The impact of regulation, ownership arrangements, and management culture on risk management practices within the water industry

• Main Author: Allan, Richard
• Other Authors: Jeffrey, Paul ; Pollard, Simon
• Published: Cranfield University 2015
• Subjects: 363.6
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.681446

Although the specifics of water utility ownership, regulation and management culture have been explored in terms of their impact on economic and customer value, there has been little meaningful engagement with their influence on the risk environment and risk management. Using a two phase case study approach as the primary source of information, this thesis asks what are the particular features of regulation, ownership arrangements and management culture which influence risk management, and what are the implications of these relationships in the context of ambitions for resilient organizations? In addressing these queries, the thesis considers the mindful choices and adjustments a utility must make to its risk management strategy to manage strategic tensions between efficiency, risk and delivery of safe drinking water. The case studies expose a tension between the ambition of the water service providers` strategic objectives to provide safe drinking water and the priority that executives place on corporate financial health. This leads to the conclusion that public health risk rankings need re-evaluation in relation to financial risks. There was no evidence to demonstrate that public health risk mitigation had been costed and evaluated against the strategic objectives of the studied organisations. Furthermore, the nature of risk conversations varied within organisations, changing the meaning of risk vertically within the business. A proposed model for the reporting of risk tolerance and risk appetite with respect to mitigating public health risk is the result. Such approaches to risk reporting and costing will support water authorities in meeting corporate aspirations to become ‘high reliability’ services while retaining the capacity to out-perform financial and service level targets, irrespective of regulation, ownership arrangements or management culture.