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2 Presenters Nathan Richardson Director, Atkins Water and Environment Geoff Darch Head of Climate and Environmental Risk Management

3 Webinar overview 1. Why consider long term, strategic water risk? 2. How long term, strategic water risk be assessed? 3. Q&A

4 WHY CONSIDER STRATEGIC, LONG TERM WATER RISK?

5 The challenge we face Population growth Urbanisation Second level Third level Water, food, energy nexus Climate change Fourth level Fifth level 5

6 Water risks 6

7 Water risks 7

8 Example of physical risk

9 Water risks

10 Example of financial risk

11 Water risks

12 Example of reputational risk

13 Water risks

14 Example of regulatory risk

15 Top water risks By sector from CDP Water Report 2013

16 The impact of water risk

17 Thinking in 4 dimensions Water use/efficiency within factory gate short term

18 Thinking in 4 dimensions No. 1 Breadth of water risks

19 No. 2 - Spatial dimension wider catchment context

20 No. 3 - Vertical dimension

21 No. 4 - Temporal dimension

22 Poll Which types of water risk do you think could be most Click significant to edit Master for your text company styles within the next 10 years? Physical Financial Regulatory Reputational All of the above

23 Summary Risks around water are growing Costs associated with water risk can be high We need to think about water risk in 4 dimensions Breadth of risk (physical, regulatory, financial, reputational) Spatial scale (catchment Second level not factory gate) Vertical scale (suppliers and customers) Temporal scale (looking into the future) Use improved understanding to inform business planning, investments and R&D Companies that understand the complexities of water and devise and implement a strategy that drives water stewardship will be the long term winners Paul Simpson, CEO CDP

24 HOW TO ASSESS LONG TERM STRATEGIC WATER RISK

25 Overview Current approaches for understanding water risk Framework for understanding long term strategic water risks

26 Water risk tools

27 Poll How far into the future does your company consider its water risk? No consideration of water risk 0-5 years 5-10 years years 25 years+

28 Framework for assessing water risk

29 Stage 1 Scope the assessment Set the boundaries of the assessment Which business functions to include? What types of water risk to look at? Include supply chain Third level and customer risks? What is the spatial scale? How far into the future to look?

30 Stage 2 Review current risk Identify vulnerability to current water risks Effects of past weather events Water status of catchments Current regulations Current reputation

31 Stage 3 Predict future risks Identify how water risks could change in the future Identify internal and external drivers Consider how these could change Scenario planning, Fourth modelling, level threshold analysis Identify how risks could change Identify opportunities

32 Scenario planning A qualitative tool for thinking about the future A method for envisaging plausible future worlds Take account of uncertainty Explore interactions between uncertainties Can be used to look Fifth 10, level 20, 50 years ahead

33 Scenario planning A D B C The past Today The future

34 Future Proofing the UK Water Sector

35 Water availability modelling

36 Water availability: Robust decision making Source: Darch et al. (2011) for Adaptation Sub-Committee and Thames Water

37 Water quality modelling Source apportionment Source apportionment GIS (SAGIS) Phosphate

38 Water quality: Scenarios for targeting measures

39 Water quality: Scenarios for targeting measures 1.3 billion

40 Water quality: Scenarios for targeting measures 300 million

41 Flood risk modelling: understanding Click to edit Master future title hazard style Source: Atkins for Lincolnshire Coastal Study Group

42 Stage 4 Development Management Plan Produce a management plan to inform business strategy, investment planning and R+D What needs to be done Who When How will success be measured?

43 Prioritisation of future risks and actions Risk / opp Change When Priority Response Water availability Flood risk Water efficient products Climate change and population growth likely to reduce available water Increasing - climate change, development, Third deforestation level and agricultural Fourth changes level Increasing customer interest in green products 5-10 years >10 years 5-10 years High risk Medium risk Medium opp Find alternative source and/or reduce demand. Re-locate. Work with stakeholders to promote sustainable solutions Offer new products, attract new customers

44 Summary Current tools are limited in terms of temporal, spatial and vertical scope Water risk needs to be thought about in four dimensions 4-stage framework Fourth for level understanding long term, strategic risk Techniques for understanding the future Aim to produce prioritised management plan

45 Q&A Dr. Nathan Richardson Dr. Geoff Darch

46 THANK YOU!