Finding the Energy to Stick With Green

Finding the Energy to Stick With Green | Risk & Insurance | Assessing risks and practicing risk management tops the list of business trends this year and, for risk managers, that is a good thing. The increased importance placed both on risk assessment and risk management puts us front and center with senior management to deliver timely, relevant information in a useful format. Undoubtedly, identifying emerging risks will be part of that challenge.

By JANICE OCHENKOWSKI, the past-president of the Risk and Insurance Management Society Inc. and a managing director with Jones LaSalle Inc.

I am responsible for risk management for Jones Lang LaSalle, a global real estate services company. With offices in more than 60 countries and a wide range of products and services related to commercial real estate, we have already identified plenty of risks. One of the areas that I see as an emerging risk flows from one of the hottest initiatives in real estate--energy and sustainability, known as the "green" movement. It is important to mention that there are as many aspects to the real estate green movement as glass panes in a high-rise building.

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For some, it means adding a few plants in a building's lobby. For others, it is Platinum LEEDS certification. But for most of us, it includes everything between. Jones Lang LaSalle does not view energy and sustainability initiatives as a trend but rather as an emerging way of thinking about global property ownership and management.

When I think about new risks on the horizon, I think about risks related to the energy and sustainability initiatives that are either unknown or unquantified today. For example, simple calibration errors can occur when working with new types of building equipment; the consequence could be a failure of the systems to operate as anticipated, with neither the financial nor resource savings that were expected. Additionally, over time, we may learn about adjustments required or special conditions that were not fully understood when the systems were installed. These could also result in failure to meet expectations that can lead to potential claims.

There is also a new category of green cleaning products and materials. Potential risks here include misuse of the materials, unintended consequences from unanticipated use, and new scientific data emerging about the material or product's components--all of which may lead to unexpected risks. The same risk potential is true of building materials, recycling programs, lighting sources--in fact, just about any of the new products and/or services that are related to improving energy efficiency and sustainability carry a risk potential.

Should we avoid these risks and wait a few years before embracing this movement? At Jones Lang LaSalle, the only answer is: "Absolutely not!" We believe that developing, owning, managing and leasing properties that are respectful of the environment is critical. We are committed to this initiative and are confident that, as those new risks emerge, we will manage them. We believe that traditional risk management practices can be applied to emerging risk successfully.

We believe this because, of course, in a perfect Catch-22 situation, failure to implement the best technology, or to operate a property in an energy efficient manner, is also a new risk on the horizon.

April 15, 2009

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