Ex-Officials: CEOs Ignore Environmental Risks

Corporate executives are underestimating the threat they face due to environmental risks such as global water shortages, former Environmental Protection Agency Administrator Carol Browner and former Securities and Exchange Commission Chairman Harvey Pitt said this morning at a briefing organized by the world's largest insurance broker, Marsh Inc.

Browner and Pitt are members of a panel of experts at Marsh's new Center for Risk Insights, which aims to advise businesses on how to mitigate large global risks such as climate change. A survey of top-level executives--conducted in June but released by Marsh today--indicated that corporate perceptions of big risks are at least somewhat out of whack; many more executives feared a natural disaster or a terrorist attack than the collapse of the housing market as an event that was "very likely to occur."

Browner pointed out that the executives viewed reduced access to water as an even less likely risk than a housing collapse; but water shortages are already a reality in many parts of the globe—including regions that are highly relevant to U.S. companies that rely on outsourcing and global trade.

"More and more companies are going to have to think about water and the changing realities of water," she says. Pitt noted that too many corporate executives reasoned that climate change was either an issue that could not affect their companies, or was a threat too large to manage.

"You can't just sit there and assume these risks don't apply," he said.

—Marianne Lavelle