Managing Water Risks

Water related risk to economy

What is Water Related Risk to business?

Reducing water risk is becoming a management priority for companies globally. Water risk can affect a company’s direct operations as well as its supply chain, ultimately affecting operational costs, security of inputs supply, profits, and future growth. Besides typical physical risks related to the lack of water availability or poor water quality, there are also reputational risks, regulatory risks, and eventually financial risks arising from water scarcity, pollution and competition over its use. Sustainability assessment of the full supply chain of a business is the key to understanding these risks. In 2016, we developed an advanced Water Risk Assessment Framework that can be tailored for any portfolio or individual business. It seeks to better inform water related risk assessment and to garner interest in turning those risks into opportunities.

The Water Risk Assessment Framework can be adapted and tailored to an individual business’ unique set of circumstances. It incorporates details of the business as a whole and includes the variations amongst each individual site included in the assessment. This makes it possible to identify the level of exposure of each operational unit. By combining the level of risk with the level of exposure, a ‘water stewardship business case’ is established for each operational unit and the most appropriate water stewardship actions can be selected.

Water Risk Assessment Framework

FMO agri-business Portfolio Risk Assessment, Yaşar Group, Turkey. The Water Risk Assessment Framework has also been tailored for the Yaşar Group and applied to help four companies within the Group understand the water footprint of their operations and supply chains and the sustainability of their water use. The results revealed even with a limited amount of data, how these facilities could improve their water use and minimise the potential risk related to their water use. This gave the Yaşar Group a solid foundation for progress towards corporate water stewardship.

Water Stewardship Program

Intercontinental Hotel Group [IHG Hotel’s risk mapping and developing tailored Water Stewardship Programme]. InterContinental Hotels Group’s (IHG®) recently performed the hospitality industry’s most comprehensive water risk assessment to date. Using the Water Risk Assessment Framework, we conducted a detailed assessment for all of the company’s hotels, as a first step in developing its worldwide Water Stewardship Programme. This involved undertaking: Rigorous assessment of 11 physical, regulatory and reputational risk triggers related to both water quantity and water quality for over 6000 hotels, both operating and pipeline. Robust risk assessment and water stewardship actions frameworks identify actions that each hotel can do to manage and mitigate water risk. Establishing Hotels Risk Assessment and Water Stewardship Actions databases to guide the Water Stewardship Programme. Developing a deep understanding of water usage at a local level, applying best practice techniques and behaviours to manage and reduce the water footprint.