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Corporate responsibility a hidden facet of risk mitigation


January 22, 2007   by Canadian Underwriter


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Although corporate social responsibility is an important part of risk mitigation, companies do not incorporate this realization into their practical, day-to-day risk management strategies, according to an article published in CMA Management.
The connection, the CMA article suggests, is that “if you handle local environmental and social issues proactively, they don’t become a problem or a drain on resources later.”
Similarly, as is the case with corporate social responsibility, risk is not always perceived within a broader context, CMA Canada says.
“Although terrorist attacks in Western countries over the past five years have convinced some industries and individual companies to reconsider their risk parameters, many still aren’t considering all of the factors they should the social and political risks that can help them sink or swim,” says a press release announcing the publication of a new CMA Canada-AICPA Management Accounting Guideline.
“Part of the problem is that there hasn’t been a framework within which companies can easily include additional social and political risks. These risks are hard to quantify, and there hasn’t been a methodology to make it easier to do so.”
The new management accounting guideline, which includes a detailed discussion about these matters, is entitled “Integrating Social and Political Risk into Management Decision Making.”


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