Tool for Risk Management
of Water Utility Assets
Linda Reekie, Water Research Foundation project manager
Tool for Risk Management of Water Utility
Assets (2008, order #91246/project #4126)
aims to help users identify risks and
potential mitigation options in a consistent
manner across all areas of the utility asset
Risk is often defined as probability times
consequence. The term risk is defined in
the publication as a measure of the degree
of exposure to the consequences that might
result from events that might happen. Risk
is defined in quantitative terms, including
combinations of frequency and probability
of the event occurring. The event might not
happen, and if it does, there may not be
exposure to the full risks due to mitigations.
The set of circumstances capable of
producing the consequences is not certain
A risk management process upon which the
risk management tool for water utilities is
based was adapted from the International
Infrastructure Management Manual (2002)
and the AS/NZS 4360 2004
Standard. It is a five-step
approach as illustrated
in figure 1, which was
incorporated into a Microsoft
Excel spreadsheet-based tool.
The second stage of identifying risks
involves identifying business consequences
including consequences to customer
service, health and safety, the environment,
regulatory compliance, and finances. It
also includes identifying the initiating
event or the root cause such as pump
failure, power failure, or Cryptosporidium
breakthrough. Since several consequences
affecting several business objectives may
result from a single initiating event, the
tool allows risks to be evaluated in terms
of each business consequence. The tool
allows the magnitude of each business
consequence to be assigned independently.
The tool also allows a single chain of causes
to be identified for each initiating event.
The probability or frequency of individual
consequences is entered in the same way as
the probability of the initiating event. Four
causes can be entered for each initiating
event, plus a root cause, which is selected
for a user-editable list.
CoNTINUED NEx T PAGE
The first stage of establishing
the context ensures that the
risk management process
supports the utility’s overall
business plan and identifies
the business objectives,
standards, and regulations
that must be addressed.
Figure 1: Five Step Approach for Risk Management Process
Source: Tool for Risk Management of Water Utility Assets. ©2008 UK Water Industry Research Limited.
Developed from the International Infrastructure Management Manual, 2002 and the AS/NZS 4360: 2004.