Assessing the Impact of Environmental, Social, and Governance Disclosures on Financial Risk Assessment Processes

Posted: Oct 04, 2022

• Luna Perez
• Luna Rodriguez
• Luna Smith

Abstract

The integration of Environmental, Social, and Governance (ESG) factors into financial risk assessment represents a paradigm shift in how investors and financial institutions evaluate corporate performance and stability. Traditional financial risk models have predominantly focused on quantitative financial metrics, often overlooking the growing evidence that non-financial factors significantly influence long-term financial viability. This research addresses the critical gap in understanding how ESG disclosures quantitatively impact financial risk assessment processes and introduces a novel methodology for systematically incorporating these factors into risk models.