Benchmarking risk management practice within the water utility sector

Explicit approaches to risk analysis within the water utility sector, traditionallyapplied to occupational health and safety and public health protection, are now seeingbroader application in contexts including corporate level decision making, assetmanagement, watershed protection and network reliability. Our research suggested thatneither the development of novel risk analysis techniques nor the refinement of existingones was of paramount importance in improving the capabilities of water utilities tomanage risk. It was thought that a more fruitful approach would be to focus on theimplementation of risk management rather than the techniques employed per se.Thus, we developed a prescriptive capability maturity model for benchmarkingthe maturity of implementation of water utility risk management practice, and applied itto the sector via case study and benchmarking survey. We observed risk managementpractices ranging from the application of hazard and operability studies, to the use ofscenario planning in guiding organisational restructuring programmes. We observedmethods for their institutionalisation, including the use of initiation criteria for applyingrisk analysis techniques; the adoption of formalised procedures to guide theirapplication; and auditing and peer reviews to ensure procedural compliance and providequality assurance.We then built upon this research to develop a descriptive1 capability maturitymodel of utility risk analysis and risk based decision making practice, and described itscase study application. The contribution to knowledge of this stage of the research wasthree-fold, we: synthesized empirical observations with behavioral and normative theories to codify the processes of risk analysis and risk based decision making; placedthese processes within a maturity framework which distinguishes their relative maturityof implementation from ad hoc to adaptive; and provided a comparative analysis of riskanalysis and risk based decision making practices, and their maturity ofimplementation, across a range of utility functions.The research provides utility managers, technical staff, project managers andchief finance officers with a practical and systematic understanding of how toimplement and improve risk management, and offers preliminary guidance to regulatorsconcerning how improved water utility governance can be made real.