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Comprehensive Risk Management: How Utilities Can Assess all Their Risks and Put Vulnerability Risks in Context

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The Green Bay Metropolitan Sewerage District is seeking to improve the means by which it balances risk in decisionmaking. On one level the District does not have the tools to use to identify risks; On the other, it is not adequately balancing risk. There is also concern that the assumptions used may be too conservative.

The recently enacted Public Health Security and Bioterrorism Response Act of 2001 (H.R. 3448) requires that community water systems conduct vulnerability assessments, under the authority of the U.S. Environmental Protection Agency. Several bills for wastewater systems are pending in Congress. Under those bills, community water and wastewater systems “shall conduct an assessment of the vulnerability of their facilities to terrorist acts or other intentional acts intended to substantially disrupt the ability to provide a safe and reliable service.”

Utilities face many other risks besides terrorism or intentional acts that could substantially disrupt their ability to provide safe and reliable service. Failure of major assets due to obsolescence, spills of wastewater into receiving waters, and unexpected losses of key staff are all examples of risks that utilities must actively manage. How can these risks be assessed? How can all the risks affecting a utility be put into context and prioritized? These are the questions the District wanted answered.

The Green Bay Metropolitan Sewerage District, along with the consulting firm of CH2M HILL, conducted both a risk assessment (RA) and a vulnerability assessment (VA). The RA addressed risks related to physical facilities, business practices, human resources policies, insurance provisions, functional and operational confidence, and other factors. The VA addressed risks related to intentional actions that would substantially disrupt the ability to safely and reliably operate, or that would have a substantial adverse effect on critical infrastructure, public health or safety, or the environment.

At the beginning of the project a challenge analysis was conducted jointly with the District's RA and VA teams as a self assessment to evaluate how the District compared on elements of 12 businesses processes with worldwide benchmark utility practices. A ranking that combined importance to the District and current performance with respect to the benchmark practice was done for each of 120 activities within the businesses practices. The elements identified as the highest priority for the District to evaluate as part of the RA were:

Energy Management

Risk-Based Decisionmaking

Fixed Asset Management

Knowledge Management

Succession Planning

Each was examined in detail to identify risks and develop recommendations to reduce or mitigate risk to the District. The RA list of recommendations and the VA were prioritized and compared.

Document Type: Research Article


Publication date: 2004-01-01

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