Water Risk Management At A Glance
Water risk management is a major issue for the private and public sector. The rate of pollution of water resources, water scarcity, natural and intentional contamination of drinking water and distributions systems, floods and droughts, challenge companies and communities to take steps to ensure that water risks are managed effectively. Integrated water risk management is becoming a high-profile business issue and companies are becoming increasingly exposed to a range of water risks, through their clients, suppliers, or others with a water footprint along the supply chain.
Business risk exposure can materialize if water risk are not managed, addressed, and understood properly. Water users need to identify water risks, mitigate risk exposure and seek solutions to eliminate risks. Better water risk management is emerging. The risk management can be grouped into the following categories:
- Political
- Commercial
- Legal regulatory and contractual
- Resource
- Reputation
The business categories include:
- Water infrastructure and services
- Suppliers
- Firms
- Financial institutions.
Businesses are finding themselves under a growing obligation to disclose and justify their water use and impact – at all stages of production, consumption, and disposal. Some of the key factors have been a growing public environmental awareness and a greater understanding of the critical role of water in different economic and commercial facets of life.
These obligations and factors have translated into real business tangibles including the following:
- Concerns about potential water shortages;
- Natural or intentional contamination of drinking water and supplies;
- Growth of shareholder activism leading to greater corporate disclosure and transparency around new material risk issues;
- Growing public pressure on firms to embed Corporate Social Responsibility disciplines in their core business lines;
- Public policy issues such as influential agencies of codes of good practice and guidelines.
With increasing stresses on water resources worldwide, financial institutions have begun to consider water management policy as a risk to be managed in their portfolio analysis. However, with these challenges come opportunities. Increasing water scarcity and the challenges for a sustainable water future present high potential for growth and business opportunities in sectors related to water. From the results of interviews and experts, it has emerged that there are great differences between water users in their perceptions of water-related risks and in the way they handle these risks. There are a number of possible approaches for water users to mitigate their exposure to water risks through influencing behavior in their operations and supply chains.
Key opportunities for mitigating water risks include;
- Recommending that water users seek relevant advice and expertise on technical matters where appropriate;
- Exchanging views with other water users and peer to engage in the ongoing monitoring of water risks;
- Adhering to guidelines which offer concrete areas of action where water users can influence the adoption of environmental, social and corporate governance issues; new approaches to recognizing and mitigating water risks;
- A systematic assessment of the water footprints, sustainability indicators and diagnostic tools for internal use;
- Rating exposure and management of water risks;
- Risk assessment and testing models; integrating water sustainability into all aspects of operations, and creating incentives for staff to apply these criteria;
- Increase stakeholder engagement is critical for improved understanding and identification of potential risks.
About Water Risk Management
A
very important aspect of water risk management process is effective communication, planning and better
understanding of the water risks. However, a risk management policy can
not be developed or improved without the availability of qualified information and real-time data. Therefore, effective communication and collaboration forms the basis for developing any
water risk management plan or policy. Recognizing this, H2oAlliance has developed unique water risk management platforms, customized risk management plans, training programs and workshops for companies, industries, organizations and communities to help business leaders mitigate and manage water risks more effectively.
Water Risk Management Platform
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Reference:
Water Hazard Risks (UNWater Framework for action 2005-2015)
http://www.unwater.org/downloads/unwaterseries.pdf
Greening The Supply Chain Report (WEC.org, 2008):
http://www.wec.org/news/GreenBiz_Report_Greening_the_Supply_Chain.pdf
FInancing Water; Risks and Opportunities (UNEPFI.org, 2008):
http://www.unepfi.org/fileadmin/documents/CEO_WRR_Issues_Paper.pdf
Managing the Water Risks Facing the Private Sector (Pacific Institute, 2008)
http://www.pacinst.org/reports/business_risks_of_water/business_risks_of_water.pdf
Water Management Platform:
Water-Efficiency Management System, WEMS
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