Social, Cultural & Environmental Risks in Business - Lesson | Study.com (2024)

FAQs

What are social and environmental risks? ›

What are E&S risks? E&S risks are the potential negative consequences to a business that result from its impacts (or perceived impacts) on the natural environment (i.e. air, water, soil) or communities of people (e.g. employees, customers, local residents).

Things like labor issues, human rights issues, public health issues, and political uncertainty qualify as social risk. Cultural differences between a company and its employees, customers, and the local environment can cause cultural risk.

There are many more social issues that business activities can affect. Other risks at worksites include excessive working hours and insufficient wages, while community-related risks such as land rights and access to water resources can be particularly significant in certain industries or regions.

Social risk is characterized by four components in combination: an issue, a stakeholder or group of stakeholders, a negative perception about an organization, and the means to do damage.

Environmental risks to health include pollution, radiation, noise, land use patterns, or climate change [2]. Environmental health is a growing area of knowledge, continually increasing and updating the body of evidence linking the environment to human health.

"Culture is a system of values, beliefs, and behaviors that shapes how things get done within an organization." "Culture risk is created when there's misalignment between an organization's values and leader actions, employee behaviors, or organizational systems."

Socio-cultural factors include consumers' lifestyles, buying habits, education, religion, beliefs, values, demographics, social classes, sexuality and attitudes. These factors determine the suitability of an organisation's products and services for its customers' needs.

Sociocultural factors influence people's feelings, values, beliefs, behaviors, attitudes, and interactions. Examples include social classes, religious beliefs, wealth distribution, language, business practices, social values, customer preferences, social organization, and attitude towards work.

Business Environmental Risk is defined by ASTM as “a risk that can have a material environmental or environmentally-driven impact on the business associated with the current or planned use of commercial real estate, not necessarily related to those environmental issues required to be investigated in this practice.

How to reduce social risk in business? ›

The best way to address business risk is to try and prevent it from ever happening, rather than solving problems as they occur. To do this effectively, business assurance professionals carry out regular risk assessments and create 'risk mitigation' strategies to combat risks based on how likely they are to occur.

The social construct of the environment a business operates in contributes to its success or failure. Specifically, social environment factors influence key stakeholders, such as the employees and customers, ultimately shaping business decisions, strategies, opportunities, and challenges.

The environmental risk factors include pollution, radiation, noise, land use patterns, work environment, and climate change.

Environmental risk is a measure of the potential threats to the environment, life and property. ● Consequence .. Effect due to occurrence of the event, which may endanger the environment permanently or temporarily and, or, loss of life and property.

Culture risk considers what behaviors or cultural issues will pose a risk to the organization achieving its goals. More specifically, culture risk examines the likelihood that culture will differ from what's desired due to inherent pressures in the environment and/or ineffective mitigation of these factors.

The social environment can include various factors such as friends, family, culture, education, religion, media, and community. Family is often considered the primary source of socialization and plays a crucial role in shaping people's behavior.

There is growing recognition that social risk factors – such as poverty, minority race and/or ethnicity, social isolation, and limited community resources – play a major role in health, and significant gaps remain in health and in life expectancy based on poverty, race, ethnicity, and community environment.

There are five types of social risk and they are Environment pollution , Hazards to human health , safety and security , working conditions and fair wages .

The environmental risk factors include pollution, radiation, noise, land use patterns, work environment, and climate change.