Resilience, Sustainability, Ethics and Operations Governance

Introduction and Context

Operations management has traditionally emphasized cost, quality, speed, dependability, and flexibility. Contemporary operations must pursue these objectives while also remaining resilient under disruption, reducing environmental harm, protecting workers and communities, and operating within systems of accountability. These requirements are not separate concerns. A low-cost supply chain may be fragile; an environmentally efficient process may expose workers to unacceptable risks; and rapid recovery after a disruption may be achieved by shifting harm to suppliers or communities.

Resilient and responsible operations therefore require a systems perspective. Managers must understand how facilities, suppliers, logistics networks, information systems, people, regulators, customers, and ecosystems interact. The purpose of governance is not merely to prevent legal violations. It is to establish decision rights, controls, transparency, incentives, and assurance mechanisms so that operational performance remains aligned with organizational purpose and stakeholder obligations.

This chapter integrates five related domains: business continuity and disruption management; circular economy and life-cycle thinking; environmental and social performance measurement; ethical operations; and governance of operational risk, suppliers, safety, traceability, and compliance.

Learning Objectives

After studying this chapter, students should be able to:

1. Distinguish resilience, robustness, redundancy, agility, and recovery capability.
2. Design a business-continuity approach using disruption scenarios and critical-process analysis.
3. Apply circular-economy and life-cycle-thinking principles to operations decisions.
4. Select and interpret environmental, social, safety, and governance metrics.
5. Evaluate labor, supplier, traceability, compliance, and operational-risk controls.
6. Critically assess trade-offs among efficiency, resilience, sustainability, and ethics.
7. Develop an integrated governance approach supported by data, assurance, and continuous improvement.

1. Resilience as an Operations Capability

Operational resilience is the capability of an operating system to anticipate, absorb, adapt to, and recover from events that threaten the continuity or integrity of its activities. It is broader than disaster recovery. Disaster recovery commonly focuses on restoring information technology or facilities, whereas resilience includes preparation, adaptation, alternative operating modes, stakeholder communication, and learning after disruption.

Several concepts should be distinguished:

Resilience is multidimensional. A network may recover quickly from a port closure but remain socially irresponsible if it relies on forced overtime during recovery. Conversely, a highly sustainable process may be vulnerable if it depends on one geographically concentrated source of a critical material. Strategic operations management therefore evaluates performance across time, risk, and stakeholder impact.

A useful conceptual model contains four stages:

1. Preparation: identify critical processes, dependencies, hazards, vulnerabilities, and response resources.
2. Response: contain damage, protect people, communicate, and maintain prioritized services.
3. Recovery: restore capacity in a controlled sequence while monitoring quality and safety.
4. Learning: investigate causes, revise controls, and invest in improved capability.

Resilience should not be measured only by whether operations eventually resume. A system that resumes while causing injury, corruption of records, environmental release, or severe customer harm has not achieved responsible resilience.

2. Business Continuity and Disruption Scenarios

Business continuity management (BCM) is a structured process for maintaining or restoring priority operations during and after disruptive events. Its scope can include natural hazards, cyberattacks, utility failure, equipment breakdown, pandemics, labor disputes, geopolitical restrictions, supplier insolvency, product contamination, and reputational crises.

Business-impact analysis

A business-impact analysis (BIA) identifies processes whose interruption would materially affect safety, customers, revenue, legal obligations, or strategic commitments. For each process, managers should identify:

• maximum tolerable period of disruption;
• recovery time objective (RTO), the targeted time to restore a process;
• recovery point objective (RPO), the acceptable age of recoverable data;
• minimum acceptable operating level;
• critical people, equipment, materials, utilities, information, and suppliers;
• legal, contractual, safety, and environmental constraints.

RTO and RPO are different. An RTO concerns time; an RPO concerns data loss. For example, an RTO of four hours means that a service should be restored within four hours. An RPO of fifteen minutes means that no more than fifteen minutes of data transactions should be unrecoverable.

Scenario analysis

Scenario analysis tests how the system behaves under plausible but challenging conditions. Scenarios should be specific enough to reveal dependencies, but not so narrow that they merely reproduce historical events. A useful scenario includes the initiating event, duration, geographic scope, affected resources, secondary effects, decision constraints, and recovery assumptions.

Managers can classify scenarios by likelihood and consequence, but a simple risk ranking is not sufficient. Low-probability events may deserve substantial preparation when their consequences are catastrophic or irreversible. Interdependent failures also matter: a cyberattack may disable production scheduling, while a power outage may prevent communication and refrigeration simultaneously.

Continuity strategies

Common strategies include:

• Avoidance: redesigning the process so that a dangerous or excessively vulnerable dependency is removed.
• Reduction: lowering likelihood or impact through preventive controls.
• Transfer: using insurance, contracts, or external capability, while recognizing that responsibility cannot be fully outsourced.
• Acceptance: consciously retaining a risk within approved limits.
• Sharing or diversification: using multiple suppliers, locations, technologies, or transport routes.
• Buffering: holding inventory, spare parts, capacity, or financial reserves.
• Adaptation: establishing alternative specifications, workflows, or product configurations.

These strategies involve trade-offs. More inventory may improve continuity but increase obsolescence and environmental burden. Dual sourcing may reduce supply risk but sacrifice volume economies. Local sourcing may shorten physical distance but not necessarily improve labor conditions or total emissions.

3. Operational Risk and Governance

Operational risk is the possibility of loss or harmful outcome arising from inadequate or failed processes, people, systems, external events, or governance. In operations, it includes safety incidents, quality failures, unauthorized work, fraud, data loss, regulatory noncompliance, environmental releases, and supplier misconduct.

Risk governance assigns responsibility for identifying, evaluating, treating, monitoring, and reporting risk. A mature governance design normally includes:

• Board or governing body: approves risk appetite and oversees material risks.
• Senior management: integrates risk with strategy, resources, and performance objectives.
• Process owners: operate controls and remain accountable for outcomes.
• Risk, compliance, and safety functions: provide expertise, challenge, and monitoring.
• Internal audit or independent assurance: evaluates whether governance and controls work.
• Workers and suppliers: report hazards and participate in improvement.

The “three lines” model is useful: operational management owns and manages risk; specialist risk and compliance functions support and challenge management; and internal audit provides independent assurance. It is not a substitute for leadership accountability.

Risk assessment

A basic qualitative risk assessment may rate likelihood and consequence on ordinal scales. A numerical risk-priority score can be calculated as:

Here, S is severity, O is occurrence likelihood, and D is difficulty of detecting the problem before harm occurs. The scales must be defined, for example from 1 to 10. The result is a prioritization aid, not a probability of loss. It assumes that the three ratings are sufficiently consistent for comparison and that multiplication is an appropriate decision rule. It should not be compared across unrelated processes without calibration.

For events with measurable probabilities and consequences, expected loss may be represented as:

where pᵢ is the probability of scenario i, cᵢ is its monetary or otherwise quantified consequence, and the summation covers all relevant scenarios. This model assumes that scenarios are defined consistently and that probabilities and consequences are credible. It can understate risks involving catastrophic, irreversible, or ethically unacceptable outcomes because a low expected value does not make severe harm acceptable.

Control design

Controls can be preventive, detective, or corrective. Examples include machine guarding, segregation of duties, supplier approval, access restrictions, inspection, incident reporting, recall procedures, and corrective-action systems. Strong control design follows the hierarchy of controls in safety: eliminate the hazard where possible, substitute safer alternatives, apply engineering controls, use administrative controls, and rely on personal protective equipment only as the last layer rather than the primary solution.

4. Sustainability and the Circular Economy

Sustainable operations meet present needs without undermining the ability of future generations and other stakeholders to meet their needs. In operations, sustainability is commonly analyzed through three interacting dimensions:

• Environmental: emissions, energy, water, materials, waste, biodiversity, and pollution.
• Social: human rights, decent work, safety, equity, community effects, and customer well-being.
• Economic: long-term viability, productivity, innovation, and fair value creation.

The circular economy challenges the linear pattern of take–make–use–discard. It aims to preserve the value of products, components, and materials for as long as possible and to regenerate natural systems. Circular strategies include durable design, repair, refurbishment, remanufacturing, reuse, sharing, product-service systems, and high-quality recycling.

Circularity is not automatically sustainable. Reverse logistics may consume energy; recycling may create hazardous exposures; reused products may fail safety requirements; and product-service models may shift rather than reduce consumption. Each circular intervention should therefore be evaluated against life-cycle impacts and social conditions.

Design hierarchy

A practical hierarchy is:

1. Avoid unnecessary material and energy use.
2. Extend product life through durability, maintenance, and repair.
3. Reuse products or components.
4. Refurbish or remanufacture.
5. Recycle materials at the highest feasible quality.
6. Recover energy only when higher-value options are not viable.
7. Dispose safely as a final option.

The hierarchy reflects value preservation, but regulatory, health, safety, and technical constraints may alter the preferred option.

5. Life-Cycle Thinking and Environmental Metrics

Life-cycle thinking evaluates impacts from raw-material extraction through processing, distribution, use, and end-of-life. It prevents “burden shifting,” in which an improvement at one stage creates greater harm elsewhere. For example, reducing factory energy while increasing product replacement frequency may worsen total emissions.

A life-cycle assessment (LCA) generally includes four phases:

1. Goal and scope definition: purpose, system boundary, functional unit, and intended use.
2. Life-cycle inventory: data on material, energy, water, transport, emissions, and waste flows.
3. Life-cycle impact assessment: translation of inventory flows into impact categories.
4. Interpretation: evaluation of results, assumptions, sensitivity, uncertainty, and conclusions.

The functional unit provides the basis for comparison, such as “one thousand hours of lighting service” rather than simply “one lamp.” Comparisons are valid only when products provide equivalent function and boundaries are consistent.

Important operational metrics include:

A generic intensity measure is:

where I is impact intensity, E is total measured impact, and Q is the relevant output or functional service. Units must be explicit, such as kg CO₂-equivalent per product. Intensity can improve while total impact increases if output grows faster than efficiency.

Environmental reporting requires careful boundary control. Direct emissions from owned or controlled sources, indirect emissions from purchased energy, and value-chain emissions are often separated into different categories. Managers must avoid double counting, unsupported estimates, and selective disclosure.

6. Social Sustainability, Ethics, and Responsible Work

Ethical operations concern what an organization ought to do, not merely what it can legally do. Law is a minimum standard; ethical responsibility may require stronger action where laws are weak, enforcement is limited, or stakeholders lack bargaining power.

Key labor and human-rights concerns include forced labor, child labor, discrimination, excessive working time, wage violations, unsafe conditions, harassment, freedom of association, privacy, and retaliation against whistleblowers. Ethical procurement must consider conditions beyond the first-tier supplier. A contractual statement alone is inadequate if purchasing targets, lead times, or price pressure make compliance impractical.

Ethical reasoning can be supported by several perspectives:

• Duty-based ethics: certain rights and obligations must not be violated even for economic benefit.
• Consequentialism: decisions are assessed by their overall effects, including harms and benefits.
• Justice and fairness: benefits, risks, and opportunities should not be distributed arbitrarily.
• Stakeholder theory: managers have responsibilities to affected groups, not only investors.
• Virtue ethics: organizational character, integrity, courage, and practical wisdom shape decisions.

Ethical dilemmas often arise because objectives conflict. During a shortage, should scarce protective equipment be allocated to the highest-paying customer, the greatest medical need, or the most vulnerable population? A governance process should make criteria explicit, involve affected stakeholders where feasible, document decisions, and provide escalation channels.

Safety is both an ethical duty and an operational requirement. Leading indicators—hazard reports, near misses, completed corrective actions, training quality, and safety observations—can complement lagging indicators such as injuries. However, targets must not encourage underreporting. A reduction in reported incidents may indicate improved safety or suppressed reporting; the metric requires triangulation.

7. Supplier Governance, Traceability, and Compliance

Supplier governance extends operations control beyond organizational boundaries. A robust supplier program includes risk segmentation, due diligence, contractual expectations, capability development, monitoring, remediation, and responsible exit.

Risk segmentation should consider country and sector exposure, material criticality, labor intensity, environmental sensitivity, financial dependence, substitutability, and past performance. High-risk suppliers may require deeper assessments, worker interviews, document verification, site visits, and independent audits.

Audits are useful but limited. Announced audits may produce staged compliance; document-focused audits may miss coercion or unsafe practices; and repeated nonconformities may indicate that the buyer’s commercial model is part of the problem. Effective programs combine audits with worker voice, grievance mechanisms, performance data, unannounced verification where lawful, and supplier development.

Traceability is the ability to follow the history, location, transformation, and ownership of a material, product, or information record. It supports recalls, fraud prevention, ethical sourcing, regulatory reporting, and impact analysis. Traceability is not identical to transparency: an organization may trace a product internally without publicly disclosing the information.

A traceability system should define:

• the object being traced;
• the required data fields and identifiers;
• chain-of-custody rules;
• event capture points;
• data ownership and access rights;
• retention periods;
• verification and exception handling.

Digital technologies such as sensors, distributed ledgers, cloud platforms, and AI-assisted anomaly detection can improve visibility. They do not guarantee truth. Poor source data, biased algorithms, weak access controls, and false confidence in immutable records can undermine governance. Human accountability remains necessary.

Compliance management should identify applicable laws, permits, standards, contractual obligations, reporting duties, and sanctions. It should then assign owners, establish controls, monitor changes, test effectiveness, and document evidence. Compliance should be integrated into process design rather than treated as an annual checklist.

8. Integrated Metrics and Decision-Making

A balanced operations scorecard can connect resilience, sustainability, ethics, and performance. Possible measures include:

Metrics must be designed to avoid perverse incentives. For example, rewarding purchasing solely for price may produce hidden labor and resilience costs. A dashboard should show trends, thresholds, data quality, uncertainty, and trade-offs rather than a single aggregate score that conceals poor performance.

Decision-making should distinguish efficiency from effectiveness. A process can achieve a low cost per unit while failing its intended purpose because it is unsafe, unreliable, or environmentally damaging. Multi-criteria analysis can make trade-offs explicit by comparing alternatives against agreed criteria. Weighting should be transparent, and certain constraints—such as legal compliance or unacceptable safety risk—should be treated as thresholds rather than traded away for small financial gains.

9. Illustrative Case: Northstar Medical Devices

Background

Northstar Medical Devices manufactures sterile diagnostic cartridges. Its main polymer supplier is located in one region, while sterilization is performed at a single external facility. The company has historically prioritized low unit cost and high equipment utilization.

Problem

A severe flood interrupts polymer supply and disables the sterilization provider. At the same time, an internal review finds that a lower-tier supplier uses temporary labor agencies with weak wage documentation. Northstar can restore output quickly by purchasing substitute material from an unverified broker and asking employees to work extended shifts. This option would protect short-term revenue but creates quality, labor, and traceability risks.

Analysis

The BIA identifies sterilization and polymer availability as critical dependencies. The RTO for essential hospital orders is seventy-two hours, but the current network cannot meet it. The RPO for production and batch records is fifteen minutes; the information system meets this requirement, but physical traceability records at the sterilization provider are incomplete.

The response team evaluates four alternatives: wait for the original supplier; use the broker; qualify a second supplier; or redesign the cartridge to use a more available polymer. The last option is strategically attractive but cannot be implemented immediately because validation is required. The broker offers speed but has unknown origin and weak chain-of-custody evidence.

Approach and solution

Northstar adopts a staged response:

1. Prioritize medically urgent orders using an explicit allocation rule.
2. Protect workers by limiting overtime, adding qualified shifts, and monitoring fatigue.
3. Use only substitute material with documented origin, certificates, and incoming verification.
4. Establish a temporary quarantine and release process for affected batches.
5. Contract an alternate sterilization provider subject to qualification and validation.
6. Conduct worker-centered due diligence at the lower-tier supplier.
7. Create a dual-source strategy and minimum strategic inventory for critical polymer.
8. Redesign the cartridge for material flexibility, with full regulatory validation.
9. Report the disruption, controls, and limitations to customers and regulators where required.

Outcome

Northstar restores priority service within five days rather than the targeted seventy-two hours. It avoids an unsafe shipment, but incurs expedited logistics and validation costs. A later review shows that the original low-cost design had concentrated risk in both material and sterilization. The company changes supplier incentives: continuity, verified labor practices, and traceability become part of supplier performance evaluation.

Learning points

The case illustrates that resilience is not simply rapid restart. Ethical labor decisions, product safety, traceability, regulatory validation, and transparent communication are part of continuity. It also shows why supplier governance must extend beyond immediate contractual partners and why resilience investments may appear inefficient during normal conditions while creating substantial strategic value during disruption.

10. Implementation Road Map and Best Practices

Organizations seeking integrated responsible operations can proceed through the following cycle:

1. Define purpose and risk appetite. State which risks are unacceptable and how stakeholder obligations influence decisions.
2. Map the operating system. Identify processes, suppliers, materials, information, facilities, utilities, and communities.
3. Assess material risks and impacts. Combine scenario analysis, life-cycle thinking, worker consultation, and compliance review.
4. Set measurable objectives. Use clear baselines, boundaries, owners, time frames, and data-quality requirements.
5. Design controls and capabilities. Include prevention, detection, response, recovery, and learning.
6. Engage suppliers and workers. Provide practical requirements, fair commercial conditions, training, and safe grievance channels.
7. Test and assure. Conduct exercises, audits, simulations, control testing, and independent review.
8. Disclose and improve. Report material performance honestly, investigate causes, and revise strategies.

Good practice includes maintaining current dependency maps; using scenario exercises rather than relying only on written plans; designing products for repair and safe disassembly; linking executive incentives to balanced outcomes; protecting whistleblowers; validating environmental data; and treating near misses as learning opportunities.

Challenges and Limitations

Resilience and sustainability decisions face uncertainty, conflicting stakeholder interests, incomplete data, long time horizons, and changing regulation. Quantitative risk models may create false precision. LCA results depend on system boundaries, allocation methods, and data quality. Supplier audits may fail to reveal hidden abuses. Carbon or waste intensity can improve while absolute impact worsens. Digital traceability can increase visibility but also create privacy, cybersecurity, and surveillance concerns.

Managers should therefore use sensitivity analysis, scenario ranges, qualitative judgment, stakeholder engagement, and independent challenge. They should disclose assumptions and avoid claiming certainty that the evidence cannot support. Some decisions cannot be reduced to optimization: a legally permissible action may remain ethically unacceptable, and an economically attractive choice may violate a non-negotiable safety constraint.

Contemporary Developments

Climate-related disruption, geopolitical fragmentation, cyber risk, tighter product regulation, mandatory sustainability reporting, human-rights due diligence, and investor scrutiny are changing operations governance. Artificial intelligence can improve demand sensing, predictive maintenance, anomaly detection, and scenario simulation. It can also amplify bias, obscure accountability, consume substantial energy, or generate unreliable recommendations. AI used in operational governance should have documented data lineage, human oversight, access controls, validation, monitoring for drift, and a clear process for contesting decisions.

The strategic direction is toward operations systems that are not merely lean, but adaptive; not merely efficient, but regenerative where possible; and not merely compliant, but trustworthy. Graduate operations managers must be able to connect operational detail with governance, ethics, environmental science, finance, and organizational behavior.

Chapter Summary

Resilient and responsible operations integrate continuity, sustainability, ethics, and governance. Resilience involves preparation, response, recovery, adaptation, and learning; it depends on capabilities such as flexibility, diversification, redundancy, visibility, and decision discipline. Business-impact analysis and scenario testing identify critical processes, dependencies, recovery objectives, and plausible disruption pathways.

Sustainable operations use life-cycle thinking to avoid shifting environmental or social burdens between stages. Circular-economy strategies preserve product, component, and material value, but must be evaluated for total impact and safety. Environmental metrics require explicit boundaries, functional units, reliable data, and attention to both intensity and absolute impact.

Ethical operations protect human rights, decent work, safety, fairness, and stakeholder interests. Supplier governance requires due diligence, worker voice, remediation, traceability, and responsible purchasing practices. Governance assigns accountability, establishes controls, monitors performance, and provides independent assurance. Metrics should combine leading and lagging indicators without creating incentives for concealment. Technology and AI can strengthen visibility and analysis but cannot replace human responsibility, ethical judgment, or trustworthy data.

Key Terms

Operational resilience: The capability to anticipate, absorb, adapt to, and recover from disruption.

Robustness: The ability to continue performing despite disturbance.

Business continuity management: A structured approach to maintaining or restoring priority operations after disruption.

Business-impact analysis: Assessment of how interruption affects critical processes and stakeholders.

Recovery time objective: The target time within which a disrupted process should be restored.

Recovery point objective: The maximum acceptable age of recoverable data.

Operational risk: Risk arising from failed processes, people, systems, external events, or governance.

Risk appetite: The amount and type of risk an organization is willing to accept.

Circular economy: An economic system designed to retain value and reduce waste through reuse, repair, remanufacture, and recycling.

Life-cycle thinking: Evaluation of impacts across the stages of a product or service’s life.

Functional unit: The quantified service or output used as the basis for comparison in an assessment.

Life-cycle assessment: A systematic method for evaluating environmental impacts across a defined life cycle.

Materiality: The significance of an issue to decisions, impacts, or stakeholders.

Traceability: The ability to follow the history, location, transformation, or ownership of an item or record.

Due diligence: A process for identifying, preventing, mitigating, and accounting for adverse impacts.

Leading indicator: A measure of activities or conditions expected to influence future outcomes.

Lagging indicator: A measure of outcomes that have already occurred.

Three lines model: Governance arrangement separating operational ownership, specialist oversight, and independent assurance.

Supplier governance: Management of supplier conduct, capability, risk, performance, and accountability.

Operational ethics: Application of moral principles to decisions affecting operations and stakeholders.

Review Questions

Short Answer Questions

1. How do robustness, redundancy, flexibility, and agility differ?
2. What is the difference between an RTO and an RPO?
3. Why is a functional unit important in life-cycle assessment?
4. Identify two limitations of supplier audits.
5. Distinguish a leading safety indicator from a lagging safety indicator.

Long Answer Questions

1. Explain how a business-impact analysis supports resilience strategy and resource allocation.
2. Discuss how circular-economy strategies can create both environmental benefits and operational risks.
3. Evaluate the ethical responsibilities of a buyer whose purchasing practices contribute to supplier labor violations.
4. Explain the three lines model and its relevance to operations governance.
5. Develop an integrated scorecard for a manufacturing operation covering resilience, sustainability, safety, and compliance.

Analytical / Application Questions

1. A firm must choose between single sourcing at low cost and dual sourcing at higher cost for a critical component. Design a decision analysis that includes disruption exposure, environmental impacts, supplier labor risk, service requirements, and total cost.
2. A company reports a 20% reduction in emissions per unit while total production doubles. Analyze what can and cannot be concluded about its environmental performance.
3. Using the Northstar Medical Devices case, propose three governance changes that would reduce the probability and consequences of a similar disruption. Explain the trade-offs of each change.

Multiple Choice Questions with Answers

Question 1

Which capability describes changing processes or inputs in response to variation?

A. Flexibility

B. Redundancy

C. Recovery

D. Compliance

Correct Answer: A. Flexibility

Question 2

An RPO primarily specifies:

A. The maximum acceptable duration of equipment downtime

B. The acceptable age of recoverable data

C. The number of alternate suppliers required

D. The time required to qualify a new product

Correct Answer: B. The acceptable age of recoverable data

Question 3

Which activity is part of the business-impact analysis?

A. Selecting a marketing slogan

B. Identifying critical processes and recovery requirements

C. Calculating employee annual leave

D. Replacing all suppliers regardless of risk

Correct Answer: B. Identifying critical processes and recovery requirements

Question 4

In the formula RPN = S × O × D, what does D represent?

A. Demand volume

B. Defect cost

C. Difficulty of detecting a problem before harm

D. Delivery distance

Correct Answer: C. Difficulty of detecting a problem before harm

Question 5

Which option is highest in the circular-economy hierarchy?

A. Energy recovery

B. Landfill disposal

C. Product repair and life extension

D. Downcycling contaminated material

Correct Answer: C. Product repair and life extension

Question 6

Why is a functional unit used in life-cycle assessment?

A. To provide a consistent basis for comparing equivalent services or outputs

B. To eliminate the need for inventory data

C. To guarantee that all impacts are zero

D. To replace stakeholder consultation

Correct Answer: A. To provide a consistent basis for comparing equivalent services or outputs

Question 7

Which is a leading safety indicator?

A. Recordable injury rate

B. Workers’ compensation cost

C. Completed corrective actions for identified hazards

D. Number of past fatalities

Correct Answer: C. Completed corrective actions for identified hazards

Question 8

What is a major limitation of relying only on supplier audits?

A. Audits can never examine documents

B. Audits may miss hidden conditions and may encourage staged compliance

C. Audits automatically transfer legal responsibility to suppliers

D. Audits eliminate the need for remediation

Correct Answer: B. Audits may miss hidden conditions and may encourage staged compliance

Question 9

In the three lines model, who owns day-to-day operational risk?

A. Operational management

B. External regulators only

C. Internal audit only

D. Customers

Correct Answer: A. Operational management

Question 10

A reduction in emissions intensity while total output increases means that:

A. Total emissions must have fallen

B. Environmental performance cannot be assessed without considering absolute impact

C. The functional unit is necessarily invalid

D. Life-cycle assessment is unnecessary

Correct Answer: B. Environmental performance cannot be assessed without considering absolute impact