Turn utility risks into enterprise resiliency

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By Heather Smith*

The desire for resilient water systems is fast becoming a keystone of utility governance. In 2016, an influential US consortium published “Taking the Next Step” which recommended ten attributes of effective utility management.

Foremost was a call for “enterprise resiliency.” That utility-wide, strategic approach meant utility leaders and staff worked together both internally and with external partners to anticipate, respond to, and avoid problems.

Resilience thinking–the ability of a system to adapt to a disturbance–isn’t new. And threats may be from one-off shock events, or from underlying ‘slow motion’, or ‘slow burn’ stresses. But while simple in concept, achieving resiliency is complicated. It requires all human, organisational and technological aspects of an entity must work in concert, under a leadership willing to be counter-intuitive and, at times, challenging of perceived business wisdom.

The basic concepts of resilience have been adopted from materials science, from the world of structural integrity, from organisational psychology and from ecological studies of natural systems.

Indeed some offer ecological resilience as the platform for understanding the collective resilience of organisations. Yet in a real, dynamic world, no one assumes systems should return to their pre-stressed state after a shock; rather, an organisation should learn from the stresses upon it, survive, adapt and move forward to an improved state of readiness. To start, utilities can establish tolerance levels for, and management strategies of, the full range of, business risks. Utilities are exposed to rising legal, regulatory, financial, environmental, safety, physical and cyber security risks. They risk losses from human resource turnover and losses from natural disasters. All these risks are complicated by and interdependent with other institutions.

Through proactive measures, water managers who adopt a strategic approach can strengthen their enterprise with enough flexibility and ‘organisational slack’ to anticipate stress and respond to it.

None of this is new. Resilience literature is long-standing, extensive and transdisciplinary. Yet few have translated the elegant conceptual frameworks into practical tools that help utilities plan systemic changes to become ‘future proof’.

Developing these practical tools is no simple task. If resilience implies that utilities should become more flexible and adaptable, the notion of fixed benchmarks or standards to measure progress and plan improvements becomes more difficult.

Nonetheless, in the UK both the National Infrastructure Commission and newly-established Water and Wastewater Resilience Action Group have helped develop resilience metrics. These are still in their early stages, but potential metrics include: how much of a treatment works at risk from flooding have protection in place; the proportion of customers with multiple sources of supply; and the amount of households rewarded for water-saving practices through tariffs or other financial incentives. To be sure, development of such metrics will always face tensions between demands for consistency and comparability versus the need for relevance to local contexts and priorities.

A resilient organisation is mature, adaptive, flexible, and open to learning. Resilience in the water sector may come through the process of managing innovation. But this doesn’t necessarily imply a focus on ‘in-house’ research and development. Utilities are increasingly encouraged to look beyond their own boundaries to find unorthodox solutions to their long-term needs.

In practice, resilient utilities scan technologies, conduct more rapid trials and create ‘safe spaces’ to quickly test performance outcomes. Models of ‘open innovation’ are now emerging in the water sector, which open opportunities for new relationships that share risks and rewards, among utility organisations, their customers, and solution providers.

The water sector can transition from business risk to enterprise resiliency, but only if it improves relationships with external stakeholders, integrates the technology supply chain, and builds regulatory confidence. By following the well-trodden path of other industries, the water sector will find it is not alone.

*Heather Smith is a lecturer in water governance at the Cranfield Water Science Institute.