Water utilities wishing to become more resilient in response to regulatory initiatives should ensure their risk management efforts directly inform their long-term corporate planning.

Professor Simon Pollard, principal author of Cranfield University’s latest report on business risk for the international water sector, says: “It might seem obvious to state that long-term plans should be informed by assessments of risk and opportunity, but frequently these activities become disconnected.” The report was funded by the Water Research Foundation, Calgary Water and a consortium of utilities from Canada, the US, Australia and the UK.

Water utilities have various arrangements in place for the management of risks and opportunities that suit their legal structures. These need better alignment with related business processes – particularly those associated with strategic planning – to release the full value of risk governance. Utility managers and their top teams are best placed to make these connections during planning cycles and the rhythm of corporate reporting to their stakeholders.

David Owen, Risk Manager at Yorkshire Water and report co-author, comments: “When incidents do occur, water utilities are expected to react quickly and efficiently, creating a new dynamism for risk management.”

This fast ‘clock speed’ for risk is placing substantive demands on the processing of risk information for optimal decision making. Operational leaders managing risk on the frontline need engaging tools that keep the risk agenda live; and executives need real-time summary information on risk so they and their boards can keep pace with the changes to their risk portfolios, the report stresses.

Professor Pollard believes not enough emphasis is placed on the tangible value that managing risk well brings to water utilities. He says: “Utility managers need to be continuing to highlight the real business value generated by good risk governance. With the oversight that comes from directing the core strategy of a utility, they are ideally placed to join the dots up on risk, ensuring risk management does not become an isolated head office function.

“Best in class organisations have developed in-house, pragmatic approaches to governing risk, often based on international standards and adapted for their own organisational culture to inform their long-term decisions.”

The Water Research Foundation report, Risk governance: Achieving value by aligning risk governance with other business functions in water utilities, is the latest of four guides on managing risk in the water sector produced by Cranfield Water Science Institute (CWSI). It supplements Cranfield’s substantive research on organisational resilience communicated through its academic papers, technical reports and executive courses over the last 20 years.

Water droplet into puddle
Water utilities are prepared to manage the risks and opportunities that suit their legal structures

Notes for editors

Risk Governance: Achieving value by aligning risk governance with other business functions in water utilities entailed an in-depth analysis of risk management across the international water utility sector, assembling best practice on aspects such as risk management structures, risk appetite and organisational resilience.

About Cranfield University

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