How Risk Management Can Build More Resilient Utilities
By Christian Bonawandt
From rapidly evolving cyber threats and extreme weather patterns to regulatory pressures and emerging contaminants, modern water and wastewater utilities are facing an unprecedented era of growing risks. To navigate these challenges, forward-thinking organizations are adopting structured risk assessment frameworks that support long-term resilience rather than reactive emergency response.
In a recent episode of The Water Online Show, hosts Travis Kennedy and Kevin Westerling sat down with Pam Elardo, vice president of strategic services at Brown and Caldwell. With an extensive background as a state regulator, asset management manager, and wastewater treatment plant director, Elardo outlined the critical gaps in how the water industry currently quantifies and communicates risk. Their conversation explored enterprise risk management (ERM), the hidden costs of deferred maintenance, and the role of organizational excellence in addressing the loss of institutional knowledge.
Reactivity And The “Whack-a-Mole” Pitfall
For many municipal systems, daily operations have devolved into a continuous cycle of emergency response, Elardo said. Emergency repairs consume a significant share of utility resources and budgets. This makes long-term planning difficult, forcing leaders to prioritize immediate infrastructure failures instead of addressing the greatest systemic risks.
“We tend to look at risk in silos,” she explained, describing the industry’s historical approach to asset management. “We look at the pump station that failed last week, or the compliance issue we’re facing today. It’s a game of whack-a-mole. But true resilience requires looking across the entire enterprise to understand how these risks compound and intersect.”
This fragmented approach masks the true cost of utility operations, she added. When a major asset fails, there are the immediate expenses of emergency contractors, overtime labor, and expedited material procurement. But this represents only a fraction of the total economic impact. She pointed to hidden costs such as regulatory penalties, environmental remediation, lost productivity, and the erosion of public trust, which often exceed the direct repair costs. By remaining trapped in a reactive posture, utilities pay a premium to maintain a declining standard of service.
Quantifying The Unknown
Elardo said utilities need a standardized way to evaluate, rank, and communicate risks across the organization. ERM, she said, provides this exact framework. Unlike traditional asset management, which focuses primarily on physical infrastructure, ERM evaluates every threat to the utility’s core mission, including cyber vulnerabilities, supply chain volatility, regulatory shifts, and workforce depletion.
She described the two key components of an ERM framework:
- The risk register. This first step creates a centralized record of risks identified across the organization. By documenting these vulnerabilities in a centralized database, a utility can eliminate operational silos and prevent localized risks from expanding into systemic failures.
- The probability-impact matrix. Once identified, each individual risk is evaluated through two primary metrics: the probability of occurrence and the severity of the consequence. This creates a common framework for comparing different types of risks, allowing a utility board to objectively compare a SCADA cyber-vulnerability against a failing interceptor line.
“You have to monetize and quantify these risks so that decision-makers can look at them rationally,” Elardo explained. “If a utility manager can say, ‘We have a 10% chance of an interceptor failure that will cost $5 million in cleanups and lawsuits versus a 50% chance of a localized treatment bypass that costs $100,000,’ the path forward becomes clear. It takes the emotion out of the political budgeting process.”
The High Cost Of Deferred Maintenance
The conversation then moved to one of the most pervasive challenges facing modern utility management: deferring routine infrastructure maintenance to balance annual municipal budgets. Elardo said this creates the illusion of short-term savings while quietly compounding long-term capital liabilities. Over time, this backlog becomes an invisible, high-interest debt known across the industry as the infrastructure gap.
Even worse, she added, deferring maintenance accelerates asset degradation. A gravity sewer line or a high-horsepower blower does not decline linearly. Instead, its failure curve steepens dramatically in the final stages of its lifecycle. When preventive maintenance costing thousands of dollars is routinely delayed, it results in emergency capital replacements costing hundreds of thousands down the road.
“It is a tough sell, but it’s an essential one,” Elardo emphasized. “When you defer maintenance, you aren't saving money. You are simply shifting a massive financial burden onto future generations, and you’re doing it at a much higher cost. We have to change the political narrative from ‘how much does it cost to fix’ to ‘how much does it cost to ignore.’”
Elardo believes part of the problem is the political difficulty of raising utility rates for invisible infrastructure. Elected officials are historically hesitant to approve rate increases for underground assets that the public assumes are operating perfectly.
The Pillars Of Long-Term Utility Resilience
To improve resilience Elardo said utilities should focus on four foundational areas: .
1. Define levels of service (LOS). The baseline of any resilient infrastructure program is clearly defining what the utility is expected to deliver. This goes beyond regulatory compliance. A comprehensive LOS agreement defines parameters for pressure stability, outage durations, customer response times, and environmental impacts. “If you don’t define what success looks like, you can't possibly build an engineering or financial plan to achieve it,” Elardo stated. “Your level of service is the contract between the utility and the public. It tells the community exactly what they are paying for, and it gives the engineering team a concrete metric to design toward.”
2. Execute data-driven asset management. With LOS established, utilities must deploy systematic asset management protocols. This approach uses predictive analytics, condition assessments, and monitoring technologies to guide investment decisions and track asset health. With better asset data, Elardo explained, utilities can accurately predict asset failure before it occurs. This allows maintenance teams to schedule interventions during planned low-flow periods, maximizing asset lifecycles and avoiding the premium costs associated with emergency call-outs.
3. Secure multi-year financial forecasting. Resilient infrastructure cannot be built on an annual, politically driven budgeting cycle. Elardo recommended developing a rolling, multi-year financial forecast that aligns projected capital expenditures directly with the risk register. “You need a minimum of a 10-year, and ideally a 20-year, capital improvement plan that is legally and financially insulated from the standard municipal political cycle,” she said. “Resilient systems require capital certainty. Contractors, engineers, and bond markets all require long-term visibility to deliver projects efficiently.”
4. Cultivate organizational excellence. Elardo described the final, and most critical, pillar as a commitment to organizational health. Building resilient infrastructure is ultimately a human endeavor. Structured organizational development models helps align roles, clarify objectives, and improve employee engagement. This approach is vital to combatting the industry's ongoing “brain drain” as senior operators retire. “When I look at organizational excellence, it's better for business, it's better for efficiencies, it's better for a million other things,” Elardo concluded. “But when you get down to it, the best thing about it increases job satisfaction. People know why they're there. The outcomes and outputs that they're creating become much more tangible and celebrated.”
Christian Bonawandt is an industrial content writer for Water Online. He has been writing about B2B technology and industrial processes for more than 25 years.