Sensemaking perspective in ESG related risk management
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Journal Title
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Volume Title
School of Business |
Master's thesis
Authors
Date
2024
Department
Major/Subject
Mcode
Degree programme
Accounting
Language
en
Pages
79
Series
Abstract
The objective of this research was to examine the Enterprise Risk Management (ERM) process within the case company, explore the role of ESG (Environment, Social, and Governance) related risks within this process, and assess how sensemaking influences the definition and management of ESG risks. Currently, increased expectations regarding sustainability add a new dimension to the field of risk management. In recent years ESG issues have garnered significant attention from regulators and investors alike. This heightened focus on sustainability inevitably impacts risk management practices. Further, the sensemaking perspective theory was employed to gain a deeper understanding of the sensemaking process in ESG related risk management. The research method employed in this study is qualitative in nature. Data for this study was collected through semi-structured interviews and the analysis of public documents. For this research, Finnish specialist organization is used as the case study. This study contributes to the existing body of literature by enhancing the comprehension of ERM processes, the integration of ESG risks, and the impact of sensemaking on risk management practices. Sandberg and Tsoukas’ (2015) framework of sensemaking perspective has not been studied in the light of ESG risk management in prior literature and therefore this study provides new insights into that field. The findings of this research include a discussion on the implemented ERM process, ESG related risks and sensemaking perspective. The findings indicate that the ERM process of the case company aligns with established theoretical frameworks. Specifically, the ERM process is closely integrated with the company's strategic objectives and adheres to the COSO framework. Identified ESG risks in case company are also largely consistent with prior research. Social responsibility related risks are highlighted, due to the nature of case company’s industry – professional service specialist organization. Also, this study highlights the critical role that laws and regulations play in shaping the framework for risk management and sensemaking.Description
Thesis advisor
Huikku, JariKeywords
ESG, ERM, risk management, sensemaking