Together with 7 water utilities and with involvement from Ofwat, WRc has recently delivered a new approach to assess the risk of service failure in distribution systems. As Cigolene Nguyen from Yorkshire Water comments “The business found the project really useful and is willing to implement its findings through a test zone first …. Really good that Ofwat took part in the project as it added a regulatory point of view.”
Water companies face risk every day; it is an inherent part of any decision making process and its understanding allows valued judgements to be made. The advent of the Capital Maintenance Planning Common Framework has led to companies prioritising investment through the use of risk management techniques. Whilst this has resulted in a more integrated approach to investment planning that has been embraced by the industry, coverage is incomplete. Ofwat is encouraging enhanced development of this risk-based approach for the next periodic review. This requires business processes to be further improved to ensure risk management is firmly embedded within company culture.
In order to assess the impact of disparate operational and capital activities, it is necessary to define common ground. The co-ordinated and consistent application of risk management processes provides a truly integrated approach to the management of distribution systems by:
- Providing information to enable good practice risk management frameworks to be established or strengthened;
- Clarifying the application of risk management within the context of UK water industry business planning process;
- Illustrating a method to assess the risk of service failure and the consequence of that failure on customers. (This particular aspect is being taken forward in a follow-on project with 8 utilities to provide a common approach to risk fault trees and event trees (CP435)).
The project outputs have been developed to be compatible with ISO 31000:2009 where a key requirement of which if for companies to establish a culture embracing risk management so it becomes part of the normal day-to-day activities. As part of this culture, companies also need a clear indication of the level of risk they are running, ensuring risks are managed to align with company risk appetite statements.
The Integrated Distribution Management (CP399) project report presents a risk assessment procedure and method to identify and analyse the risk of service failure in distribution systems. Causal and consequential analysis techniques are demonstrated, methods for estimating asset failure probability reviewed and a method of consequence modelling is presented. Worked examples illustrate the techniques recommended.
In addition, a comprehensive literature review identifies further sources of useful information to underpin good practice risk management. A glossary of risk terms has been compiled to aid the construction of a company-specific risk lexicon.
For further information please contact Jo Hulance at jo.hulance@wrcplc.co.uk or +44 (0) 1793 865068.