Environmental risks and their management
Environmental risks refer to the risks related to the health and living and working environment of humans and the risks to other creatures and to the physical environment. A separate sphere of environmental risks are environmental damage risks, which are environmental risks caused by a sudden disturbance or disaster.
When an environmental risk becomes reality, the resultant effects on your company may be enormous because the law dictates that the party causing the disaster shall pay compensation for it. This includes damage caused by inadvertent action. Environmental damage may also have other consequences on your company, such as negative publicity.
Companies have a responsibility to be aware of the environmental impact caused by their operation. The prime objective of environmental risk identification and management is to prevent risks from becoming reality. On the other hand, preparing for various disasters and interruptions helps companies to secure the continuity of financially stable operation when disaster strikes.
The environmental risk management procedures of companies are often presented to the authorities. However, more often than not the procedures are also of interest to customers, investors, lenders and sponsors.
Voluntary environment management systems (such as ISO 14001 or EMAS) can be used to lend a hand in environment management.
Environmental liabilities and damages
Compensations for environmental damage are pursuant to the Act on Compensation for Environmental Damage, but liability is also subject to other laws. Responsibility for compensation for environmental damage lies with the party whose operation likely caused the damage. Any damage must be compensated for by the party that caused it even if the operation was carried out with due care.
The purpose of statutory environmental damage insurance is to ensure that the injured party will receive compensation for any losses suffered as well as for prevention and restoration costs even when compensation cannot be received from the party who caused the damage. Companies under private law whose operations require an environmental permit to discharge sewage effluent or an environmental licence granted by the Regional State Administrative Agency, or a licence for the industrial processing and storage of hazardous chemicals granted by the Finnish Safety and Chemicals Agency (Tukes) are subject to the duty to insure.