Page 56 - CMA Journal (Nov-Dec 2025)

Focus Section

Formwork (ESG) Frequency Business Impact (Likely) Risk Materiality Transi onal Cost

Topic Iden fied Risk

1. Direct Cost: CO Tax, compliance cost &
2
Carbon E High High Yes Transi on risk Technology Cost etc.
emissions (regula ons, costs) 2. Indirect Cost: due to change in fashion,
Reputa onal cost due to brand an campaign
Data G Medium Medium Yes Legal and Legal exposure to data privacy that damages the
privacy reputa onal risk reputa on like Banks.
Employee S Low High Yes Opera onal risk Opera onal cost will increase due to learning
TO (Tech) curves of new high technical employees.
Employee S High Low No Opera onal risk Insignificant cost increase due low level no
TO (Labours) technical employees TO.
Rain Fall E High Medium Yes Financial risk Significant reduc on in produc on.
Drought E Medium High Yes Financial risk Significant reduc on in produc on.
Single risk may impact different areas or different risks may impact single area and also may impact in different areas. All the possible
risks are tested on E, S and G to see the impact.

2. Risk Assessment Stakeholder Concern
through Stakeholder Methodology Risk Iden fied Ac on
Engagement: This approach is Category Status Stakeholder Company
effective because all risks are Local Smoke badly hi ng Reputa onal Shi ing on alternate
addressed through plausible Community External Complaints Environment ( E) health loss energy.
and actionable measures, Employees TO Internal Records (Data) Work place issue(S) Incidents, injuries Opera on Loss Work & mo on study
ensuring that stakeholders are Fraud & Strengthen Internal
Employees Internal Audit Governance (G) Misappropria on Financial Loss Controls
involved in managing poten-
Customers External Survey Delay in supply (s) Stock out cost Financial Loss Increased vehicles
tial impacts.
Strike of transport Imposed CO2 tax by Shi ing to cer fied
Supplier External Newspapers Financial / Rep
3. Scenario and Sensitivity Union/ Supply Chain (S) the Govt. Suppliers.
Method of Risk Assessment: Delay in dividend Loosing value of Reputa onal Bank loan for mely
Shareholders Internal Mee ng
payment (G) money loss payment
Scenario Analysis: Different BMR to use
End user of Reputa onal
scenarios may affect multiple External Online survey Quality depressed (S) Value of money loss sophis cated
product loss
variables or a single variable, technology
and a single scenario may
impact several variables. All final
Scenario outcomes are then tested in sensitivity
Framework Mul ple Scenario Mul ple Outcomes Out Come analyses to identify the most vulnerable
1. Govt. imposes USD 20/ ton CO . 1. Cost of produc on increased (OH). 1. Prime cost
2 variables that should be addressed first.
Climate -E 2. Extreme weather disrupts the 2. Cost of RM increased. 2. Conversion cost
supply chain of Raw Material. 3. Sales volume decreased 3. Sales Volume
Sensitivity Analyses: Labour costs are
1. Labor demand increased in the
Social- S market. 1. Wages to be increased to maintain labours Labor cost (Wages) will controlled first, followed by material
2. No change in rate of incidents in 2. Insurance cost increase
produc on dep . costs, and then administration costs.
1. Appointed consultant for audit 1. Slight increase in cost.
Governance- G /assurance quarterly. 2. Reputa on would increase but cannot Administra on Cost About the Author: The writer is a Fellow
2. Commitment to adopt GRI - be quan fied.
standards Member of ICMA and CEO at Mazhar

Mahmood & Company in Rawalpindi. He is an
Sensi vity Decease in ROI Official Trainer of SMEDA for Business
1.Prime cost. Development and also Consultant at PIPS
2.Coversion cost. 1. PC by 9 % 2.CC by 6% 3. SV by 8% When CC & Sv constant is -9% (Parliament House) for commentary on
3. Sales Volume performance of outgoing year & Annual
Labor wages by 2% (No need for further
Labor cost (Wages) When PC & SV constant is -12% Budget. He served as a GM (Finance) in a
test).
business group and also Zonal Head of
Administra on Cost Admin cost by 1% (No need for further test). When PC & CC constant is -8% Accounts at Muller & Phipps Pakistan (Pvt) Ltd.

54 ICMA’s Chartered Management Accountant, Nov-Dec 2025