Environmental risk
Environmental risk concerns uncertainties arising from an organisation’s interaction with the natural environment. Analysis can include harm caused by its activities, dependence on natural resources, physical disruption and consequences of environmental requirements or changing expectations. The particular exposure and affected stakeholders should be identified rather than assuming every environmental issue is solely a compliance matter.
Worked example
Water shortages threaten a producer’s operations, while its own discharges could damage a local ecosystem. Management assesses both dependence on the environment and effects on it.
Common mistake
Defining environmental risk only as damage caused by the business or only as a natural disaster affecting it.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | BT | Direct | September 2026–June 2027 |
| ACCA | SBL | Direct | September 2026–June 2027 |
| FIA | FBT | Direct | September 2026–June 2027 |