Making Risk Management Stick: Reflections on Risk Governance in Water Utilities

Allan, R. R.; Mauelshagan, C.; Luis, Ana María San; Jeffrey, Paul; Pollard, Simon J. T.

doi:10.1039/9781849737890-00033

Cited by 4 publications

(9 citation statements)

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“…Figure 6), summarised as a narrative for each of the risks on the "heat-map". Relationships between operational, tactical and strategic risk tend to be disjointed and interfaces between these risk types poorly informed (Strategy Unit, 2002;Allan et al, 2013). Many of the existing risk based approaches are developed at tactical (e.g.…”

Section: Evaluation Of Likelihood and Consequence Of Risksmentioning

confidence: 99%

“…In practice, this means developing an organisational capability to connect operational activities to utility-wide risk management programmes; to understand the impact of risk on a utility's corporate priorities; and then forecast future risks into the mid-and long term so stakeholders can be confident in the master plans designed to manage risk over the planning cycle. A growing research agenda has developed around this need (MacGillivray and Pollard, 2008;Schiller and Prpich, 2013;Allan et al, 2013); one that straddles the engineering, decision and social sciences in the context of water utility management.…”

Section: Introductionmentioning

confidence: 99%

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Assessing interdependent operational, tactical and strategic risks for improved utility master plans

2015

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Risk management plays a key role in water utilities. Although risk tools are well-established at operational levels, approaches at the strategic level are rarely informed by systemic assessments of the water supply and lack a long-term perspective. Here, we report a baseline strategic risk analysis, founded on a systemic analysis of operational risks developed 'bottom-up' and validated in a large water utility. Deploying an action-oriented research method, supported by semi- structured interviews with in-house water utility risk experts, deep connections are established between operational risk and strategic risk that surpass those existing elsewhere in the sector. Accessible presentational formats - influence diagrams, risk "heat-maps" and supporting narratives are used to promote Board-level risk discussions, and characterise a baseline set of strategic risks core to forward utility master planning. Uniquely, the influence of operational events, exposures and potential harms, together with the mitigating measures in place to mediate these risks are linked to corporate objectives on business sustainability, profitability, water quality, water quantity, supply disruption and reputation.

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Section: Evaluation Of Likelihood and Consequence Of Risksmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Assessing interdependent operational, tactical and strategic risks for improved utility master plans

2015

Self Cite

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“…Engineering and asset risk assessment is undertaken in isolation of strategic risk assessment, often resulting in a disconnect between the view of strategic risk and the operational reality of risks (Luis et al 2015). In a survey of water utility risk managers in Europe, America and Canada, Allan et al (2013b) found that the main challenges to effective risk management pertained to inconsistent risk appetites, lack of coordination between departments and lack of risk manager authority.…”

Section: Mckinseymentioning

confidence: 99%

“…The respondents suggested that risk management was often seen as an audit function, rather than a necessary component of project, operational and strategic management practice (Allan et al 2013b). …”

Section: Mckinseymentioning

confidence: 99%

“…In the urban water sector, integrated risk management is still in its infancy (Allan et al 2013b, Institute for Sustainable Futures 2013d). Engineering and asset risk assessment is undertaken in isolation of strategic risk assessment, often resulting in a disconnect between the view of strategic risk and the operational reality of risks (Luis et al 2015).…”

Section: Mckinseymentioning

confidence: 99%

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Integrated project risk management for residential recycled water schemes

West¹

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In Australia, recycled water schemes have been implemented in residential developments to contribute to sustainable urban development, enhance water supply security and reduce pollutant discharges to the environment. However, a proportion of schemes have been delayed in commissioning, placed on stand-by or prematurely decommissioned well before the end of the scheme design life. Subsequently, the Australian Productivity Commission has questioned the robustness of the project assessment and decision-making practices adopted by the urban water sector.Despite considerable research on recycled water schemes, few attempts have been made to characterise the complex array of risks to the long-term viability of schemes or to define critical risk factors for which targeted management measures may be developed. To date, the risk assessment and management practices for recycled water schemes have pertained to environmental and public health risk only, with limited attention provided to the broader array of project risks. Consequently, the overarching aim of this thesis is to establish an integrated project assessment framework which incorporates critical risks to the long-term viability of residential recycled water schemes in an integrated manner.The study was based on a pragmatist philosophical foundation where practical outcomes and real effects were considered vital components of the research. A mixed method design was applied, where qualitative and quantitative methods were used to enable complementary and convergent research findings. The nature of the risk knowledge being sought was the construction of critical risk factors, with recognition that these constructions are subject to on-going revision as contextual conditions change.Through a case-study analysis of 21 residential recycled water schemes in Australia, 34 risk factors arising from six sources -physical, social, political and regulatory, implementation and operation, financial and economic and legal and contractual -were identified and characterised. The critical risks to the long-term viability of residential recycled water schemes, based on historical occurrence, comprised: unanticipated operational costs, legal and contractual arrangements, regulatory requirements and approval process and customer complaints and customer expectations not met. Despite continued concern pertaining to the public health risk of recycled water, the research findings concluded that public health impacts have been low to date.A national survey, developed on the basis of the defined risk factors, enabled the collection of complementary data to refine and verify the critical risk factors. At present, the ii inability to demonstrate an incontestable business case is posing a significant risk to the long-term viability of residential recycled water schemes. Political, regulatory, organisational and financial factors were also rated as critical risks, in addition to community risk perception and fall in demand. The survey results shed further light on the regulatory environ...

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Fusing strategic risk and futures methods to inform long-term strategic planning: case of water utilities

et al. 2021

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Risks and futures methods have complementary strengths as tools for managing strategic decisions under uncertainty. When combined, these tools increase organisational competency to evaluate and manage long-term risks, improving the flexibility and agility of the organisation to deal with gross uncertainties. Here, we set out a framework to guide the assessment of strategic risks for long-term business planning, based on its application at Portugal’s largest water utility, Empresa Portuguesa das Águas Livres. Our approach extends strategic risk assessment by incorporating scenario planning—a futures approach used to help the utility move beyond single point forecast of risks to focus on critical dimensions of uncertainty that are fundamental to the resilience of corporate objectives and their vulnerability to external pressures. We demonstrate how we combine two complementary approaches—risk and futures—and use them to assess (i) how a set of baseline strategic risks for a water utility evolves under alternative futures, (ii) the aggregate corporate-level risk exposure, and (iii) the process and responses needed to manage multiple, interdependent strategic risks. The framework offers a corporate approach to evolving strategic risks and improves a utility’s (i) knowledge of uncertainties, (ii) ability to assess the impacts of external developments over long time horizons and the consequences of actions and (iii) degree of flexibility to adapt to possible future challenges. The framework supports risk managers in their long-term strategic planning, through the appraisal and management of multiple, interdependent long-term strategic risks and can be replicated in other organisational contexts to bridge operational and corporate perspectives of enterprise risk.

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Making Risk Management Stick: Reflections on Risk Governance in Water Utilities

Cited by 4 publications

References 0 publications

Assessing interdependent operational, tactical and strategic risks for improved utility master plans

Assessing interdependent operational, tactical and strategic risks for improved utility master plans

Integrated project risk management for residential recycled water schemes

Fusing strategic risk and futures methods to inform long-term strategic planning: case of water utilities

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