Paul Johnson, Manager

Business Risk Consulting Group

Water UK Asset Management Forum Workshop

London, 12th May 2004

Agenda

• Water Industry Incident Experience

• Business Continuity Management Framework

• The Business Impact Analysis process

Water Industry Incident Experience

Water Industry Loss Experience

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

No

of

Lo

sses

1998 2000 2001 2002 2003 2004

Year

Losses within International Water Companies 1998-2004

Miscellaneous

Pressure equipment failure

Mechanical breakdow n

Electrical breakdow n

Flood

Robbery

Theft

Burgalry

Water damage

Collapse

Earth Movement

Riot & Vandalism

Escaped liquid

Vehicle

Wind or hail

Lightning

Fire

Water Industry Loss Experience

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998 2000 2001 2002 2003

Year

Loss values within International Water Companies 1998-2003

Misc

T hef t/ Robber y

Mechanical Br eakdown

P r oduction Issues

Natur al disaster

Business Continuity Management Framework

BIA in context – business continuity*

1

5

4

3

2

6

understanding your business continuity

strategies

developing the response

establishing the continuity culture

exercising and plan maintenance

BCM programme

management

*The Business Continuity Institute 2002

BIA in context – business continuity*

1

5

4

3

2

6

understanding your business continuity

strategies

developing the response

establishing the continuity culture

exercising and plan maintenance

BCM programme

management

*The Business Continuity Institute 2002

business continuity management* framework

Stage 1. Understanding Your Business

Organisation StrategyOperational and Business

Objectives

Business Outputs & Deliverables

(Service & Products)

Critical Business Factors(Critical Activities)

Stage 2. Business Continuity Strategies

Organisation (Corporate) BCM Strategy

Resource RecoveryBCM Strategy

Process LevelBCM Strategy

Stage 3. Develop and Implement a BCM response

Business Continuity Plan(s) Crisis Management Plan

Resource Recovery &Solutions Plans

Business

Impact

Analysis

*The Business Continuity Institute 2002

The value chain

Firm Infrastructure - Finance

Human Resources

Information Technology

Procurement

Inbound Logistics

Outbound Logistics

Operations Marketing & Sales

Service

Profit

The Business Impact Analysis process

Business impact analysis – process

What are the key hazards? What is the quality of risk mitigation within the business? What are the credible loss scenarios?

Engineering Risk Analysis

How much profit do these products and services generate? Where are the costs associated with their delivery to customers?

Financial Analysis

Business Impact AnalysisWhat are the key facilities and processes that drive revenues and costs, what could go wrong within these and what would be the cost to the business if it did go wrong?

How can these exposures be mitigated in order to ensure business continuity and protect shareholder value?

Risk Mitigation Opportunities

How do products and services flow through the internal and external supply chain? How could these flows be interrupted?

Business Model Analysis

What does this mean to you?

• Corporate GovernanceImproves your understanding of key property-damage related exposures and how they can be mitigated

• Capital Investment OptimisationProvides you with a tool to optimise risk-focused capital investment decisions – where best to spend your money

• Shareholder Value ProtectionProtects shareholder value through identifying opportunities for you to reduce operating cash flow volatilityRisk reduction => cash flow stability => shareholder value

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