Global Insights Report:
The Three Big Wake-Up Calls For Boards
Published jointly by Datamaran and The Conference Board, this Global Insights Report examines how some of the largest public companies reacted to the events of 2020 in their corporate reporting.
Download your free copy to learn how senior executives can prepare for risks that have been flagged as emerging but not identified as material.
External and ESG risks - and the pace at which they emerge - have transformed the business landscape in 2020.
The events of 2020 brought risks related to public health, climate change, and diversity, equity, and inclusion to the forefront of public consciousness. Yet, too many businesses are failing to incorporate external and ESG risks into their long-term strategies and to think about business model innovations to reorient towards long-term value creation.
This joint publication by Datamaran and The Conference Board examines how the largest public companies reacted to the events of 2020 in their corporate reporting, and how senior executives and Boards can apply this knowledge in addressing other systemic and external risks.
Key insights of what's ahead:
- As more ESG are run through the financial disclosure process, companies may be increasingly expected to provide more specifics.
- Now is the time for companies to examine whether their financial disclosures adequately acknowledge systemic risks.
- Materiality is dynamic: as companies react to the current crises, they should carefully consider what other relatively “dormant” risks might be around the corner.
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“Getting executives and board members to look at ESG as an integrated business function is crucial. So much ESG data is traditionally based on past performance, and not forward looking. The more real-time you can get with your data, the better able you are to forecast where your company needs to go.”
What can you expect to see in this report?
This research focuses on some of the largest public companies from Europe and the United States, examining the S&P 500 and the S&P Europe 350 using Datamaran’s patented technology. It shows that companies still have work to do in reassessing their risk management, annual reporting and Board oversight practices. Specifically:
- Companies were largely unprepared for public health risks before they materialized.
- Climate risk disclosure has increased, but most disclosure lack specificity.
- Disclosure of Diversity, Equity & Inclusion is less prominent in financial reporting of US companies and will likely be under the microscope moving forward.
Download the Global Insights Report to learn how to use real-time data to monitor the external risks landscape and stay on top of trends.
Frequently asked question (FAQs)
Click on each question to learn more.
Today, firms are more exposed to broader and more complex risks which behave differently from traditional operational risks and can have very concrete financial consequences. The most pressing risks for companies are in the external landscape. These external risks include ESG risks, such as climate change, infectious diseases, and human capital management.
External and ESG risks virtually define the idea of emerging risks: they’re often hard to identify and even harder to manage under current processes, many of which are inadequate. On the contrary, these issues belong to the core of your organization, not exclusively siloed in separate departments and functions.
A topic is a theme within an ESG category. Currently, Datamaran tracks over 90 topics and 380 risk factors, clustered in the core categories of ESG, such as climate change, business ethics and human rights. Topics are Datamaran's unit of analysis to annotate and assess the ESG issues mentioned in a selected document from a selected source.
High, medium, low and no mention are the scores that are used to assess the level of emphasis each company puts on a specific topic in their corporate reports. The emphasis takes into account variables such as the number of times the topic is mentioned in a sentence (also the number of sentences mentioning it) and its location (e.g. CEO letter).
The new model in ESG is towards increasing responsibility at the board and senior executive level. Particularly in times of crisis, it is essential for decision-makers to have reliable insight to inform strategies. How willing senior executives and board members are to assume responsibilities beyond the walls of their own operations plays a direct role in their success.
Dynamic materiality is at the heart of the modern risk management space. As a recent WEF white paper highlighted, what is financially immaterial today can quickly become material tomorrow - this explains why continuous monitoring of external risks and stakeholder expectations is a crucial process. Effective risk management lies in data-driven approaches that allow us to monitor the external landscape and focus on the risks that matter. A dynamic approach to materiality, backed by technology, helps taking better strategic decisions by understanding:
- What is important now.
- How does it change over time.
- What is likely to emerge as material in the future.
- What are the potential unknowns.
Datamaran is the only software analytics platform in the world that identifies and monitors external risks, including ESG. Trusted by blue-chip companies and top tier partners, it brings a data-driven business process for external risk and materiality analysis. In house - at any time.
Datamaran’s patented and award-winning technology offers real-time analytics on strategic, regulatory and reputational risks, specific to your business and value chain.