AI-Powered ESG Risk Assessment
Effective investment decision-making increasingly depend on clear, data-driven ESG risk assessment: An AI-powered ESG Risk Assessment system makes this feasible. It can also integrate into an investor's risk management system seamlessly.
Business and investment communities find themselves increasingly exposed to new types of ESG issues that make ESG risk assessment an integral part of their investment decisions.
While there is not a single best way to assess a company’s ESG risks, all current methods attempt to construct a global risk score or rating in a process that progressively abstracts different combinations of ESG and financial materiality inputs.
However, for effective investment decision-making, opaque risk scores are insufficient. Due to heterogeneity in approaches to the abstractions, third-party ESG risk scores usually vary markedly among scoring providers. Divergences from these scores complicate the incorporation of ESG risk analysis to one’s investment decisions.
An information system enriched with ESG Risk Assessment AI is designed to tackle these issues.
AI-Powered ESG Risk Assessment
ESG Risk Assessment – Harmonizer AI helps investors harmonize third-party risk reports. Using various techniques in NLP, it is able to analyze each risk report / score individually, deconstruct their abstractions, and map them to in-house standards and approaches.
ESG Risk Assessment – Scorer AI takes this one step further to underpin proprietary ESG risk scoring. It can build logical reasoning around identified risks and their assessment. In conjunction with ESG Sensor, which we have discussed previously, this AI will be able to uncover data elements that would help, for example, to measure the impact each risk factor can have on a specific company or industry.
To read more on ESG risk assessment with AI, download our White Paper on AI in ESG.
