Risk permeates every aspect of water company operations. Implementation of new technologies and asset upgrades are required around the world to replace ageing systems, and to manage the risks of a variable climate. These conditions deliver uncertainty in relation to future water harvesting and supply, as well as extreme weather events that test the capabilities of the industry’s ageing infrastructure. Regulators and water companies are well aware, however, of economic conditions constraining the ability of customers to absorb the costs of updating water technology and infrastructure, despite community expectations to uphold integrity of water supply and quality.
While these challenges can vary year-upon-year, they are underpinned by risks relating to asset management and water contamination, which the industry has consistently identified as its top two areas of risk in all of our studies over the past decade.
In the last 12 months, we have seen an increase in some measures of the industry’s total cost of risk (TCOR), reflecting firmer insurance market conditions, an increase in self-insured losses, and the influence of a broader survey base. Around the world, the benchmark of TCOR per megalitre (TCOR/ML) of water delivered to customers in 2013 was US$20.
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