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(identification of specific pathogens, such as anthrax, botulinum, ricin); and
Plants as sensors to create genetically modified plants as an easily producible
early warning system. The plants would be modified to change colour when
in contact with a predetermined chemical or biological agent, and would be
distributed in public places to provide a monitoring grid capable of detecting
the spread of a contaminant.
Contingency plans for rapid action to a bioterrorist attack include:
Setting up local emergency rooms and offices to immediately deal with the
outcome in case of an attack by competent people;
Performing mass decontamination on victims or potential victims (persons
suspected of harbouring contamination that they might knowingly or
unknowingly spread to others);
Quarantine to prevent the spread of disease, or temporary quarantine for
decontamination;
Instruction and training for local communities;
Protective clothing for military personnel; and
Locating persons buying biological warfare materials.


Emerging threats need innovative solutions
Once the biological agent has been identified, it can be fought through vaccina-
tion of people before they are exposed. However, vaccines are not considered to
be a perfect solution. A bioterrorist could develop novel, possibly artificial,
pathogens against which conventional vaccines would be useless.
Consequently, some suggest that researchers should look for ways of devel-
oping vaccines quickly enough for them to be created, mass produced and
distributed after an attack. This would require significant progress in DNA
Chapter 17 “ Health and safety of stakeholders and customers 431



sequencing so that an unknown pathogen™s genes could be decoded quickly.
The resulting sequences could help in the development of a DNA vaccine.
Another major issue with vaccines is that they sometimes have dangerous
side-effects, and hence a massive inoculation programme may result in deaths
and illness which would be unnecessary if no biological attack occurs. This
concern has been raised with modern anthrax vaccines. The 1976 swine flu
scare highlights the dangers of the mass-vaccination approach. The same issue
is debated to counter bird flu.
A conventional approach will not work; as a society we have no major
experience about bioterrorism so let us not assume that government and related
agencies will be in a position to manage. The war against bioterrorism will
require an unconventional approach and will need citizens™ cooperation. Are
we ready? Do we have systems in place? Or will we decide when we are faced
with a crisis? Think of AIDS. Prevention is better than cure, definitely in the
case of bioterrorism.
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PART
D
Overview of the Environmental
Aspects of Business Risk
The term ˜sustainability™ often means a paradigm shift towards a greater under-
standing of things in relation to natural processes, which are more durable in
their efficient use of resources and inputs and outputs from systems. There is a
review of how to reduce the 5.4% average risk to organisations from these issues.
We cover the key environmental aspects of risk which include:
Environmental risk management systems (Chapter 18); and
Aspects of environmental risk (Chapter 19):
Environmental incidents and accidents;
Air emissions from production and transport;
Resource use and waste emissions; and
Water use and pollution.
Sustainable
Success




External
Stakeholder
Pressures and
Opportunities




A Sustainable Enterprise Risk Management System (SERM)
and Improved Competitive Performance




Social Environmental
Economic
Performance Performance Performance
Performance




Social Environmental
Economic
Processes
Risk Management Risk Management
Risk Management




People and
Organisational Vision and Objectives
Plans



The net risk to market value from these issues is outlined in the pie chart below.
Resource Use “ Resource Use “
Waste Water Water Use, 0.2%
Air Pollution “ Pollution, 0.2%
Peripheral Pollution, Environmental
0.3% Incident Risk,
1.3%
Air Pollution “ from
Production, 0.4%


Resource Use “
Land and Natural
Resources, 0.4%
Environment “
Historical Liabilities,
Resource Use “
0.8%
Energy, 0.4%


Air Pollution “ from
Resource Use “ Transport, 0.5%
Raw Materials, Resource Use “
Waste Generation,
0.4%
0.5%
18
Environmental risk management
18 Environmental risk
management



CHAPTER OVERVIEW
This chapter considers the background surrounding the legal framework and
trends that can be identified around environmental risk management and
operational risks. Chapter 19 looks at the environmental risks that emanates
from the use of inputs and the consequences of outputs from organisations™
processes and the risks and legislation covering these.
Almost everything that any organisation does has an impact upon the
environment “ from energy use to disposal of waste, from compliance with
discharge consents to the management of its transport fleet. The resulting
figure is the total potential financial loss the company could suffer if the
environmental risk was to materialise is 5.1% of the average market value
of the 500 top EU and US companies.
The most appropriate response to environmental risks is to integrate
some form of environmental risk management into an organisation™s risk
management system. Evidence suggests that such an approach can
improve profitability. This is achieved by resource efficiency, production
cost savings and the avoidance of litigation. Additionally, the opportun-
ities are large; as well competitive advantage can be achieved by the devel-
opment of less environmentally damaging products and processes.
Increasingly, business leaders are realising the benefits of having an envir-
onmentally positive reputation in the public and political arenas.



Environmental due diligence and risk management
International, regional and national environmental laws and regulations assign
financial responsibility to real estate owners, operators and others for clean-up
costs associated with contaminated soil, water and other pollutant discharges.
In addition to regulations and legal actions, public perception has become
a powerful motivator for property owners and managers to fully understand
and manage their liabilities associated with environmental contaminants.
Environmental due diligence and risk management are vital proactive steps for
corporations wherever they are either side of the Atlantic.
Chapter 18 “ Environmental risk management 437



Environmental risk management can help to achieve the avoidance of:
Environmental and health incidents (or a reduction in the number of inci-
dents and/or their impact);
Non-compliance convictions, criminal prosecutions and enforcement
notices;
Enforcement actions for remedial work;
Civil claims;
Damage to reputation and brand;
Increases in resource costs and insurance premiums; and
Stakeholder pressure:
Increasing demands by business partners/customers for environmentally
responsible suppliers;
Customers “ maintaining the goodwill of brand value;
Employee pride and health and safety;
Strengthened bank lending criteria; and
Removal of cover and increasing premiums by insurers as losses mount
(failures to comply with legislation can invalidate insurance cover).


The new environmental environment
We are in an era of environmental reason where governments are also learning
how to create incentives for companies to innovate and improve environmen-
tal performance, quality, and management. Innovation can reduce the use of
power, natural resources and production materials. Businesses that take a hard
look at their internal operations will notice opportunities for the development
of effective environmental management systems. Those systems not only
reduce liabilities and risks, because less pollution is produced, but they also
increase profits because all resources are used more efficiently and effectively,
making informed consumers more likely to buy the product or service even at
higher per unit prices.
As the chief of Asda (the UK subsidiary of Wal-Mart), Andy Bond, says:
˜green is the new black™, as he states that he wants Asda to be Britain™s greenest
grocer.


Sustainable development
The well-known definition of sustainable development “ coined by the
Bruntland Commission in 1987 “ has continued to command most widespread
support (see also below). Sustainable development may also be defined as
reducing pressure on natural resources and optimising the use of human
resources. The term ˜double dividend™ has been coined to describe the dual
benefit of sustained natural resources and higher employment.
The industry response of international environmental management has
also been developing for over a decade. As was made clear at the 1992 Rio
Conference or Earth Summit sustainable development is central to the issue of
Part D “ Overview of the Environmental Aspects of Business Risk
438



international environmental management and has been embraced by many
national policies in their reports on the state of the environment. Meanwhile
the Business Charter for Sustainable Development had launched at the Second
World Industry Conference on Environmental Management by the International
Chamber of Commerce (ICC) in Rotterdam in 1991. The over-riding objective of
the Charter was to encourage business to join the international effort to uphold
the concept of sustainable development through sound environmental practice.
Its aims were stated as:
To provide guidance on environmental management to all types of business
and enterprise around the world and to aid them in developing their own
policies and programmes;
To stimulate companies to commit to improved environmental performance;
and
To demonstrate to governments and electorates that business is taking its
environmental responsibility seriously, thereby helping to reduce the pres-
sure on governments to overlegislate and strengthening the business voice in
debates on public policy.
Many members of the ICC and companies have seen the Charter as a major
response to pressures for environmental codes of conduct. Meanwhile the ICC
definition of environmental auditing has also played a key role in the spirit of
˜shared responsibility™ by the key players, government and industry.


Corporate responsibility
It is imperative that every organisation, large or small, should focus on their
individual role in the protection of the environment, irrespective of whether
they are involved in a polluting industry or activity. In its 5th Environmental
Action Programme ˜Towards Sustainability™, covering the period 1993“2000,
the European Union (EU) targeted the role of industry in implementing the
principle of ˜shared responsibility™ to achieve improved environmental protection
and preservation. The European Commission has recognised that small and
medium-sized enterprises (SMEs) must be equipped to participate fully in this
initiative. Moreover, the EU™s Eco-Management and Audit Scheme (EMAS)
exemplifies the need for a practical approach (see further below).


Sustainability in business
In order to make business more profitable and benefit society as a whole, busi-
ness organisations should aim to protect the environment by taking account of
the highest standards in technology and good management practices.
Management theories indicate that this is best achieved by a combination of
formal and informal corporate measures including a comprehensive corporate
policy on the environment and follow-up procedures such as environmental
audits.

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