Measuring Utility Companies' Resilience

In today’s increasingly connected and complex world, the characteristics of resilience risk events have changed, and the potential impacts are growing larger. Utility companies feel this pressure given the effects of climate change, ageing assets, digital disruption, connected devices and the downward pressure on customer fees.

The need to proactively understand and plan for the potential impact of catastrophic events has never been more important. We depend upon utility companies for some of the most vital services that keep our daily lives running smoothly. A utility company’s biggest operational concerns are to ensure undisrupted public services as well as the protection of their assets and the environments in which they operate.

Utilities are also ubiquitous – they are a key part of the system of systems that keep the services we rely on working. They connect the population in cities and, as such, they need to build an understanding of resilience that goes beyond the physical boundaries of their cities or the services they offer. Imagine an energy blackout or water shortage – the impacts are felt by individuals but also by the businesses and industries that operate in that environment.

Our approach to measuring utility resilience

So, how do you plan for resilience?

Arcadis has developed a consequence-led approach to quantifying and improving resilience, helping to put customers at the heart of investment decisions and ensuring organizations better prioritize capital, operations and maintenance spends to enhance resilience. 

It is important to measure resilience – as the old adage has it “what gets measured, gets done”.

Additionally, as the system of systems continues to evolve, with the digital age bringing ever-greater interdependencies and interconnectedness, there is a real need to take a broader ecosystem perspective – beyond the traditional boundaries of the organization. Adopting a flexible approach to measuring and managing resilience is key as it allows the same approach to be transferred from one sector to another, within a system of systems.

One of the key challenges is the difficultly in making the business case for resilience. Measuring resilience provides a basis for demonstrating change and the impact of a potential solution – the resilience benefit.

Results demonstrated

Working with our water industry clients (initially in response to UK regulatory requirements) to demonstrate improvements to resilience, our resilience assessment methodology and associated tools provide ‘freedom in a framework’ and put customers at the center, by creating an outcome focused metric (e.g. number of households / customers at risk). The methodology provides an approach that can be readily tailored to other infrastructure sectors, their specific outcomes and a wide range of risk factors, while retaining a common language and framework.

Our methodology is built on best practice including the Cabinet Office 4R, US Homeland Security’s J100 methodology amongst others and incorporates the latest thinking on natural capital. As such, our approach and tool offer myriad benefits:

• Ensures all organizations take a bottom up risk approach to resilience
• Is consequence-led and focuses on the ability of organizations to continue delivering the outcomes they have promised
• Measures multiple hazards in one metric, providing a more holistic assessment of resilience
• Encourages efficient solutions across the 4Rs, rather than purely focusing on capex
• Supports scenario planning – the ability to test different solutions and see the resilience benefits

Our resilience methodology is built in three simple steps:

1. Asset List - list and understand the assets that will be assessed

2. Risk Assessment - carry out a practical, data-driven risk assessment of the assets against the agreed risk framework

3. Resilience Score - Generate the (customer-focused) resilience score and use this to target resilience improvement plans

Through applying this methodology, we have supported our water industry clients in achieving the following successes:

• Northumbrian Water – was able to demonstrate the need to enhance the resilience of its “too critical to fail” systems and secured £50 million for resilience improvements, impacting 2.7 million customers in its business plan submission to the regulator.
• Southern Water – improved and embedding resilience planning across 600 sites, impacting over 2 million customers
• United Utilities – following an incident which affected 700,000 people, supported the organization’s transformation into a sector leader for risk and resilience.  Our work has contributed to improvements in resilience planning and reduced the likelihood of such events recurring.

Our methodology was has received recognition in the industry and in particular has been recognized as industry-leading, by the Water Services Regulation Authority (OfWat), which is responsible for the economic regulation of private water and sewerage companies in England and Wales.

This could be used to prioritize key threats where further mitigation may be beneficial, and results could be published to provide greater transparency on resilience to stakeholders
Ofwat PR19 Methodology Consultation, July 2017

This approach has been built with flexibility, as part of our system of systems thinking, so it can also be applied to a variety of sectors including but not limited to, Energy, Rail, Aviation, Financial and Information Technology. 

To learn more about Arcadis’ work to increase utility resilience, join us as we share our experience and our approach at the Amsterdam International Water Week, 4 – 8 November, where we are leading the Utility Leaders round table.