Many companies don’t have a formalized approach to addressing environmental risk. Do you? Are you among the many businesses that react to the most pressing concerns of the day instead of proactively managing environment issues? If so, you might find yourself paying financial penalties and high costs to remedy problems while jeopardizing your company’s image and reputation.
Resolving environment risks concurrently is not always practical due to budget and staff constraints. However, a structured risk management approach can improve regulatory compliance, enhance safety, minimize liabilities, and even save money. By using a formalized process, you can evaluate risks and prioritize those with the most potential exposure.
The risks vary. If you’re focused on due diligence in advance or property development for example, the biggest environmental risk may be failing to meet tight deadlines that directly impact your business goals. However, when site clean-up is your primary objective, the risk is failing to satisfy the regulatory requirements. Below is a general guide to project prioritization that addresses both of these diverse scenarios:
1. Identify the Project’s Main Objective
- Does it meet a critical deadline (financial, technical, regulatory, etc.)?
- Is it needed to reduce actual or potential liabilities (legal, regulatory)?
- Does it improve profitability or reduce losses?
- Is it a technical precursor to a much bigger project or need?
2. Define Factors that Impact Meeting Your Objective
- What are the safety and health issues, legal agreements, etc.?
- Is cash available and is the project consistent with cash flow management requirements?
- Are key staff or resources available? Any technical difficulties?
- What is the critical path schedule (including impacts on other projects)?
3. Determine the Resources Required
- Identify critical resources early and obtain commitments using incentives/disincentives
- Work backward from the business goal to ensure resources are focused on the correct tasks – not side projects
- Allocate limited resources wisely and stay focused on critical path
- Have a backup plan if a critical vendor/resource is unavailable
- Don’t wait too long to change direction if something is wrong
4. Follow-up/Readjust Priorities/Close-out ASAP
- Make frequent status checks and comparisons to plan
- Don’t be afraid to make changes, but they should be to correct problems and not changes for the sake of change
- Don’t forget administrative closeout documentation
By taking a proactive approach to managing environment risk, you can identify issues with the most potential for exposure and enforcement actions, define strategies to avoid future problems, and ultimately, get the best return on your intellectual and capital investment.