The second step in conducting an initial risk assessment of a company's water uses is to consider the water source information prepared in Module 1 to assess the likelihood of the changes considered in the sensitivity analysis actually occurring. Frequently, this will be linked to the vulnerability of the water source(s) relied on for the use. For example, an aquifer that is being rapidly depleted or contaminated would likely be vulnerable to changes or response actions such as public policy changes or price increases that can affect the business. However, changes in water prices and allocations are often not directly related to the vulnerability of local water sources, but may instead stem from broader changes in public opinion and policy related to the needs of other water users.

For this probability analysis, you should decide on a consistent planning horizon that meets your needs, such as five, ten, or twenty-five years.

1. Source vulnerability: How secure are your current sources? What is the likelihood that you will need to seek alternative sources? Factors to consider include weather patterns, such as drought, catastrophic events, infrastructure failure, contamination from spills, increased demands from higher priority users, changes as a result of regulation, public policy, judicial action, or political conflict.
   
2. Water price: What is the likelihood of direct water price increases? What is the likelihood of indirect price increases that result from changes in water availability? Examples of indirect costs increases include energy costs, key supplier inputs, or transportation costs.
3. Water quantity: What is the likelihood of future restrictions on current water availability?
4. Water quality: What is the probability that the quality of the water used for this activity will change?

For the Module 2 risk assessment, probabilities can be assessed using simple "high, medium and low" ratings.

Return to Module 2