Why increased risk literacy is key to managing climate challenges - Rodrigo Souza, risk management academic

Rodrigo explains how we should manage climate risks, warns that with the current trajectory, a society level climate chaos could happen by 2035? and argues why better risk literacy could help us all plan our future.

Rodrigo Souza is a senior lecturer in accounting and risk management at the Business School of the University of Roehampton. He has a significant professional and academic experience risk management, corporate governance, internal controls and internal and external auditing, and related areas including cost and management control accounting. He is especially interested in the implementation of risk management in relation to controllership, audit, corporate governance, environmental management and business planning.

Highlights of the episode:

10:23: Irreversible climate change might be happening much sooner than 2050. People, governments, institutions, and individuals must think about climate resilience. 

11:53: David Spiegelhalter from Cambridge University, a statistician from the Royal Society, talks about risk literacy: https://www.science.org/doi/abs/10.1126/science.1191181

12:53 report from the Institute and Faculty of Actuaries about the IPCC report and about climate change fundamentally affecting human life taking place as early as 2035: https://actuaries.org.uk/media/gebdhxzi/climate-emergency-final-report.pdf

https://actuaries.org.uk/media/isvotyer/parasol-lost.pdf

14:45: climate change as an interconnected risk

17:30: about availability bias

21:20: about the importance of changing the rhetoric and the framing of climate change

22:34: it is essential to move from observation mode to action mode

23:00 rapid fire quiz with letter 'K':

• Key Performance Indicators, KPIs
• Kyoto Protocol, and in general, global agreements

Note: 24:10: Larry Fink pronouncement earier this year: https://www.cnbc.com/video/2026/04/14/watch-cnbcs-full-interview-with-blackrock-ceo-larry-fink.html

24:20: adding another ‘E’, Economic, before ESG, Environmental, Social and Governance

24:35 People, planet and profit vs people, planet and prosperity: https://www.youtube.com/watch?v=qnu_xGel2xg

https://www.forbes.com/sites/jeroenkraaijenbrink/2019/12/10/what-the-3ps-of-the-triple-bottom-line-really-mean/

29:18: So, for instance, for the first time in history, neuroscientists have verified that the IQ of people is decreasing with AI: https://thequantumrecord.com/philosophy-of-technology/global-iq-decline-rise-of-ai-assisted-thinking/

https://www.bbc.co.uk/news/articles/cd6xz12j6pzo

30:11: AI as a global challenge to climate change

30:49: Oxford professor, Juliane Reinecke, about the desirable worlds: https://ora.ox.ac.uk/objects/uuid:2e91cff1-bda2-43fa-86dc-b1e6d48c48b4/files/s2514nn59z

37:14: why it is important to become risk literate in the everyday life

39:02: further research and paralels to earlier crises: https://www.aicpa-cima.com/resources/download/building-and-enhancing-organisational-resilience-before-and-after-covid-19

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This was Gabor Sarlos, with Ready, Steady, Green!

podcasting: Ready, Steady, Green
news and views: LinkedIn
action: COPmitment

Transcript

Rodrigo Souza 0:17

If you cross the road, you check both sides before, and that's risk management. If you're crossing the road, you're also measuring how long you have until the car might reach you, and that's risk management. The problem is with climate change, when you set the timeline of 2050, most of us will look at it and think that we have time. In reality, if it's materializing your life today, as it's affecting fires in Australia, floods in Pakistan, in Brazil, that's where I come from. What the report provides us is this understanding that the chaos expected from climate change will happen much earlier than 2050, in 2035. Not the tipping point, not irreversibility, is about when things really get out of place and society as we have known for centuries will start to become completely unrecognizable.

Gabor Sarlos 1:38

Welcome to the latest episode of Ready Steady Green. In this podcast, we're discussing challenges and opportunities of turning climate awareness to climate action. In other words, making sustainability sustainable. We'll be focusing on young people as they are the ones who are and will be most affected by the global challenges of today and tomorrow, and they are the ones whose actions can change the current trajectory. This is not intended to be a specialist podcast to sustainability experts. Instead, it aims to broaden the discourse and help everyone realize how closely the topics of sustainability, climate, health, quality of life, business performance, equal of chances, innovation, technological development, all of these are connected. The episodes from Ready Steady Green aim to inspire everyone to step up and step out in their lives and in their community. If you like what you hear, make sure to follow us on your favorite podcast platform. Or share it with your friends and invite others to listen as well. You can also listen to our early episodes and feel free to send me a message. Who would you like to invite next? Our guest for today is Rodrigo Souza. Rodrigo is a senior lecturer in finance at the Business School of the University of Roehampton. He has a significant professional and academic experience in financial and non-financial firms, particularly in areas of risk management, corporate governance, internal controls, and internal and external auditing. And related areas including cost and management control accounting. He is especially interested in the implementation of risk management in relation to controllership, audit, corporate governance, environmental management, and business planning. Welcome to our podcast, Rodrigo. Pleasure to be with you, Gabo. Thank you for accepting our invitation. Did I forget something important when I introduced you?

Rodrigo Souza 3:34

I think that's the senior lectureship within accounting and risk management. There is an interface with finance, but I'm expert in risk management, most likely.

Gabor Sarlos 3:42

I see. Okay, that's very important. Then maybe we can elaborate a little bit about this because for an outsider these might sound somewhat specialist areas. So I know. Do you mind explaining a little bit what it covers?

Rodrigo Souza 3:54

Sure. So accounting might be pointing more towards disclosures, and I focus on a specific area of accounting that's called management accounting. That is how we produce information for internal decision makers. Finance will be most about how you feather the resources that will be available for you to manage cash flows, so mainly cash, and different versions of cash because they can come with different levels of liquidity. In risk management, in my view, is how you see the future. As an era of expertise for me, risk management always points towards future outcomes and if we prepare or not to deal with them and what we can do generally to prepare.

Gabor Sarlos 4:38

So this risk management you referred to, is this valid both for organizations, companies, as well as individuals, you think?

Rodrigo Souza 4:47

I think it's valid for everyone. We do it on a daily basis. If you cross the road, you check both sides before, and that's risk management. If you're crossing the road, you're also measuring how long you have until the car might reach you, and that's risk management. Although we do it on a daily basis, personal life circumstances that can be translated into business, the level of measurement required for that will vary. And the values that are put into place that usually are not so often referred to are as important than whatever can be measured in itself.

Gabor Sarlos 5:24

I see. Now, if I'm correct, you have experience in practical risk management as well. You have been working with uh firms, well, quite a few recent years you have been teaching and uh working with young people around it. How does the two uh connect in your mind?

Rodrigo Souza 5:42

For me, they are highly interconnected, and I don't see clear separation, or there shouldn't be a clear separation between these two fields. Recently the UK government has emphasized knowledge exchange, and that's exactly what it's about. That what is produced academically, that might be theoretically, should be translated into practice. And that has been the emphasis of my career since the beginning. I was doing accounting and then I had an internship in a bank, and I started to work with internal auditing and operational risk management. That has led me to a master's in accounting, focused on risk management, continued to pursue my risk management expertise through consultancy uh services as a manager, member of the executive board, and that brought me to the UK to do the PhD. And since then I got the job at Roehampton, I'm the chair of innovations for the Institute of Risk Management, I work for a few other institutions, try to disseminate this idea that practice and research most likely would work better together.

Gabor Sarlos 6:50

Right. It sounds very convincing to me. I'm hopeful that companies also agree with that. I'm wondering with this field, is it something which is developing in its framework and concepts, or is there or are there some widely approved and accepted standards along which everyone is working?

Rodrigo Souza 7:10

I heard anecdote recently. When has risk management started? And if you think about a baby and you're crawling and you see a fire, what do you think that this baby will do?

Gabor Sarlos 7:21

I guess crawl in the other direction?

Rodrigo Souza 7:24

Most likely not. The baby will start to crawl towards the fire because of the curiosity. Oh, you're right. And as we grow older, we start to create this risk-averse behavior and attitudes because we have been restricted from touching that fire, perhaps in a way that traumatizes us or creates blockages that start to create this way of interacting with the world. So most people will think about truth management from this risk-averse perspective of damages, of problems. But fire can be used for something good. We use it to cook food, we use it to shed light onto things. And what I try to remind people around us is that, for instance, climate change that we should be discussing in a minute, has these two sides of the coin. It can be a threat that's extinct us, but it can be an opportunity for us to redesign society, the world in a way that will work better for most, if not all.

Gabor Sarlos 8:24

I see. Now speaking of risks and climate change as you referred to, I'm wondering on the list of risks for a company management, how high is climate change? Is is it one of the top concerns and top risks or or not really? There are others which are more concerning.

Rodrigo Souza 8:44

According to the World Economic Forum, you would have climate-related risks as top risks globally for decades now. Uh two decades or more to be more precise. The problem is that the way that you translate climate risks into monetary terms might emphasize its relevance for business because that's how business operates, they translate everything into currency. The impact of climate, negatively or positively, is another matter. So although business might be downplaying the relevance of climate for financial reasons, the relevance of climate as an interconnected threat and opportunity will have significant consequences in business, government, and society in general.

Gabor Sarlos 9:36

So is it the probability of these risks happening or is it rather the the impact such a crisis would cause? What is it that uh makes it uh relevant?

Rodrigo Souza 9:48

That's a very good question. Uh most risk management discussions are usually gravitating towards this probability and impact. But something that we forget is the speed. If a risk is affecting you, it doesn't matter if this probability was 5%, when it materializing your life is 100%. The point of managing risks is when you should manage the risk, when it will become important. And therefore, the velocity of this risk towards you might affect the way that you manage these risks sooner or later. And I think that especially when we talk about climate change, we have created this discourse that climate change will happen in 2050. We start to see that this is happening much sooner than we expect. In some places it has been happening for a while. And it will start to become real, if it's not real yet, for a lot of people, government, institutions, and therefore they start to think about climate resilience. The impact for me is something that would be as important as the speed in this case, because when it reaches you, is when you see if you can absorb the impact and continue, or actually it might paralyze or create a damage that would be irreparable or hard to recover.

Gabor Sarlos 11:01

This is very interesting that you brought up this example of 2050 and whether is a target for 2050 incentivizing enough and whether people feel the urge and companies feel the urge. And the reason why I'm I'm saying this is interesting because one of our earlier guests on Ready Steady Green, Simon King, he was speaking about this and he highlighted how important it is that while the target is to reach something or do something by 2050, however, there is a trajectory leading to there, which means that year by year, month by month, week by week, you need to work along that, right? Is this a widely accepted practice or is it for some companies perhaps just uh delaying action by saying it can't only needs to happen by 2050?

Rodrigo Souza 11:48

In my personal view, it's delaying action, but let me elaborate on that. David Spieger from Cambridge University, a statistician from the Royal Society, he talks about risk literacy. The problem with risk literacy is that we haven't been trained to understand risks, and therefore the statistics that will be permeating the risks that might be affecting us on a daily basis. So we might be overestimating some risks and underestimating others. The problem is with climate change, when you set the timeline of 2050, most of us will look at it and think that we have time. In reality, if it's materializing your life today, as it's affecting fires in Australia, floods in Pakistan, in Brazil, that's where I come from, that's a risk that needs to be dealt now and cannot be delayed until 2020-50 because that would just make the problem worse. And talking about tipping points, we have recently received a report from the Institute and Faculty of Actuaries. They predict that the worst-case scenario provided by the IPCC, that is earlier than 2050, might be materializing. And according to estimation, climate change might be happening in 2035. What the report provides us is this understanding that the chaos expected from climate change will happen much earlier than 2050, in 2035. Not the tipping point, not irreversibility. It's about when things really get out of place and society as we have known for centuries will start to become completely unrecognizable.

Gabor Sarlos 13:39

Well, that's quite a doom-day scenario that you have. Let me add one thing here which I find sometimes disturbing, is that especially living, for example, in the UK, you can do many things with which you actually exclude yourself from climate change. We are working in, let's say, AC offices or perhaps driving a car where there's air condition, using AI, putting the heating on when we want, putting cooling on when we want that. So in a way we say, oh yes, there is climate change, but you know, not affecting me.

Rodrigo Souza 14:13

Yeah, what I'm proposing recently in a report that I will be producing to CIMA, and it should be available to the public towards end of summer, beginning of autumn, is that we need to think about the actions that we can take ourselves as individuals. We need to think about how we reshape the way that we operate as a business, and we need to start to connect it with our whole supply chain. Because with climate change, this is an interconnected risk. There are is a systemic risk. We'll change the way that the system operates and therefore it cannot be analyzed in its singular parts. Each individual will be important and we need to take action, daily actions, to change the way that we interact with potential carbo emissions, misuse of water, misuse of energy. To be honest, in developed countries, we are spoiling in the sense because we have a lot of resources. We have abundance of resources. In other places, for instance, if you go to Israel, not sure how it is now, but they'll be very conscious about the use of water. I think that the problem that we have created over time is that given the abundance that we have, we don't think that the scarcity will ever happen. But if the system as a whole is disrupted and significantly disrupted by climate change, it might affect UK, it might affect different countries, directly or indirectly. And I think that's the main point, for instance, if you disrupt life in Pakistan, that would be cascade effects into the whole globe that's interconnected through supply chains, people movements, geopolitical tensions and problems that might emerge as a result. These are the links that we need to reconnect.

Gabor Sarlos 16:04

Interesting point you make. Speaking of geopolitical risks, I read recently a piece. Again, it seemed to me that climate change is not the top number one concern. It is always among the top ones, but it is never the top number one. So obviously, geopolitical changes and risks ranks very high these days. And so does some of the technological changes and AI and concerns uh related to AI. And climate change is almost always there, but never the top one. We always have a feeling of yes, we can delay, we and also it's not my role to do anything about it, is it? It has to be the governments or the companies, not me.

Rodrigo Souza 16:48

Yeah, I think that the problem is that we separate ourselves and we analyze ourselves as a cell, and we don't see how our little bubble is interconnected. It's hard to talk about climate change. Are we really taking actions to change things on a daily basis? For instance, we drove to the campus today. You did, I cycled. I'm sure that you're more uh climate aware than I. And we have performed many tasks on our days that to have climate implications. We barely stop to think about it. We run with the flow as if it will never change. And that's availability bias. We have a a bias towards what is more important to us or more prominent right now. So when you talk about, oh, people are concerned about uh geopolitics or the Trump effect, as some would say, this is just because that is the most current issue on the news, but climate has always permeated the top risk for world leaders. Why hasn't action taken place yet? Or as much action as we should, because as we delay the action, it requires more significant investments and changes to make the adaptation requirements that climate change will make compulsory for us.

Gabor Sarlos 18:10

My question is that of all of these that you explain now, how do you find how strongly does this resonate with with company managers?

Rodrigo Souza 18:20

Picture that I found in my current research is that has been a lot of awareness from people. It has been a lot of intention to change things in a good way, but there has been a lot of frictions. For instance, how do you translate your individual climate actions to allow other people to replicate your climate awareness and adaptability is a matter that is usually not widely discursed. The same happens with business leaders. They might have specific values that they would like to pass as a legacy for the future generation, but for instance, because of their fiduciary duty towards shareholders, they need to hold their values until they retired, or until they think that is the right time, or until they are able to convince the board that this should be a priority. And that becomes organizational understanding that climate is important. Even in this case, and that has been the most difficult challenge to overcome, is how do you permeate it throughout your supply chain if most of other companies and other leaders might not be aware about the impact of climate change? So, Sun, yes, they will adopt your way of dealing with climate because they might be smaller players, but especially the big ones, they might not be convinced and therefore action is not taken or is delayed. And and that creates a whole resilience problem because the links in the chain they will make it stronger or weaker. So if you have weakness in the supply chain, that would be affecting large companies, small companies that to just permeate the whole supply chain, and that has been very hard to solve, especially in the West.

Gabor Sarlos 20:10

And I think one can add to this also the topic of awareness, awareness of the people, for example, who work in a given organization or or spend their day there. And to give you an example, um quite recently with my Earth in Crisis students, you know, this is a module where students study around sustainability and climate change and how that can be approached and managed from the perspective of business, law, life sciences, and so on. So we had this field trip with students from the various schools, and uh Louis Wright, the head of sustainability for the university, he showed us all these various solutions which are there in place, but often not many people know about them. So we have a biodigester, we have water treatment plant, we have uh solar panels which produce energy for us. Well, by the way, we are only uh using uh energy from renewable sources. We have Growham, we grow some of the uh food uh on uh on campus. This is a student-led initiative and so on. But again, not many people know about this, and awareness, I think, is the critical first step to any action that can be done.

Rodrigo Souza 21:22

I think that we need to change the rhetoric in terms of values. We have framed values too much in financial terms over time, and something that I'm starting to get aware of and try to diffuse more among my students is that values that don't only reflect the financial values that you have in a balance sheet, you know, a financial report. They might have other forms. For instance, many of the initiatives that you have mentioned, they have value. They are reducing carbo emissions, they are bringing relationships and connections within the community of Hampton. We have a whole knowledge in regard to how things could be done a different way, and it It doesn't need to be alternative. I think that we have dealt with climate as if it was a plan B. Sooner or later it will need to become the play plan A. Are we preparing for that? Are we really adapting and creating and imprinting that in students in the next generation that perhaps the world that they will live in will not look uh like ours? Because if we don't, all these initiatives they might go under the rudder and become unnoticed when they actually should be in the surface as the front page of what we do.

Gabor Sarlos 22:34

I fully agree. And often we are in observation mode and instead of actually action mode and urgent action and impactful action mode, we still believe that we have a lot of time, but as you just said, perhaps we don't. Except I would like to break the conversation now for a moment and bring in perhaps something lighter. I have a little game for you here. Sure. This is in fact our 11th episode for Ready Steady Green. And I would like to bring a couple of terms or even just one word, starting with the 11th letter of the alphabet, which is letter K, which is not an easy one. Yeah. And I'm wondering what associations you would have with these words in relation to sustainability. I'll give the term and I'm curious to hear, you know, in a couple of sentences in a minute, what do you think about that? So the first one is key performance indicators, KPIs in the field of sustainability. Do we have the right KPIs in place or do you think sustainability would deserve a rethink and a rejig of KPIs?

Rodrigo Souza 23:45

I think that we tend to focus too much on the financial key performance indicators. So translates everything into key performance indicators. For instance, I was working with a startup uh in Brazil and we had like a research lab, everybody working to produce training and more information, knowledge, research on ESG. That's 2020 when the whole discourse started to emerge as uh stronger after Larry Fink uh pronouncement. At some point we start to discuss if we shouldn't add another E in front of ESG, so it should be E E S G. Okay, because we can't forget the economics. And for instance, if you think about the PPP, yeah, the the triple bottle line.

Gabor Sarlos 24:35

Yeah.

Rodrigo Souza 24:36

Do you know how it's translated? Yes. I'm sure that you do. Okay. If you talk to the author who has coined the term, he didn't frame it as profit, but prosperity. Oh, what's that? And prosperity has a completely different meaning than profit. And that is permeating everything that we do in business. When we talk about CSR, corporate social responsibility, everything ended up being translated into what is cost-beneficial for business. And nowadays we're trying to replicate the same logic into climate change as if we had control of something. However, we don't have control over the planet as much as we try to pretend we do. And when we see that things are out of control, I will still be prioritizing profits or financial results above everything. So when I talk about KPIs, when I think about how this needs to be translated into measures, I'm trying to measure values that we will need or we would like to retain more than the financial ones that most likely will not mean much when the the words and the earth is a little bit chaotic. Very interesting point that you make.

Gabor Sarlos 25:56

And I learned something new. Apparently, I was wrong all along, and I may have been teaching something incorrect to my students, but I will go back to them and correct it. The next term with letter K is the Kyoto Protocol. And what I'm referring to here is in general the role of international agreements and global frameworks. Are they in place and are they doing a proper job? What is your take on this?

Rodrigo Souza 26:26

Regulations they usually come after some problems they emerge. They come trying to contain problems that have been materializing before and they start to become prominent in a way that you need to create rules to how things should take place. So for risk management, when you think about emerging risks, many of the things that we have with AI now, with climate change, with cyber before, and it's still present, is that the regulation might not be suit for purpose when the problem actually emerge because we create different pictures of how the world will look like. And as I have mentioned, especially with climate change, we try to pretend that we have control over things. So most of the regulation has been emphasizing carbo emissions. As if we control the level of carbon in the atmosphere, everything will be fine. So there has been a huge emphasis on carbon sequestration before, as if the technology be the solution, then we realize that the technology doesn't work as it should. Everything pretending that we have control without considering that the war the Earth environment, the system, how it operates, is much more complex than carbon emissions by themselves. And that's the problem with reducing complex systems into simplified models. We pretend that we have control, like as if we were operating in a lab environment with boundaries clearly delimited with Earth, not necessarily. We have the effect of the sun, we have the internal effects of people, we have so many interrelations into the system that might not be not just easily predictable, but most importantly, easily controllable. When it loses control, it might lose control when it becomes very hard for us to go back to what we used to have.

Gabor Sarlos 28:19

Now, in this context of having control or not, or losing control or not, what is your take on AI? And how do company managements perceive AI these days? Is it something sustainable? Does it have a strong risk element? Are they able to use it for prosperity as you highlighted? We love these hypes, don't you? Oh, absolutely.

Rodrigo Souza 28:43

Yeah. All these new trends and fashion words and new ways of doing things, they seem to bring the prosperity that we want, the dream that we have been waiting for. I think the problem with AI is that as most of the business propositions they are framed into what they can bring to you as good. And they downplay, they hide everything that might be behind the scenes, uh creating harm. So for instance, for the first time in history, uh neuroscientist uh has verified that the IQ of people is decreasing with AI. The amount of carbo emissions that are required to run these AI systems is incredible. The largest companies in the world, the governments included, they are investing trillions to create the database that will re will be required for us to run the generative AI technologies that are present nowadays. And if you start to operate these systems, you start to see that they are not operating at their full function yet because there has been a lot of decisions and therefore implementation of parameters put into place to reframe the use of energy and power, computer power, to make it work according to the limits that we have in the infrastructure available at the moment. AI should be exponentially stronger in the future. I think that the problem is that AI might be repeating what we have done before because it's based on the data that we have feed into it before. And if we go back into this idea that we have been feeding into all the systems that we operate within, that financial results should be prioritized above everything. The AI might be doing the same. And these are the side effects, among others, that we need to start to think about and consider because we can be vectors of change. There is a professor at Oxford, Julianne Hackinen, that she says that we need to start to design the desirable words that we need to create in order to continue to prosper, yeah, and to have the prosperity that we want to have.

Gabor Sarlos 31:01

I absolutely agree. I see an interesting parallel here to what you just mentioned, and that is in a growing number of countries uh banning of social media usage for children or or young people below the age of 15. And and while one can argue, you know, lots of pros and cons can be brought, but I absolutely agree that we need to create a framework where the actual neural working of the individual mind and thinking patterns develop at the age when they are supposed to develop. The way I see today is that in a number of fields governments are not really taking the role they should be taking, for example, in regulating uh some of the very large technology firms and so on. But this might be a first sign here and this might have also some implications later on regarding uh AI and the usage of AI for every element of our life.

Rodrigo Souza 32:00

Yeah, 100%. I think that when we're talking about KPIs, regulations, values, the problem is that for instance, if you take the the role of social media that was initially portrayed by business, and there is a purpose on it, on connecting people and make them reconnect with people that they love, that they might be far away, that they have lost track due to life circumstances. That's a great purpose. The problem is that when you start to translate that into a business model, this purpose might be forgotten and actually downplay to prioritize profit in this case, the actual financial results, rather than the original purpose of these platforms. So we have recently lawsuits against Meta, and they might still appeal to the higher court, so it's not clearly defined how the governments will position themselves in that regard. The same has happened with tobacco, the same has happened with other addictive industries before. And for instance, if you think about the tobacco industry, they just create a lot of noise around it to create a discredit towards the science that was proving that tobacco could cause cancer. Perhaps that has been the same logic that can be applied to social media. Everything that social media is bringing is great. We disregard all the harm that it's causing. I think that from a risk management perspective, we need to be aware about both, and we need to be aware about our final destination. What is the strategic objective that we want as a society to reach, and what is the best route that we can take to get there? Social media is great. Yeah. I'm in the UK, I have relatives in Brazil. I will be using social media quite frequently, not as frequently nowadays, because of the additive problems that I know that it creates to connect with them. Tobacco, I don't think that creates any benefit, but we have now the reframe of it into vapor. Absolutely. And let's think about it for a minute, and that's what risk management is about. You create vapor to reduce the harm caused by tobacco. But the addiction comes from the nicotine that could be removed. So the vapor comes with this idea that by using the vapor you reduce the amount of nicotine and reduce the addiction through smokers. But that creates a whole side effect into the younger generation, that's probably your audience, isn't it? That you start to use vapor as a joke, yeah, something that they play with, that they find fun, but they are getting addicted to nicotine, yeah, that didn't need to be in the vapor in the first place. It was put for a purpose, it became used for another purpose, and it's created a whole harm in a generation that most likely will never touch a cigarette, but it's definitely used in a vapor. So I think that these are the things. The problem that we have in risk management is not the risk itself. It's not let me give a very available example. If a tree is falling, is it a problem?

Gabor Sarlos 35:14

I guess not the tree falling. Well, it's a problem because it it will not produce any oxygen any longer, but the falling of the tree probably is not the problem itself, it's what the impact of that is. If it hits someone on the head, then it is a problem.

Rodrigo Souza 35:28

Exactly. Perfect. If it's falling on Richmond Park, that to become a whole ecosystem in itself. It's falling every day on the Amazon, most forests around the world, you have tree falling constantly, and that's part of how the system regenerates, uh rejuvenate itself. If it's falling on you, on me in one of our assets, definitely, uh that creates a financial damage. If we think about it in terms of climate, the world is changing, we need to adapt to it. It can be a threat to our existence or opportunity for us to redesign the way that we operate according to the way that we position ourselves. We are choosing to treat as a threat because we don't want to change the way that we hope have operated a society, but if we frame it as an opportunity for us to redesign a society that's more equal, that to allow more opportunities, that to enhance other values beyond profits, that can be the amazing thing that has happened with humanity. Turning point for us to go in a direction that emphasizes other values rather than just profit.

Gabor Sarlos 36:38

Well, that's a very optimistic take on this uh situation, but I fully agree that there is hope there. And continuing this further, if there are young people among our audience who are interested in, you know, learning more about risk management and and understanding how even individually how to better plan their lives, how to measure, how to calculate risks, what advice would you give?

Rodrigo Souza 37:04

I think that we should all become more risk literate. The way that the world operates is based on probabilistic measures. Although probability and statistics will play a part in that sense, we have a free will, we have agency that will allow us to choose what to do. So in that sense, risk is not a fate, it's a choice. And when we start to see that risk is a choice, and we can make different choices and turn the world, ourselves, the companies that work for society into a better trajectory, then we can benefit from risk rather than fear it. And I think that's what we can do with climate change.

Gabor Sarlos 37:49

I see. Alright. Well, thank you. Uh I have one last question at you because I'm aware that you are also uh doing quite a lot of uh research and you are interested in bringing new knowledge to the table. I'm wondering what is in the pipeline, what is exciting coming up, and uh what should we have an open eye for?

Rodrigo Souza 38:10

Well, I'm usually a dreamer, yeah. So I have many dreams and many ideas. I wish I had time to operate all of that in my lifetime. I have always been concerned about the climate. I had the opportunity to do work on climate and sustainability in very early stage of my academic career because my mentor in Brazil is an environmental management accounting expert. The problem is that when I start to analyze that route, I saw that there was a lot of greenwashing, there was a lot of minimal requirements to attend compliance, and then I decided that I would not be part of it. So the current work that I'm designing with CIMA and the work that I have designed through Hampton in my organization resilience and sustainability module is targeting create actions and changes that to change the way that we operate. Yeah, that to change the way that we think, that we change the way that we run business, that to change the way that we interconnect as a society. Because it's great, perhaps the UK will not be adversely affected by climate change, you know. As a Brazilian, I'll be quite happy to have a slightly warmer weather from time to time. Uh but for instance in Brazil, that can have devastating effects for Africa. Uh it's the north part of Africa and in various other regions, it will have devastating effects. I think that what my research tries to bring is this awareness that for climate, I'm focused now on the digital revolution as well. I'm designing and running a series of workshops this year for the Institute of Risk Management on emerging risks because we need to think about not just how the world operates right now, but what is coming in our direction that might change or might require us to change the way that we operate. So my research has been about it. How do we see the future and how do we design the future that will be better for us, but not in an egocentric view for us as a society. So just to give you a snapshot, a glimpse into what is to come with the CIMA report, I have framed this individual organizational and supply chain perspective of climate resilience into what I call the brain, the body, and the family families. And that's putting humans at the center, but not thinking that we are the most important species because we are not. The earth can still recover without us, but it's to remind people that climate resilience and climate awareness, climate adaptation needs to come from the division. Yeah, we need to think with our whole brain, not just our financial brain, but different values that we have and that are at play do it to climate change. We need to change the way that we operate as business, and that's what I call operate as a whole body. I have a head, arms, legs, but if my nail has some kind of pain, I have problems that might impair me to do other stuff. So we need to understand that all parts of the body are important, and we need to recognize that each of us have a different gift, and we need to use our gifts to create better companies in a better society. And we might not be able to do it for the whole world at once. So I frame it in the terms of the supply chain as a family of families. Are we looking after our family, the closest companies that operate with us? Can we operate it and disseminate it as a family of families? And I call it collaborate as a family of families. Can we collaborate to this higher purpose that should make the world a better place to climate, to society, to the different species? If we are, I think that we can achieve and enhance our climate resilience and operate in a better place.

Gabor Sarlos 42:05

Fantastic. Well, I wish you all the best and good luck uh to this ambitious uh research, thinking, and research project you have in front of you, and I fully support your approach in this uh holistic and global but still humanistic uh approach that you take. So thank you very much. Thank you for coming along to our uh talk here. Thank you, Rodrigo.

Rodrigo Souza 42:27

Thank you, Gabor. Real pleasure.

Gabor Sarlos 42:29

Thank you all for listening to our podcast today. If you liked it, make sure to follow it on your favorite podcast platform, share it with your friends, and invite others to listen to it. You can listen to our earlier episodes and feel free to send me a message who would you like to invite next as our guest? Help us get the message through. We all need to act on sustainability now. This was Gabor Sarlos with Ready Steady Green. Bye for now.