BUSINESS RISK EXPOSURE (BRE) - WHAT IS IT?
Part of a larger Strategic Asset Management initiative, the Business Risk
Exposure (BRE) Tool was created by WERF in collaboration with the Global
Water Research Coalition (GWRC), United Kingdom Water Industry
Research (UKWIR), and the Water Research Foundation. The web-based
tool was created to help asset managers make decisions by doing a
methodical evaluation of the degree of business risk exposure that a
utility has in the event that its water and/or wastewater assets fail.
Exposure to Business Risk
The process of determining (scoring) the kind and extent of exposure that
an organization would face in the event that a particular asset or
collection of related assets fail is known as Business Risk Exposure (BRE).
The assessment of both the likelihood of failure (i.e., the probability that a
predicted failure may actually occur) and the consequence of failure
attributable to an asset in the event of its failure (i.e., the implications or
cost to the community and utility if an asset fails) yields the business risk
exposure.
In mathematical terms, BRE is the product of the likelihood and
consequence of a potential failure, modified for both existing and potential
risk mitigation strategies. The actions taken on an individual basis with an
asset to lessen the chance of failure or the impact of failure are known as
risk mitigation strategies.
Likelihood of Failure: This term refers to the projected likelihood of an
asset failing based on its past performance or known characteristics.
Consequence of Failure: Is there a loss, harm, or disadvantage resulting
from an asset failure from a social, economic, environmental, or regulatory
perspective, and can this consequence be described qualitatively or
quantitatively?
The Consequence of Failure for BRE calculations takes into account the
failure event's direct effects (such the asset's repair cost) as well as its
indirect and intangible effects (like the possible loss of services or
evaluated environmental harm). Figure 4.1 above provides a list of
examples of the variables to take into account for water and wastewater
assets when calculating Consequence of Failure.
Depending on the level at which the BRE analysis is done, a score is
awarded as either an ordinal number (e.g., 1-10) or an estimated dollar
value for each aspect contributing to the overall consequences of failure.
The total of the score and weighting for all the variables pertinent to the
analysis is the Consequence of Failure score overall. A given factor's
relevance may vary depending on how it affects a certain organization.
Using the Tool, the analyst may create relative weightings for each of the
component criteria to enable this.
The term "core risk" refers to the sum of the Consequence of Failure (CoF)
and the Likelihood of Failure (LoF), multiplied by the present risk
mitigation strategies applied to the asset or system. By altering the
probability of failure and its consequences, mitigation strategies lessen
the impact of the failure occurrence. Treatments for mitigation might
include, for example:
• Extra redundancies
• Reorienting operations and maintenance (O&M) to be more proactive
(e.g., by hiring stand-by garbage trucks, arranging mobile generators
throughout the service area, and keeping essential supplies on site).
• Restoration or substitution
• Handling the effects that follow a failure (building containment berms,
setting up offline reservoirs for waste storage, organizing citizen clean-up
teams, etc.)
• Coverage
• Changing client expectations (e.g., by creating a "hotspot" website for
status updates on issue areas,
The overall BRE score will be affected differently by various
mitigating techniques
The development and cost-effectiveness analysis of suitable (extra) risk
mitigation techniques may begin as soon as the core risk is provided as a
baseline measurement. For instance, in subterranean water pipelines, the
ability to promptly implement bypass pumping for certain high-risk assets
may help to considerably decrease the Consequence of Failure.
Risk mitigation factor: The BRE Tool calculates the BRE by multiplying the
product of the likelihood and consequence of failure by a risk mitigation
factor. The BRE Tool employs a Risk Mitigation Factor that has a value
between 0% and 100%. Strategies for mitigating risk that were in place at
the time of the analysis should be included in Core Risk. The purpose of
the Risk Mitigation Factor is to help the Asset Manager and/or Asset
Management Team find more measures that may be implemented,
comprehend the relative effects of each strategy on BRE, and evaluate the
relative cost-effectiveness of each.
The user determines the values of the reduction factors for each
mitigation technique. A factor value determined for one asset in one
environment for a given strategy may differ in value for the same type of
asset and strategy in a different operating environment and setting.
Mitigation factor values should be based on sound professional judgment
and should be asset specific in its operating environment.
When used in conjunction with suggested mitigation techniques, the BRE
Tool may be used to identify assets with a high potential for risk exposure
and, in more sophisticated applications, to evaluate the relative risks of an
unintended failure occurrence. Relative risk information helps an asset
manager make better business choices.
The BRE Tool Structure and Steps
The following stages are applied as part of the BRE methodology:
• Recognize probable danger or malfunction instances
• Determine BRE scores.
• Determine which high-risk failure occurrences to prioritize.
• Create management plans for the failure occurrences that are
prioritized.
To create a company risk exposure profile, users of the tool should adhere
to the sequential procedures shown in the flow chart. The user has access
to information pertinent to each phase at any time. The Tool's steps are as
follows:
• Step 1: Provide Project Information
• Step 2: Ascertain the Primary Failure Mode That Is Most Imminent
Step 3A: Determine the Consequences of Failure (CoF) from a Social and
Community Aspect
• Step 3B: Determine the Economic and Financial Consequences of Failure
(CoF)
Step 3C: Determine the Consequences of Failure (CoF) from an
Environmental Point of View
Establish the Likelihood of Failure (LoF) in Step 4.
Step 5: Take into Account Risk Mitigation Techniques
• Step 6: Create a risk map and determine the BRE score
• Step 7: Evaluate and Complete Risk Profile
The BRE Tool's layout makes it possible for users to go through the risk
assessment procedure step-by-step. Keep in mind that the tool is
"progressive," meaning that the best way to determine cell/column values
is to construct the spreadsheet from left to right, column by column, with
the columns that come before providing context for the columns that
follow. Unless significant effort is taken to maintain consistency in grading
throughout the columns, we do not recommend bouncing about the
columns.
It is critical that scoring remain consistent across time and among risk
scoring teams. The best way to do this is by:
• Written grading guidelines (use this tool's content to support
development when appropriate);
• An Asset Management Task team's impartial review of each risk score;
and
• The asset manager's audit evaluation, which is based on periodic
sampling.
All of us use the services that transportation firms provide. For instance,
it's likely that you took the bus into town, rode the school bus, or taken
the train between cities. Some of you may have taken use of the Park &
Ride bus service or traveled on an ultra-green, energy-efficient tram.
The biggest surface transportation firm in the UK is FirstGroup plc,
sometimes referred to as First. Its annual sales exceeds £5 billion. It
transports over 2.5 billion people annually and has over 137,000
employees spread throughout the UK and North America.
• The biggest train operator in the UK, which transports about 275 million
people annually, comes in first. This represents 25% of the whole
passenger network. Regional, intercity, and commuter train passenger
services such as First Great Western, First TransPennine Express, First
Capital Connect, First ScotRail, and Hull/Trains are operated by First.
• First, operating more than one in five local bus routes, is the biggest bus
operator in Britain. Three million people are transported daily by a fleet of
around 9,000 buses in more than 40 major cities and towns, including
Manchester, Leeds, and Glasgow.
• The firm also runs the Croydon Tramlink network, which transports
around 26 million people annually, and First GBRf, a rail freight company.
• First is the biggest student transportation company in North America,
transporting around 4 million students each day.
The pioneer in dependable, secure, creative, and environmentally friendly
transportation services comes in first. First strives to remain local in its
approach even if it is a worldwide company. This indicates that those who
mostly reside and work in that area handle local concerns. This
guarantees a quicker reaction and a better grasp of what must occur.
Outside factors
If the directors and management had to worry about solely internal
business matters, running a firm would be easy. They may focus on
making internal choices about bus operations, schedules, and routes.
Nonetheless, business planners also need to be aware of external events.
By doing a PESTEL study, businesses may find external developments that
might have an impact on them. This tool for business uses the PESTEL
acronym, where each letter denotes a different kind of change occurring
in the external business environment.
Many of these external changes—like new government regulations, for
instance—might not be within the company's control. Certain alterations
might endanger the company, such a rival employing Opportunities may
arise from social changes; one such example is the entry of migrant
workers with new skills into the labor force. Businesses like as First are
particularly concerned about the environmental effects of waste
management and carbon dioxide (CO2) emissions.
A business plan
A company has to determine which external developments are likely to
occur and which ones it should respond to or seize. Then, with the
assistance of business strategists, the firm may efficiently react. A plan for
a collection of connected items is referred to as a "business strategy" in
our language. First's approach pertains to its travel schedules and
considers every PESTEL element in its surroundings.
Economic and political aspects Political
The movement of people to and from work, home, and education, as well
as the delivery of commodities to homes and companies, is the foundation
of the UK economy. In the United Kingdom, bus services began to be
privatized by the government in the 1980s. It was thought that letting
private companies compete to operate bus services would keep costs
down and guarantee that businesses would work better to satisfy
consumers. As a consequence, bus services are now more inventive,
sustainable, and efficient.
There are two tiers of government: national and municipal. It focuses on
collaborating closely with local government since it first believes in
offering local answers. For instance, it arranges bus routes that are
appropriate for senior citizens and offers a service to nearby schools.
One important government policy that impacts all transportation services
has to do with cutting CO2 emissions. The Kyoto Protocol is an
international agreement that the UK government has signed. Signatory
nations pledge to cut down on their emissions of dangerous gases. This
can only be successful in collaboration with business. The government
program to encourage more kids to use the bus instead of driving their
cars to school is a prime illustration of this. This will contribute to a
decrease in carbon emissions. First, there should be aggressive
encouragement to use the bus rather than drive a vehicle.
Strategy for Climate Change
First has created a climate change strategy that informs all of the
company's decisions. This is a component of First's "Transform Travel"
vision. It aims to improve public transportation users' attitudes by
providing the best possible service and satisfaction. This entails accepting
responsibility for bringing CO2 emissions down to an absolute minimum.
Though there is always need for improvement, transportation modes
including the bus, train, and tram produce less pollution than other
modes. Among the main components of First's climate change strategy
are:
• Increasing the cars' fuel efficiency
• Investing in automobiles with higher fuel economy
• making use of substitute fuels, such biodiesel
• Enhancements to operations via driver education and the use of new
technologies to track performance
By 2020, the company wants to cut its CO2 emissions by 20% for rail and
25% for its bus segment.
Financial
For businesses to stay in business, they must generate revenue. They do
this by paying attention to their clients' needs and wants in order to retain
current clients and draw in new ones.
Meeting requests
It is critical for companies to adapt to changes in consumer demand. For
instance, First has worked closely with the Neath Port Talbot Council to
offer enhanced services in response to growing demand in the Welsh
Neath valley.
Another excellent example of meeting demand is the provision of
excellent Yellow School Bus transportation. Based on lessons learnt from
its US operations, First created unique pilot services with the student in
mind after market research revealed that parents and kids needed safer
buses. It is a part of driver training to assist pupils. Every day, pupils
board the same bus, are seated in the same seats, and get care from the
same driver who has received specialized training. Padded seats, seat
belts that are incorporated, extra escape hatches, and CCTV are examples
of vehicle safety features. The first is collaborating with the government
via a commission that has been specifically designated to study the
feasibility of implementing specialized yellow school bus services
throughout the United Kingdom.
Levy
Taxes are another economic aspect that First's firm must deal with.
Customers are encouraged to transfer from driving vehicles to the more
cost-effective bus and rail systems by high fuel taxes. In places like
London, congestion fees also incentivize vehicles to use other modes of
transportation. Naturally, First does not want to take the place of driving.
Automobiles are a vital mode of transportation, and many modern
households own several vehicles. Nonetheless, a lot of people are ignorant
of the effects that, say, one individual driving a big "gas-guzzler"
automobile to work has on the environment.
First's strategy is to work in tandem with the automobile rather than
against it. is to make it simple for individuals to transition between driving
a private vehicle and public transportation. For instance, First provides
easy public transportation via its Park and Ride programs in large cities
where parking is costly.
Technological and social aspects
Business might be significantly impacted by social changes:
• The UK's senior population is growing. In our nation, there are more
individuals than ever with bus passes. With the passes, customers may
travel for free since First pays the local government to provide the service.
Bus travel is a popular choice among senior citizens due to its safety and
convenience.
• The preferences and habits of society are evolving. People are become
more environmentally conscious and turning into "green consumers."
Green customers like products and services that are "environmentally-
friendly" and have minimal negative effects on the ecosystem. For
instance, the environmentally conscious customer would rather go by bus
or rail than by plane or big automobile.
• People travel more and are more mobile these days.
The Department for Transport's 2007 statistics highlight some of the key
developments. These figures provide a favorable image of First. The
industry is expanding and more individuals are becoming aware of the
advantages of using more ecologically friendly transportation.
Technological
Companies are always creating new technology to provide the greatest
products on the market. Astute firms identify and implement the
technologies that are best suitable for their operations. This is especially
valid for transportation.
One excellent illustration of this is the availability of buses with easily
accessible lower floors. These make places more accessible to the elderly
and handicapped. First has made significant investments in order to
provide low-floor buses in accordance with government requirements.
Novel Advancements
Introduced in 2006, this text shorthand for "Future" These are cutting
edge articulated buses that resemble trams yet function like buses and go
on regular highways. In collaboration with local authorities, First has
established programs using these automobiles. first offers the bus service
and the infrastructure (new road designs, bus shelters, etc.) provided by
the local government. There is a reduction in the number of bus trips
required since FTR vehicles can accommodate more passengers on each
trip. Additionally, they are more well-liked by clients, which reduces the
number of automobile trips. As a result, there is less of an influence on the
environment, fewer CO2 emissions, and less gasoline required.
First ScotRail, the train business of First Group, has implemented
innovative passenger warning systems, Journey Check and Journey Alert.
These allow travelers to get the most recent information on trains by
email or text. These services provide a practical means of informing
individuals of delays or changes to train schedules, enabling them to
adjust their travel plans appropriately.
Prepaid Smart cards are another technology innovation that make paying
for bus fare simpler and quicker.
Legal and environmental considerations
Surroundings
These days, the environment has the potential to have the most external
impact on any transportation service. The overwhelming body of research
indicates that climate change is a result of human activities. Businesses,
consumers, and the government all want improved environmental
management. First unveiled its Climate Change Strategy in 2007. The
strategy outlines goals and objectives for achieving short- and long-term
CO2 emission reductions.
The plan pointed out a few of the climate change dangers. Among them
were the coastal areas' road and rail infrastructure's susceptibility to
floods and storm surges. It suggested measures to control these risks,
such collaborating with transportation network operators to keep an eye
on and repair rail and roads. Opportunities were also highlighted by the
plan. First, for instance, has set lofty goals to cut its CO2 emissions by
25% and 20%, respectively, by 2020 from its bus and rail operations. First
has a distinct edge over its rivals as a result.
Lawful
Government policy is the source of many changes to the law. Numerous
rules, such the ones governing bus transportation emissions, are
applicable across Europe. Firstly, confirms that every one of its buses
satisfies these standards. Political and legal developments have a lot in
common when it comes to business. Prioritizing and becoming ready for
upcoming legal changes comes first. As January 2010, First and other
businesses will have to purchase carbon credits as part of the Carbon
Reduction Commitment plan. Companies will be able to produce a certain
amount of carbon emissions thanks to these credits. In order to achieve
this, First is already creating a budget and outlining precise strategies for
projecting how much CO2 it will create after 2010.
PESTEL elements may be seen as dangers. First, however, would rather
view them as chances. As a result of social developments, more elderly
travelers are looking for cozy, convenient busses for access. Public
transportation is becoming more and more popular, especially for school
runs, thanks to government pressure. Many are looking for "greener" ways
to get about. First may create strategies that are suitable for meeting the
difficulties of a changing environment with the aid of a thorough PESTEL
study. is able to expand its company and proceed confidently first.
