Calculated risk: economic versus human rights requirements of corporate risk assessments

In: Analysis / German Institute for Human Rights

Abstract

Human rights risk assessments help corporations to identify potential adverse effects of their business activities on human rights in order to avoid them, reduce them or compensate those affected. Corporations differ in their understanding of what constitutes a "risk": a corporate risk assessment is about potentially adverse effects on returns on investments or operations. This analysis outlines the different concepts of risk in a human rights and in a business context and illustrates the potential impact this discrepancy can have in practice by using the example of a corporate risk assessment in the Colombian coal sector. From this analysis the Institute derives criteria for possible self-regulatory action on the part of state and business, which can make a human rights risk assessment a mandatory requirement for enterprises.