Financial Institutions, both depository and nondepository, are in the business of capital distribution to generate a return on investment. However, they are not in the business of managing environmental cleanups and mitigating risk required by borrowers. Equity investors, developers, and contractors are equally interested in getting deals done within quantifiable budgets and are adverse to delays, shortfalls, and liabilities arising from unforeseen environmental risk.
Lenders can be held liable for environmental cleanups far exceeding the original appraised market value of their collateral. They face challenges with selling and or managing environmentally troubled real estate, even if lenders fall within a recognized exemption to liability. In addition, financial institutions are increasingly met with investors that demand safer investments with a return that justifies the risk. These challenges are increased in times of an economic downturn when there tends to be a flight to safety.
Lenders' approach to environmental risk should involve integrating
quantifiable risk management procedures in their lending guidelines. ECA
Risk Management's expert analysis will develop specific strategies for
your company by assessing your current policy, reviewing your assets
portfolio, and identifying your individual needs. ECA Risk
Management will design a comprehensive environmental risk policy
tailored for your company integrating: current policies, internal risk
tolerance, regulatory guidelines and a peer comparison review to ensure
compliance and competitiveness in the marketplace. A properly designed
and managed environmental risk program can:
- Align environmental management with business strategies to ensure that environmental functions support business goals.
- Reduce environmental liability and risk by improving compliance performance and reducing environmental impacts of concern.
- Reduce costs of environmental management by developing systems to standardize and streamline procedures and improve relationships with stakeholders.
- Transfer Environmental Risk with the use of environmental insurance
- Comply with FIN 47, FAS 114, FAS 157, Sarbanes-Oxley and other SEC required disclosures
- Improve corporate/organization reputational risk/image
- Increase shareholder value
- Act in accordance with the FDIC, Federal Reserve, OCC and OTS Guidelines for an Environmental Risk Program
- Maintain compliance with the SBA SOP 50 10 (5D)
Financial Regulators require that a lending institution have an environmental risk management policy and that the lending institution then adhere to it. With 27 years of experience in environmental risk management, 21 years specializing in the financial services industry, ECA Risk Management is uniquely positioned to partner with your company by managing environmental risk while supporting revenue growth.