Simon Pollard, Steve Hrudey, Paul Hamilton, Brian MacGillivray, John Strutt, John Sharp, Roland Bradshaw, William Leiss, and Alan Godfree

OBJECTIVES:

The principal objectives of the research were to (1) complete a baseline assessment summarizing current risk management frameworks, techniques, case studies, best practice examples, and decision-making capability among selected utilities; (2) gather alternative approaches to managing risk; and (3) conduct and analyze case studies.

BACKGROUND:

In the 21st century, risk management has become a water utility manager's central function. Beyond the preserves of public health protection and the maintenance of process performance, utility managers must also assess and manage legal, regulatory, financial, environmental, resource, and reputational risks in a complex and demanding business climate that is subject to an unprecedented pace of change. The implications of their decisions stretch well beyond company structures to the public, regulators, consumers, elected officials, politicians, and shareholders.

APPROACH:

The study adopted a range of methods incorporating a critical literature review, structured interviews, transcription and analysis, benchmarking, a self-assessment, and an audit.

RESULTS/FINDINGS:

This report provides a critical review of the risk analysis strategies used by water utilities for better decision-making. The review was formed from an international workshop on risk analysis, several discussions with utility and risk managers, presentations, and structured interviews with utility staff. The report summarizes the status of risk management in the water utility sector among the participating and collaborating utilities. The research developed a capability maturity model for risk management (CMM-RM) in the utility sectors and used it to benchmark representatives of the international water utility sector.

IMPACT:

The research team reached the following conclusions:

• There remains a tendency to view risk assessment as an end rather than a means for opportunities for innovation.

• The value of risk management requires greater advocacy at the sector level and within individual organizations.

• The promotion of water safety plans is driving an integrated approach to public health risk analysis from catchment (watershed) to tap. Implementation of the water safety plan approach is now a powerful vehicle for a renewed emphasis on risk management within water utilities.

• Risks and values are intimately linked. However, there is little explicit expression of the risks that utilities are prepared to accept, whether the utilities have private, public, or corporate governance structures.

• Failure to manage risk in a climate of efficiency gains may leave the sector exposed to the types of organizational disaster witnessed with the fatal outbreak in Walkerton, Ontario. Regardless of its complexity, the tolerance of risk within an organization must be discussed and confronted.

• Securing a risk management culture within a water utility requires effective knowledge management, tenacity in addressing the underlying causes of incidents, and strong leadership. Further research that addresses risk management cultures within the sector is warranted.

• The compelling case for effective risk management should be used by water utilities as the core argument for moving towards an organizational structure that can be more strategic and forward-thinking.

PARTICIPANTS:

Thirteen utilities from United States, United Kingdom, Australia, and Canada participated in this project.