Introduction
Most of business objectives are future oriented and their realization are usually uncertain in the short run. There are many uncertain events that may take place in the course of running, which may make it impossible for businesses to realize their objectives. Such uncertain events are termed as risks and are likely to happen in all the aspects of the business.
Knechel (2002) defines risk as the likelihood that the outcome from a given process will not meet the expectations due to some uncertain or expected events in the course of carrying out the process. One of the major risks that may occur in the course of running the business is the environmental risk that arises as a result of the impact of human activities in the environment.
Pritchard (2000, pg 5) defines environmental risk as a measure of potential threats to the environment and combines the probability that the events will cause or lead to degradation of the environment and the severity of that degradation.
He also defines (2000, pg 5) risk management as the process of implementing decisions about accepting or altering risk as well as minimizing their effects. Environmental risks need to be managed well in order to mitigate their effects and also reduce their frequency of occurrence.
Environmental risk management involves measures taken by various sectors of the economy, both private and public, in order to deal with their operations that pose risks to the environment. All firms must establish procedure that will enable them deal with uncertainties of their daily operations (Lawrence, Andrews, Ralph and France, 2002).
These procedures involve following some protocols and also devising tools to guide and ensure conformance with the set procedures. These measures are meant to eliminate or mitigate the threats caused by the organization to the environment.
Purpose of the paper
This paper will examine the attempt by Bupa international to contain the environmental risk that arises from its activities. The company addresses the issue of carbon emissions to the environment that is caused by the outputs of energy consumption and business travel. The paper also assesses the Environmental Risks Management Strategies that could be applied in case of Bupa international.
Management of carbon emission as an environmental risk at Bupa International
Bupa international is a healthcare and medical insurance services provider that has been in existence since 1947 and aiming at becoming a world leader in the industry. The company’s vision is to extend its services to as many countries as possible in the world. The network is currently expanded to 190 countries with over 800,000 members which is a big step towards realization of its goals.
The business activities of Bupa International involve a lot of travel and energy consumption which are the major causes of carbon emissions. Carbon emissions are very harmful to the environment and the healthy robust of the people.
There are many laws that have come up aiming at reducing the impact of carbon emissions both to the environment and also to the performance of the company. for example, California legislature recently passed a bill for controlling the effects of carbon emmission. The purpose of the law is to attain 25 percent reduction in the emission of carbon in the United States.
The task of enforcing this law is to be carried out by the California Air Resources Board and the board is expected to also come up with the penalties to be effected in case of any noncompliance. The law is expected to take effect in 2012 and attain the target by l2020.
The companies not adhering to these laws may face great trouble in expanding to countries where such laws are strictly enforced. Bupa International has recently embarked on the strategies to reduce its contribution on carbon emissions.
According to Bupa International, in 2007, the company “… took the important step of measuring our global carbon footprint for the first time, as a means of helping us understand – and so start reducing – our impact on the environment” (Bupa International, 2011). The company did this with the aim of managing the risk associated with the carbon emissions.
According to this survey conducted by Bupa International, “a carbon footprint of 105000 tones of carbon was identified and this was linked to the company’s output energy consumption and the business travels” ( Bupa International, 2011). Though Bupa is not a major producer of carbon, they found the need to reduce the impact of carbon on the environment.
Bupa International has implemented various measures in various countries where it exists in order to cut carbon and its impact on the environment and business environment. In the UK for instance, the company has been “introducing low energy lights, increasing building insulation, and improving hot water and heating controls” (Bupa International, 2011).
Bupa International has also built a green building in Spain which is meant to curb or minimize carbon consumption. The green building is made according to the regulation found in the US Green Building Council. These are just some of the measures that have been put in place by Bupa international in dealing with carbon production.
Bupa international health and safety issues
The company recognizes that its activities have environmental impact which may be a health hazard to the people it exists to serve. The company’s project of expanding its net works to all countries across the globe may pose a great health and safety hazard to the people around the world.
This is because carbon may cause a great detriment to the health of the people exposed to it. If the necessary measures are not taken, the business may expand throughout the world and still spread the health hazard across the world. Bupa International recognizes this health hazard and puts in place the environmental policy that will help contain the situation.
According to Bupa International, [Bupa recognizes that our activities have an environmental impact and in developing this policy we seek to reinforce our commitment to manage environmental issues properly within our existing UK and expanding international businesses…This policy forms part of a suite of Bupa policies covering issues such as Health and Safety and Community Connections] (Bupa International, 2011).
This shows the company’s commitment to deal with the health issues that its project of expanding worldwide might have on the country they venture. One of the commitments addressed in the policy is the company’s compliance to the environmental regulations of every country that it ventures. There is also use of risk assessments methods in identifying any environmental risk that the business may face.
Application of the Environmental Risks Management Strategies in Bupa International
Risk management is given different approaches by different authors in their attempt to develop various strategies to risk management. Some scholars have viewed strategic management as a process involving various stages that must be followed in order to manage the risk. Environmental risk (and other risks) may be managed via the theories or approaches proposed by different theorists.
Sarfin (2010), for example, views environmental risk management as a responsibility of the decision makers within an organization. Sarfin (2010) argues that decision makers have a number of strategies that they can employ in their environmental risk management (Slater and Jones, 1999). First Sarfin (2010) argues that decision makers can use a Holistic Approach in the management of environmental risk.
This approach suggests that the environmental risks can be dealt with before they occur. That is, the risk problems can be solved before they start (Petts and Eduljee, 1994). Sarfin (2010) also provides that in case the problem at hand is associated or intertwined with another problem, another approach may be adopted. For Bupa International, the risk of carbon production can be dealt with before the carbon is actually produced.
This approach takes in to consideration many factors that are likely to affect the business operation and cause a risk. In this case, the decision makers will be informed and make informed decisions in preventing the disaster.
The other approach proposed by Sarfin (2010) is the precautionary principle that suggest that precautionary measures should be taken in case of a negative phenomena that is likely to pose a risk to the environment.
Precautions should be taken by the environmental decision makers even in cases where the evidence of risk is not present. This strategy would apply to Bupa international in that the environmental decision makers can take the necessary precautions regarding the risks likely to result from carbon production.
The other strategy is monitoring the potential risk in order to assess whether it needs to be regulated or not. This approach is less proactive and may not be affective in all cases.
This may not be recommended for Bupa International. Lastly, the other strategy in this case is revisiting the previous decisions that were made by the firm. If some decisions are no longer relevant, they should be replaced by new ones so that the current issues may be addressed.
Kerzner (2006), views risk management as a process that involves various stages such as risk planning, risk assessment, risk identification, risk analysis, risk handling and monitoring and control. Risk planning involves the process of developing and documenting a strategy and the methods that should be adopted in identifying analyzing and dealing with risk issues that the company may face.
Risk assessment involves identifying and analyzing the project areas that are likely to be affected by the risk. Risk identification involves examining the risk areas and identifying the associated risks. Risk analysis deals with the process of assessing the nature of the risk and their impact on the operations of the business (Kerzner, 2006).
Risk handling stage deals with the identification of the approaches that should be adopted in dealing with the risks that have been identified. The approach chosen in this case depends on the nature of the risk.
Risk monitoring is the process of keeping vigil and evaluating the approach to make sure that it achieves the desired results. Bupa International could adopt this risk management process in order to deal with the environmental risks when they occur or before they occur and also devise mechanisms of avoiding them in future.
The EU and UK Legislation Relating To Environmental Risk Management
The risk management in the UK and EU is governed by the UK environmental Regulation and EU’s Environmental Liability Directory usually termed as ELD.
According to The National Law Review, “Businesses seeking to expand into the United Kingdom face multimillion-dollar liabilities following a European Union directive imposing new requirements on companies that harm the environment.” (The National Law Review, 2011). The ELD also came into force in 2009 to put more regulations on the risk management issues.
These regulations require that the companies that are harming the environment should clean up any damage caused to the environment and above that return the ecosystem to its original state. More penalties include paying compensation by those companies to the community affected for the period they affected the ecosystem.
The regulations further states that in the event the ecosystem cannot be restored to its original state, the company is required to provide an alternative resource to the community affected.
In case of discharge of any chemical to the environment like river, the company will have to clean the river and also replace all the organisms that die as a result and also pay compensation for the loss suffered when the stream/river was not in use.
The companies are also supposed to be very careful wherever they are setting operations and ensure that their operations do not affect or harm the environment in any manner. Failure to this, the company might be at risk of suffering heavy losses. The directors of such companies can also be prosecuted especially if they do not report any harm they cause to the environment.
It is therefore important for the companies to be keen and observe these laws and regulations strictly. For Bupa International, there is great risk of making heavy losses if they do not observe these regulations. Carbon and associated compounds are harmful to the lives of many organisms and their emissions should be controlled strictly.
Identify and Manage the Most Significant Environmental Risks Affecting Organization
The most significant environmental risk affecting the company is the issue of carbon and its impacts to the environment. The company recognizes that its activities cause some carbon emissions into the environment. Since the company has its main operations in the UK where there are strict regulations on environmental risks, this risk becomes the most significant.
Besides this risk, there is also the risk of natural disaster. For example the issue of tsunami in Haiti affected Bupa International. This is because most of the infrastructures were destroyed and this affected the operations.
The company would also encounter problems in expanding its networks to that country. When the tsunami took place in Haiti, Bupa international responded first by recognizing that the natural disaster has significant impact on the company’s performance and people.
The company noted that “Natural disasters have the capacity to cause human, environmental and financial losses of immense proportion. Areas hit by natural disasters often suffer major loss of infrastructure including transport, food supply, healthcare, sanitation and clean water” (Bupa International, 2011).
The company also recognizes the need to prepare for the natural disaster like tsunami as and when they take place. The company emphasizes the need to make a disaster plan and have a disaster supplies kit containing all the supplies needed to contain the situation such as food, water,first aid supplies among others. The company keeps emergency numbers which people can use in case of emergency.
Critically Evaluate the Most Appropriate Approaches to Environmental Risk Management for the Organization
As discussed in the section above, there are various approaches that Bupa International can employ in risk management. The most appropriate approaches that the company can adopt are holistic approachHolistic Approach, the precautionary principle, monitoring the potential risk that were proposed by Sarfin. The Holistic Approach states that the risks should be dealt with before they occur.
This approach can be the most effective especially where there are strict regulations like UK and EU. If the risks are dealt with before they occur, the company will avoid the risk of incurring losses. The company can also adopt the risk management process that was proposed by Kerzner.
Critically Assess the Impact of Environmental Risk Strategies and Requirements on the Organization
The risks management strategies discussed above have great impact on Bupa International. This is because they will enable the company cope with the environmental risks and also evade the risk of incurring heavy losses. The strategies also make the company more proactive in dealing with risk management.
The compliance to the requirements stipulated in the regulations discussed above gives the company a sense of direction in dealing with the risks. This also gives the company the freedom to expand its network to many countries since there will be no barriers.
Conclusion
Risk management is one of the integral activities of every firm’s operations. Environmental risk management has become a significant activity in almost all firms in the world. This is because the firms’ operations are future oriented and uncertain in nature. There are many uncertain events that are likely to occur in the course of carrying out the business operations and jeopardize the realization of their objectives.
These uncertain events are the risks that need to be dealt with before they paralyze the operations of the company. Bupa International recognizes that its activities have some effects on the environment. The company therefore puts in place some strategies to deal with the risks posed to the environment by its activities.
Reference List
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