Cape Town crisis: lessons for all

Cape Town crisis: lessons for all | Insurance Business

Cape Town crisis: lessons for all
On 12 April this year, deemed ‘Day Zero’, a major world city is expected to run out of that most basic of necessities – water. The city in which the taps will run dry is Cape Town, South Africa, home to around four million people and operations of global companies like Adidas, Levi Strauss, Johnson & Johnson and GlaxoSmithKline. If it can happen in the third largest economic hub in Africa, it can happen in plenty of other places, too.  

Indeed, cities worldwide are at ever-higher risk of running dry. Over a billion people in 69 countries are already threatened by high water stress, prompting the World Economic Forum to list it as a top-five global threat to business; meanwhile, 46% of CEOs bet that resource scarcity fuelled by climate change will transform their businesses within five years, according to a PwC survey.

Water risk looms over many of us (see here for more detail), transcending all sectors of business and affecting everything from consumer demand to supply chains. The question then becomes how to mitigate it best.

Risk managers clearly need to take the lead in developing water crisis management strategies to both save water and continue business operations as traditional sources run dry. Following, Charles Fischer, associate director – risk assurance, PwC, sets out a Day Zero checklist for risk managers.
  • Measure
Find out how much water you’re currently using.
  • Understand where your water comes from
Find out about the dams and distribution grid you are reliant on. Water supply to businesses, essential services, and informal settlements will be prioritised above residential use. When water pressure starts to drop, higher-lying sites might also be worse impacted.
  • Save, save, save!
Reduce your water usage and wastage by investing in water saving devices (grey water storage tanks, waterless sanitation etc) and leak detection and repair programmes.
  • Perform a business impact assessment (BIA)
Make sure not to forget about the people, infrastructure, suppliers, and customers that could be affected.
  • Perform a risk assessment
Rank operational risks according to severity (based on likelihood and impact) and develop or revise your risk response plans so that they account for water scarcity and include proactive and reactive measures for coping and dealing with the crisis.
  • Make a timeline
Align your risk responses to a clear timeframe (before, immediately after and the weeks/months thereafter) as Day Zero for your location(s) approaches.
  • Do what can be done ahead of time
Look for other ways to source water (like boreholes, well points, and even desalination plants) that could be used for human consumption and operational use. This might include working with suppliers of bottled water to purchase mass quantities on a regular basis from now onwards and having them delivered to operational sites where they can be stored for later.
  • Develop a crisis management plan tailored for a Day Zero scenario
Make a plan for where there is no water available at the operational site. Communications should be clear, and action should be swift. Make sure to consider situations where employees can’t work onsite and must be evacuated or prevented from coming to work.
  • Develop or update your business continuity plan
The plan should include courses of action in the event of the worst-case scenario and should consider the outcome of the BIA. Recovery of operations should happen in phases – starting with ‘critical’ levels of operations, then ramping up to ‘acceptable’ and ‘normal’ levels.
  • Monitor effectiveness
Keep track of both your water saving and augmentation measures.

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