With less than three percent of the world's water now reachable
and fit for human consumption - a figure that is shrinking - 40
percent of Fortune 1000 companies surveyed said the impact of a water
shortage would be severe or even catastrophic. Despite this, less than
one-in-five (17%) say they have prepared for such a crisis, according
to research sponsored by the Marsh Center for Risk Insights.
The findings are based on work conducted for the Marsh Center by
Public Opinion Strategies, an internationally respected polling firm
that spoke to senior officials from more than 100 executive suites
from a cross-section of Fortune 1000 companies.
Marsh Inc., the world's leading insurance broker and risk advisor,
formed the Marsh Center for Risk Insights as a working forum for
experts to identify, debate and tackle the most critical global
business risks - with water being one of the newest threats on the
horizon. The founding advisors of the Marsh Center, which launches
today, include:
-- Dean Alexander, Director of the Homeland Security Research
Program and Assistant Professor, Homeland Security, at Western
Illinois University (USA)
-- Philip Armstrong, Head of the Global Corporate Governance
Forum (South Africa)
-- Carol Browner, Principal of The Albright Group and former
Administrator of the U.S. Environmental Protection Agency
(USA)
-- Dr. Sheikh Faisal F.J. Althani, Deputy General Manager
Anadarko Petroleum Corp., (Qatar)
-- Dr. Rohan Gunaratna, Head of Singapore's International Centre
for Political Violence and Terrorism Research (Singapore)
-- Dr. Howard Kunreuther, Co-director of the Risk Management and
Decision Processes Center, Wharton School, University of
Pennsylvania (USA)
-- Harvey Pitt, Chief Executive Officer of global business
consulting firm Kalorama Partners and former Chairman of the
Securities and Exchange Commission (USA)
-- Andrew Winston, Founder of Winston Eco-Strategies and
co-author of "Green to Gold" (USA)
"From terrorist attacks to natural disasters to droughts,
businesses today face a new breed of risks that can threaten supply
chains, stall expansion plans and harm profitability," said John
Merkovsky, executive director of the Marsh Center for Risk Insights.
Water Denial
Almost half of the Marsh Center survey respondents, 47 percent,
said water is critical or very important to their day-to-day
operations, but only 6 percent believe it is likely that in the next
five to ten years access to water for manufacturing and drinking will
be significantly reduced because of quality degradation or scarcity.
"Many corporations across seemingly unrelated economic sectors are
exposed to water scarcity and pollution risks, usually in their supply
chains," said Ms. Browner. "Changes in our global climate, along with
rising consumption levels, will dramatically alter water distributions
and availability over the coming decades. Businesses need to take time
to identify the challenges and opportunities posed by local and
regional changes in water availability."
Water-related costs already are climbing, as manufacturers must
treat both source water and waste output to improve quality. Even
non-water-intensive businesses are being affected as suppliers pass on
their own water-related costs.
Risk Responsibility
Whether it's a loss of water, the outbreak of potentially fatal
disease or the aftermath of a terrorist act, executives today are
being tasked with risk-management responsibilities their predecessors
never faced.
"Business leaders have a fiduciary responsibility to their board,
shareholders, employees and customers to understand the implications
of emerging threats and take steps to address these challenges," said
Mr. Pitt. "It's no longer acceptable for CEOs to stand up and say, 'I
didn't realize it could happen' after a crisis occurs."
Other Risks Beyond Water
Survey respondents were asked about preparedness for eight
different potential risk scenarios, including natural disasters,
terrorist attacks, oil price spikes, global climate change, housing
market collapse, risks associated with nanotechnology, access to water
and pandemics. Despite the growing number of threats, 44 percent of
respondents said one of the main reasons their companies didn't bother
to prepare for crisis situations because they felt these types of
risks weren't relevant.
"A number of business leaders today are taking a short term view
of risk and operating under the false assumption that even though
these risks are on the horizon, they don't need to act on them
promptly," said Mr. Kunreuther of Wharton. "While these decisions may
not affect them in their term of office, it could have dire effects on
their successors and those connected to their companies years later."
Complete survey results are available on the Marsh Center for Risk
Insights' Web site at www.risksmarts.com.
About the Marsh Center for Risk Insights
The Marsh Center for Risk Insights is a growing assembly of
leading authorities on global risk issues working to identify, debate
and provide guidance on the world's most critical business risks. An
independent and objective source of critical information and insight,
the Marsh Center does not market, promote or sell any products or
services. Please see www.risksmarts.com for research, white papers,
articles and information.
About Public Opinion Strategies
Public Opinion Strategies is a survey research company
specializing in corporate, public policy and litigation research, with
offices in Washington, Denver and Los Angeles. Since its founding in
1991, Public Opinion Strategies has completed more than 10,000
research projects and interviewed more than four million Americans
across the United States. These projects have ranged in scope from
neighborhood studies to national samples in all 50 states.
Internationally, Public Opinion Strategies has completed research
projects in 18 different countries. Since Public Opinion Strategies'
roots are in political campaign management, their research is focused
on producing information that compels decisions - and then results.
Survey Methodology
On behalf of The Marsh Center for Risk Insights, Public Opinion
Strategies conducted a telephone survey of 101 C-level executives of
Fortune 1000 companies, June 6-29, 2007. The list of C-Level Executive
contacts was obtained directly from Fortune.
