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A Quick Guide to Water Risk Assessment Tools

Many companies adopt or expand their sustainability programs due to the potential risks associated: be it rising energy costs, new regulations, or the reputational risk of inaction. Yet just last year the World Economic Forum’s risk report ranked water supply as the top risk to businesses for the next decade.

For some companies, especially those with water-intense operations such as mining or agriculture, this risk may already be factored into a business plan. But many other organizations do not fully understand how their water use – or that of their suppliers – leaves them exposed to risk as water becomes increasingly scarce. Even seemingly unrelated factors (such as energy demand) are inherently linked to water, since the production of electricity requires a significant amount of water.

As a result, companies are exposed, or may become exposed, to numerous water-related risks: financial, regulatory, and physical for a company with facilities in areas that experience droughts.

We may see increased raw material, commodity, and water costs as a result of weather, climate changes and the availability of water. A portion of our cost of sales, or $2.5 billion, could be at risk through increased costs to our supply chain as a result of these risks.”  – Dr Pepper Snapple Group Inc. (2013 CDP Report)

Fortunately, there are tools that help companies and organizations identify and assess their water risk.

Companies that utilize process water may want to explore more comprehensive, fee-based tools. One example is Bloomberg’s Water Risk Valuation Tool, which models assets based on future physical water scarcity. This tool has a particular focus on the gold and copper mining industry.

There are also plenty of free tools to take advantage of:

  • The Water Risk Monetizer, by Ecolab and Trucost, allows users to input their facilities, amount of water used at each location, and revenue. Once these are entered into the system, the online tool provides a water scarcity risk score (from low to high), a reputational risk score, and a regulatory risk score. Additionally, the tool offers two graph views: one for risk-based water price projections over the next decade, and one for potential revenue at risk. This is great because it quantifies the risk in dollar amounts, which often makes it easier for companies to incorporate addressing water risk into strategic plans.
  • Another option is The Brendle Group’s downloadable excel workbook tool, “Net Zero Water Building Toolkit.” Inside the workbook there are 5 “modules” (tabs) to work through: calculating a water footprint, vision and goals, footprint reduction strategies, plan implementation, and tracking & reporting. This allows your company to create a comprehensive water management plan all within one document. What’s also nice is that the footprint also allows you to track water quality by selecting specific minerals, such as zinc, associated with your company’s wastewater.
  • Finally, The World Wildlife Foundation offers the “Water Risk Filter,” a free tool where you are able to enter each of your facility’s addresses and see an immediate “basin related risk.” There is also a questionnaire component, which contextualizes the risks specifically within your company’s location. Once completed, the online tool provides an analysis with high-level risk results, and a risk matrix with all your facilities mapped. You can also view the “Report on facility level” option for a more detailed look at how each company location is affected by water risk.

Though these tools are great starts, the Sustrana app offers extensive education related to water management, as well as a set of projects that can help you begin to mitigate and manage your company’s water risk right away. Be sure to request a demo to find out more!

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