Z.A., Barnes, M. Caudwell, P. Chadwick, , N. Clarke, A. Grove, A. Heather, S. Mellot, and P.D. Selby

OBJECTIVES:

The first objective of this project was to develop a framework that will enable water utilities to adopt a common understanding and principles in risk management of their assets, conforming to relevant international standards and best practices and allowing risks to be compared and prioritized between utilities and other organizations. Next, the research team sought to elaborate an approach, adaptable to individual circumstances, for water utilities to adopt in the assessment and management of risk of their assets, covering cost, decision models, strategic security, the role of expert judgment, and the impact of asset standards on performance (including environmental), risk, customer service, and investment requirements.

BACKGROUND:

Risk is considered in the context of negative impacts on areas such as customer service, the environment, health and safety, or the utility itself. Risk assessment provides users with an understanding of the causal events and the way they can lead to customer service failures. The process becomes risk management when the knowledge is used to decide whether to change the asset base or its operation to reduce risk, and those decisions are implemented. Risk is not reduced by the assessment process or the decision to take action, but rather by the completion of the implementation stage.

HIGHLIGHTS:

The research team developed a high-level risk management process that could be implemented at various levels of detail, derived from the International Infrastructure Management Manual and the Australia and New Zealand standard AS/NZS 4360. A functional specification, detailing the main features of the tool's design, was based on the process above. An iterative approach to development included the international project steering group and peer review. Development of the risk management guidelines followed a similar process, alongside the development of the tool.

APPROACH:

The term “risk” was defined in as unambiguous a way as possible, to ensure clarity for users and to identify the function that the risk management tool will fulfill. A literature review covered the main features of processes currently in use together with a survey of water utilities within the Global Water Research Coalition (GWRC) to establish the need and requirements for the risk management guidelines and tool. The survey confirmed interest in producing a set of risk management guidelines for the water industry, applicable internationally regardless of the utility's approach to asset management.

RESULTS/FINDINGS:

Guidelines were produced on the implementation of the individual steps of the risk management process. The guidelines were developed in a tabular format so that for each step, the theory, main activities, and appropriate examples are given. This format allows users to follow themes through the steps, without having to read the whole entry for each step.

The spreadsheet tool demonstrates the guidelines. It allows users to enter risks, evaluate them, and explore the costs and impacts of different options for treating the risk. Users may define some of the settings, or use the defaults. The tool shows how risk assessments take account of the root causes and the way they lead, through asset failure, to business and customer service consequences. It takes account of the varying likelihood that individual consequences will occur, as well as that of the risk itself. The tool is a working demonstration of the guidelines, but it is not a full-featured software. The tool also has the potential for wider application, outside the water industry, owing to its foundation in standard risk management principles. Detailed tool instructions, plus quick start instructions, are provided.

IMPACT:

Benefits of Risk Management

The process of risk management provides organizations with a consistent approach to identifying what could prevent them from achieving their objectives. It allows the costs and benefits of treating risks to be evaluated, enabling practitioners to choose appropriate action to protect objectives.

Recommendations

Water utilities should adopt the risk management guidelines to help develop their risk management processes. This report and tool will be useful to large and small utilities. The literature review and guidelines are good resources for educating staff. The tool should be used to help train staff in the risk management process and as a starting point for utilities to specify their own databases for recording and managing risks and their treatments.

MULTIMEDIA:

The project includes a CD-ROM that contains the risk management tool and two sets of guidelines: a quick-start guide and detailed guidelines.

RESEARCH PARTNERS:

• Global Water Research Coalition

• UK Water Industry Research Ltd

• Water Environment Research Foundation

• Water Services Association of Australia

PARTICIPANTS:

Five U.K. utilities, 3 U.S. utilities, and 35 survey utility respondents from 10 countries participated in this project.