Risk and assurance

Principal risk description

Due to the nature of our business we continue to face risks arising during our normal course of business, including risk of failure of our assets, processes, or systems which could otherwise impact on the health, safety and security of our people or customers, or on our financial position and our reputation.

Specific examples include:

  • the health and safety of our people, contractors and visitors (in line with our “Zero By Choice” policy towards accidents);
  • physical security of our assets, security and safety of our people, and security of our information; and
  • effective prioritisation of our asset maintenance and investment activities to ensure our assets continue to be safe and fit for purpose.

 

Whilst acceptance of the price determination from Ofwat leads to greater certainty over what we need to achieve for the coming AMP period, nevertheless we must still manage the risk associated with our ability to effectively meet the challenging targets set.

An example of this is the achievement of our regulatory performance targets and objectives to ensure that these commitments are met.

Our ability to influence customer behaviour or to operate in an environmentally responsible way could affect our financial position and our reputation.

An example of this is our reputation, as we recognise that our customers’ trust is essential to do business.

 

 

 

 

 

In the challenging economic environment, we continue to closely monitor risks to the achievement of the growth plan for our unregulated businesses.

An example of this is our ability to effectively implement appropriate organisation, processes and systems to support the growth plan.

Key mitigation activities include…

  • We are entering year three of a four year improvement plan to further enhance safety across all of our sites and operations and will continue to monitor implementation of the agreed improvements. (See page 14 – A safer workplace).
  • We have developed a prioritised capital investment programme using models which take into account the consequence, likelihood and severity of a service failure.
  • We have an annual business planning process which ensures that the prioritisation of investment delivers the required service levels.
  • We have robust processes for monitoring operating and capital spending.
  • We are implementing a new model for working with our key partners for delivery of our critical programmes over the next five years. (See page 16 – Focus on innovation in our supply chain).
  • We have detailed processes in place for planning and performance monitoring to ensure we achieve agreed regulatory outputs including targets for efficiency in our capital and operating expenditure.

 

 

 

  • We have a holistic approach to communicating with the aim of ensuring that the importance of the efficient use of water and waste water resources is fully understood, and we continuously monitor the effectiveness of these plans.
  • We are working to find ways to improve river quality while keeping carbon emissions and costs down, for example through our catchment management programme. (See page 13 – Dealing effectively with waste water).
  • We are working to develop new sources of renewable energy and have set ourselves a target of 30% renewable energy by 2014/15. (See page 14 – Minimising our carbon footprint).
  • We regularly monitor economic conditions and forecast growth to maximise the likelihood of achieving our growth targets for this part of the business.
  • We have strong, market leading products and good market knowledge, and we are establishing a local presence in our target markets. (See pages 20 to 21 – Severn Trent Services Performance).