Sessions: The Future Is Now, Risk Managers

Peter Breitstone, managing principal and CEO of Aon Environmental Services Group, broke the tension in the room after his presentation with a, "I'm a fun guy, right?"

He'd spent the last 20 minutes or so in the Tuesday morning session titled "The Future is Now: Upgrading from ERM to Sustainability" talking about how the "intangibles" now make up 71 percent of the balance sheet for corporations. Risk managers better "embrace" the intangibles, he said. Otherwise, their company's sustainabiliy officer will decide that tacking on "insurance buying" onto their to-do lists would be better than paying a whole other person's salary (hint, hint ... your salary).

"Once we turn into insurance buyers, we're marginalized. We know that," he said.

Intangibles? They're green consumerism, governments, activist shareholders, vendors/suppliers, the dreaded media.

Embrace intangibles, and the sustainability that comes from doing so. Breitstone said that
"embracing sustainability offers risk managers to broaden their role."

"Be a sponge, not Sponge Bob," he said, adding that sustainability is fun and it's good business.

Dan Anderson, professor of risk management and insurance, University of Wisconsin-Madison, gave the audience some techniques of strong sustainability:

-- it has to become a top management priority
-- it has to be CEO driven
-- ERM should be expanded to include sustainability risk
-- consider producing a sustainability report, first thing by figuring out where you're at. About 67 percent of the largest 200 global companies have made sustainability reporting part of their risk manageemnt
-- waste reduction. DuPont made a 74 percent reduction in toxic releases and cut annual waste tratement bill by $200 million
-- prevention and reduction of pollution and emissions
-- increase water efficiency
-- voluntary reductiuon of greenhouse gases

"There's a very high probability in 2009 that we'll have rules, regulations, requirements," he said about the three presidential candidates.

Companies should also figure out their "triple bottom line" -- their financials minus their environmental risks and social responsibility performance risks.

All this sound expensive? Anderson cited the Stern Report from the British government, which calculated the cost of mitigation of global warming at 1 percent of gloal GDP ... but without mitigation, global warming will lead to loss of 5 percent to 20 percent of GDP.

If that's not enough, the panel also included John Vargo, who manages risk for Johnson Controls. Sustainability has become one of his company's five vore values, as well as integrity, customer satisfaction, its employees, and innovation and improvement.

Track down Vargo if you want proof that sustainability -- including making global warming a priority -- works.

"If you align yourself with what society wants and what your customers want, your're going to do better," he said.