diversity.

“It is all about how the company impacts the environment around it – that is both in physical and human terms,” he said. Adding: “We aim to leave the world in a better place for the next generation. As the risk manager, I am part of the team that is responsible for this non-financial disclosure document but also responsible for translating risk into quantifiable impact.”

He admitted it is not easy to quantify a future risk and provide a long-term perspective, particularly in a fast-moving environment with so many ifs and buts. But the work is crucial and can help develop important conversations on supply chains, he added.

“We have to have a better understanding of potential climate changes and how it might impact our supply chain. There has been a massive improvement in this work in the past four or five years,” said Mr De Felice.

“Being part of the Dow Jones Sustainability Index means we have made a commitment to invest and to be transparent – both of which are key to a sustainable business,” he added. Paola Radaelli, one of Anra’s vice-presidents and risk management senior consultant at Strategica Group, said the role of the risk manager is to understand the importance of sustainability and resilience for their company in a changing environment. “There are some issues we can try to solve, others we must find a way to adapt,” she said.

“If we are considering an investment, there are opportunities as a risk professional to steer that investment and to consider it with a sustainable eye. As risk professionals we can actually become more relevant to the business through this kind of work. We will have to take care of the risks in a different way going forward and we are well positioned to take that long-term view and to work with management on that,” she added.

Agreement came from Carlo Cosimi, another vice-president of Anra and head of insurance and risk financing at Saipem, who also said his board has sustainability deeply embedded into its thinking.

“As a construction company, it is very important to us; our customers want to see changes and works fit for the future. It puts resilience and sustainability at the heart of the business,” he said.

As a global high-technology company in the aerospace, defence and security arena, Leonardo Company is also listed on the Dow Jones Sustainability Index, said its risk manager Salvatore Lampone.

More than that, he said, the company operates internationally and is keen to be seen to be doing whatever it can to drive the sustainability agenda.

“My role is to support operations, in particular in approaching the business in the most sustainable way, whether that is looking to the future or reducing pollution risks today,” he said.

Mr Lampone believes that risk managers have an unrivalled opportunity to join the dots for businesses and make connections that can drive improvements.

“We are also working on improving the working environment for all the staff. People have to have good working conditions, to be safe and healthy, and this is something we started on many years ago,” said Mr Lampone.

While the problems posed by climate change and extreme weather events are well recognised in Italy, a lack of investment to meet this challenge has to be addressed, the risk managers agreed.

Ms Radaelli stressed the need for forward planning and significant resourses, something that can be a challenge for central government. “We need to develop systems to collect water when there is a sudden deluge. When we have a dry period followed by heavy storms, the water generally runs off instead of soaking in. We need a proper system to collect the water at that point, for example,” she said.

Adding: “During periods of drought, new risks have risen such as the diffusion of bacteria. It is a new problem that has been addressed centrally.”

The risk managers agreed that water distribution must be a key factor when choosing a new site. More Italian businesses are also looking for alternative sources of energy, including solar, and are mindful of any pollution risks.

As Mr De Felice said: “In Italy we have some of the most rigid and strict pollution rules in Europe. Most of the consequences of a breach sit within criminal acts and can result in directors being fined or going to jail.”

The group agreed that making it personal has helped drive the issue up the board agenda and ensured it remains a key topic.

“Companies are keen to be compliant and will invest to make sure that they are. There can be no risk tolerance around this – we have to do whatever possible to mitigate the risk,” said Mr De Felice.