Sydney Water - Annual Report 2009

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Sydney Water has adopted a corporation wide risk management framework that covers all financial and non-financial risks.


In this section:
Insurance Risk management	Key strategic risks that can impact on Sydney Water’s financial performance

Insurance

Sydney Water retains a comprehensive insurance program that forms part of its risk management strategy.

The insurance policies are renewed yearly. They cover various exposures to Sydney Water that include existing assets as well as those under construction, risks associated with its operations and insurable legal liabilities. Sydney Water is protected by the NSW Treasury Managed Fund as well as by insurance with various Australian and overseas insurers.

Sydney Water seeks advice from its appointed insurance broker to help with the placement and maintenance of insurance and insurance advice for major projects.

Risk management

Sydney Water has adopted a corporation wide risk management framework that covers all financial and non-financial risks. It is part of the planning and business case processes.

Strategic risk assessments consider risks that could impact on the achievement of corporate objectives. Operational risk assessments consider risks that could impact on the achievement of business and operating objectives.

The top five key strategic risks that can impact on the financial performance of Sydney Water are set out in the following table. The table also shows strategies that manage the risk.

Key strategic risks that can impact on Sydney Water’s financial performance

Key risk	Value driver	Mitigation strategies
Climate change impacts on Sydney Water’s planning and operations	Capital Operating costs Income	Participate in whole of government research and development programs to address climate change. Climate change strategy and action plan developed to address climate change risks to infrastructure and operations.
Significant water quality incident leading to public health deterioration or unsuitable aesthetic customer impacts	Capital Operating costs Income	Emergency response plans and procedures. Quality management system to track and monitor water quality incidents. Install temporary powder activated carbon-dosing systems at Orchard Hills and Warragamba Water Filtration Plants. Catchment to tap risk assessment to identify taste and odour compounds and algal toxins risks. Established protocols with Sydney Catchment Authority and NSW Health.
Price determination does not generate enough cash flow to meet financial targets	Capital Operating costs Income	Clear understanding and communication of price determination requirements and accountabilities. Obtain government directives in writing for programs which need subsidy. Track monitoring of capital and operating expenditure, Statement of Corporate Intent targets and performance against Independent Pricing and Regulatory Tribunal (IPART) forecasts.
Significant accident(s) with loss of life	People Capital Operating costs Income	Workplace safety-culture change program, including safety leadership and mentoring, focus on line management accountabilities, including training and Key Performance Indicators) KPIs in contracts and performance agreements. Rigorous occupational health and safety performance monitoring. Key risk project and improved incident reporting.
Failure of IT strategy, operations or program delivery to properly support Sydney Water’s activities	Capital Operating costs Fixed assets Income	IT standards and guidelines. Governance model in place to manage IT projects. Engage with peers and external organisations to inform IT strategy and plans. Enterprise IT strategy approved by the Board, with six-monthly review of implementation.