Sustainability Report 2006/07Risk management
Melbourne Water seeks to adopt a balanced approach to risk management that recognises its commercial, social and environmental responsibilities having regard to both short and long-term goals.
Risk management does not mean that Melbourne Water will avoid all risks, rather it allows us to understand our risks and manage them in a consistent manner. The effective and efficient management of risk is central to the achievement of our sustainability vision.
We adopt a ‘whole of business’ approach by considering risks in the following focus areas:
- Infrastructure and resource management
- Stakeholder relations
- People
- Public health
- Environment
- Reputation and image
- Corporate governance
- Commercial
- Information management
- Economic regulation.
To effectively manage risks across the organisation, risk assessments are conducted on a regular basis to identify:
- The likelihood or probability of a risk occurring
- The consequence of a risk occurring
- The effectiveness of mitigating strategies in place to manage risks.
The capital prioritisation process uses risk assessment as a key tool for determining the need for and relative timing of investments. Operational risks are managed by the organisation on a daily basis and through specialised management systems.
To assist in the strategic management of risks at an organisational level, Melbourne Water has identified 13 key strategic risks (see diagram below) and assessed each risk based on the current risk level (likelihood + consequence) and our current assessment of control effectiveness.
Melbourne Water actively manages the strategic risks with a strong focus on continuous improvement. Melbourne Water’s risks will continue to be managed through a robust risk management framework comprising major elements such as: certified management systems; appropriately skilled people and sound operational procedures; a robust capital works program and sound technological applications such as our SCADA, Asset Management and GIS systems; and, close working relationships with the water industry, government departments, councils, developers and the community.
Insurance and incident management framework
To further mitigate the commercial, social and environmental impact of risk occurrence, Melbourne Water has a robust emergency and incident management framework coupled with a comprehensive insurance portfolio.
As part of this framework, Melbourne Water has developed comprehensive emergency management and contingency plans, which are regularly tested and reviewed. In addition to local emergency management arrangements, Melbourne Water has assisted in the development of industry response plans and protocols in conjunction with the retail water businesses and government department/agencies that prescribe roles and responsibilities in the event of a large-scale incident.
Audits and risk reviews
Melbourne Water seeks to reassess its risk profile through external reviews by subject matter specialists and a comprehensive risk-based internal audit program. In addition to these reviews, Melbourne Water undertakes a formal self-assessment annually to assess the current management of risks and the identification of new or emerging risks and opportunities. The results of these reviews are presented to the Board via the Audit and Corporate Risk Committee, which proactively oversees the management of risks at Melbourne Water.
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