Dealing with Biodiversity in Corporate Venture Risk Exploration and Production
Authors: Wright Nigel H 
Published: September 2012

Abstract
Biodiversity is the thermometer of the health of the environment and vital to long term sustainability. Placing biodiversity and environmental capital at risk has proven to be a costly business, but, the burden of proof of environmental damage and liability claims is left with the public. Stakeholders are now demanding that companies pioneering energy development in new vulnerable "high risk "frontier areas should bear the costs up front of insurance or financial assurance bonds. Such market mechanisms would re-gear risk incentives and capture ecosystem values thereby driving reduction of future disasters. In order to set target values and implement the necessary financial mechanisms tools are needed which capture key metrics which reflect the value of ecosystems biodiversity, their services and long-term support functions. Global studies are now delivering critical data focused on categorising ecosystem values and the services they provide which is changing the perception of "using environment for free". Data from international oil spill risk assessment and environmental liability work will illustrate the benefits of new metrics placing financial values on ecosystem services for use in strategic resources and emergency risk management. Capitalising on this approach a system in development will be presented that uniquely combines ecovalues from around the globe on a geographic information system with the latest cost data from the insurance sector on environmental claims and liability.
This unique combined system, incorporating risk reduction measures, will form the nucleus of metrics to assess and set the worst case dollar value of risk to biodiversity and ecosystem damage for coastal, offshore or onshore geographic areas. This system has global applications for venture risk managers, governments and insurers who will be able to utilise this system to develop and benchmark environmental risk cases for proposed energy development.
According to the Rio+ 20 conference attended by scientists and politicians, progress since the Rio Earth Summit has not met expectations, and the implementation challenges of sustainable development have proved to be much more difficult. The robustness of "life services" upon which business and society depend and their continued delivery relies upon their ecological integrity interactive functioning, biodiversity (variety of plant animals) and abundance. Biodiversity is the thermometer of the health of the environment and vital to long term sustainability. Current species extinction rates have been highlighted in the Millennium Ecosystem Assessment (2005) in which a staggering degree of irreversible biodiversity loss has been revealed. Now 10–30% of the mammal, bird and amphibian species face extinction. The World Wide Fund for Nature (WWF) records that nature is failing in the fight to regenerate in the face of consumption of resources. The International Union for the Conservation of Nature (IUCN) indicates that species face extinction including 1 out of 7 turtles face extinction; I in 8 birds; lin 4 mammals; I in 3 amphibians. Some 75% of world fisheries are fully or over exploited and 1 in 3 species of coral reef building coral face extinction. Meanwhile some 350 million people suffer from water shortage (www.global_issues.org)