Water Risk Assessment – Operational and Sustainability Performance

26 April 2015

In considering their 2020 sustainability commitments an increasing number of clients are asking ERM to assist them in understanding their exposure to water risk at the same time. The initial linkage comes from the simple fact that, in the developed world, it is the monetary and carbon cost of energy to manage water that counts more than the value of the water itself. Upon further consideration, however, the trail typically goes much deeper and more fundamentally exposes multi-million dollar liabilities via business continuity risks associated with the many facets of the water environment. Global operations and supply chains are further exposed due to differing levels of awareness and varying attitudes towards risk around the world. As a result, the emphasis given to water usage, water availability, flooding, drought and water security also varies considerably and in some cases are not even considered. In shining a light on exposure to water risk we are therefore seeing opportunities to protect business continuity and achieve sustainability objectives in combination.

What’s needed is a rational and transparent process upon which to compare and contrast water risks across businesses that operate globally and are subject to a wide variety of water related risks. Empowered with this risk based perspective, priority actions can be identified and executed.

For process water related reasons, risks are often associated with the supply of a quantity of water, for which water quality may not have been considered. Satisfactory historical performance may also obscure an understanding of future risks. In addition to water supply and water quality considerations at a process scale, within a changing world environment there are many other factors in play ‘beyond the fence line’. Operating at site and catchment scales these can impact upon business operations and are often overlooked.

Another risk area concerns new liabilities created by evolving legislation and regulations. A topical example of this is implementation of the European Union’s Industrial Emissions Directive (IED), successor to the IPPC Directive. The IED is creating a much more stringent consenting regime whereby existing discharge consents, for example, are likely to come under greater scrutiny, particularly when an operator seeks to renew or vary the terms of a permit.

To help resolve such issues, ERM has adopted a tiered approach to our assessment of our clients’ global exposure to water risks across all of their assets. Site locations and process water usage are compared to national and regional statistics concerning surface water and groundwater resources. Subsequent tiers of water risk assessment adopt a catchment scale approach, placing each site within its flood risk and water availability context. Subsequent tiers, if required, adopt a site based approach, and finally a process oriented perspective.

By understanding water risks in this way, business is able to respond to the many facets of corporate responsibility whilst also protecting business continuity through the proactive management and mitigation of previously unknown and unquantified water related risks. 

Want to know more?

If you’d like to discuss how water risk assessment can help to protect and enhance your business performance pleases contact Duncan Russell, Technical Director, Integrated Water Management.