Risk
|
Consequence
|
Drought and Drought Cycles |
An unexpected or chronic decline in water supply can significantly jeopardize business operations, or raise the cost of operations, especially for companies that are water intensive. These factors can result in production delays, limits on expansion, or total failure. This, in turn, affects the company's financial performance at a facility level, and ultimately at a corporate level. |
Water Quality Concerns |
Deteriorating water quality has become one of the most critical issues affecting the entire world. Most "developed" countries have the technical, administrative and financial capability to support advance technologies to treat industrial wastewater and sewage effluent. However, industrial and municipal pollution still pose a significant risk for operations. |
Institutional and Managerial Capacity for Effective Water Governance |
A considerable challenge to address equitable water allocation and environmental sustainability is the lack of capacity at the country or regional level to provide effective water governance. This is characterized by fragmented responsibility over water resources, including multiple government agencies responsible for water management, which typically operate in isolation and in competition for funds; weak governance, coupled with a propensity towards corruption within different levels of government; and lack of capacity to develop, implement, and enforce regulation concerning water management issues. |
Political and Regulatory Conditions |
Given the current water scarcity scenario and future water demand projections, many countries around the world are taking steps to strengthen regulatory mechanisms for water use and water pollution as part of development processes. This may affect business by changing the environment for obtaining abstraction and discharge licenses; rules for effluent discharge may become more stringent and better enforced; regulations and toxicity categories for effluents may be modified; and businesses may begin to be increasingly liable for their negative impacts on the environment as part of their production processes. Legal and regulatory reform may also lead to higher water tariffs for some industrial consumers. |
Cross-boundary Water and the
Risk of Conflict |
Cross-boundary concerns, including risk of conflict, pollution upstream, blocking of waterways and mismanagement of shared resources, all pose considerable risks for projects and investments. |
Local Community and
Stakeholders Concerns |
Companies are no longer able to exploit water resources with impunity on the pretext of job and revenue creation in the community by setting up a facility. Mismanagement of local stakeholder water needs can result in loss of water use rights or social license to operate. |
