Sydney Water has a corporate-wide risk management framework. It focuses on risks that have a material impact on the achievement of strategic and operational goals.
Sydney Water has a corporation-wide risk management framework. The framework covers all financial and non-financial risks. It focuses on risks that have a material impact on the achievement of strategic and operational goals. The framework is integrated into planning and business case processes.
Each division applies the corporation-wide risk management framework when carrying out risk assessments at strategic, divisional and operational levels. Strategic risks are identified as part of the corporate planning process and are higher order risks, that tend to be long-term in nature and impact on the future direction of Sydney Water.
Divisional risks are lower order risks, tending to be short-term in nature and focus on the business and operating environment. Operational risks include safety and environmental risks, and usually relate to sites, assets and processes that are identified in:
The top five key strategic risks that can impact the financial performance of Sydney Water are set out in the table below. The table also shows mitigation strategies to manage the risk.
| Key risk |
Financial impact |
Mitigation strategies |
| Climate change impacts on Sydney Water’s planning and operations |
Capital
Operating costs
Revenue |
- Participation in whole of government research and development programs for addressing 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
Revenue |
- Emergency response plans and procedures.
- Quality management system to track and monitor water quality incidents.
- Installation of 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 to generate sufficient cash flows to meet financial targets |
Capital
Operating costs
Revenue |
- 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 IPART forecasts.
|
| Significant accident with loss of life |
People
Capital
Operating costs
Revenue |
- Workplace safety-culture change program, including safety leadership and mentoring, focus on line management accountabilities, including training and performance indicators 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
Revenue |
- 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.
|
Sydney Water retains a comprehensive insurance program that forms part of its risk management strategy.
Cover is arranged for various exposures that could impact Sydney Water’s existing assets as well as those under construction. Risks associated with its operations and insurable legal liabilities are also covered. Sydney Water transfers these exposures to the NSW Treasury Managed Fund, as well as various Australian and overseas insurers.
Sydney Water seeks advice from its insurance broker to assist it with the placement and maintenance of insurance, including cover for major projects. Insurance coverage is reviewed yearly.
