Skip to main content
Marsh logo

Article

Building a resilient utilities sector

The UK has seen unprecedented utilities disruption this year. Driven by extreme weather and geopolitical events we anticipate the utilities sector will need a resilience revolution.

25/10/2022 · 3 minute read

The UK has seen unprecedented utilities disruption this year. Driven by extreme weather events — including Storm Arwen, which disrupted power to 1 million households — and geopolitical events such as the crisis in Ukraine affecting gas supplies, we anticipate the utilities sector will need a resilience revolution.

As we head into winter, all indicators point to a concerning situation. The National Grid has doubled its emergency planning exercises. Wholesale gas prices are predicted to soar 80%, and they have raised concerns for the possible need for a 3-hour blackout this winter. European governments are also bidding against one another to secure supply. The sector will need to prioritise and invest in resilience if it is to avoid widespread disruption and public resentment.

A recent survey found that extreme weather and unsustainable price rises for essential resources ranked within the top-five. However, two long-established risks also lead the way: cybersecurity and sluggish regulatory policy hindering investment.

A picture emerges of an industry grappling to navigate sudden disruption in tandem with complex issues often ascribed to public policy and regulation. Such tension presents a serious challenge for building meaningful resilience. Resources, capability, and structures must be fit for purpose in the face of multi-layered disruption, where competing priorities are often at play.

With senior utilities managers expecting risks to only magnify within a 5-10 year timeline, and only 53% of them confident in being able to navigate this based on current capabilities, the sector is entering a period where enhancing resilience will not only underpin commercial success, but socio-economic security for millions.

It is critical to long-term success for organisations to build resilience within the three key areas outlined:

  • FUTURE-PROOF PREPERATIONS: Ofgem’s report following Storm Arwen underscored the insufficiency of existing planning.[1] Critique centred on inadequate support for vulnerable customers and the speed at which communications channels became overwhelmed. With the water system facing similar weather challenges, a higher bar is emerging for preparedness. In this context, planning around current and future “reasonable worst case” scenarios must drive the review and stress testing of resilience plans.
  • HOLISTIC APPROACH TO CYBER: Concern is focused on the ability of the industry to keep pace with emerging threats as systems evolve and technology develops to include novel sensors. At the technical level, regular vulnerability assessments, immediate tactical improvements, and strategic initiatives endorsed by senior leadership must lead the way. However, it requires the whole business to prepare for and respond to a severe cyberattack. This must focus on strategic-level planning and leadership training, and it must seek to fully integrate the business with its core supporting services, including third parties.
  • FACING TRUST CHALLENGES HEAD ON: As the sector grapples with the erosion of public trust, a significant challenge lies ahead to manage rising backlash. This is exacerbated by the impending challenge of achieving net-zero, which will require customers to make lifestyle and spending sacrifices. In this context, a future-focused stakeholder engagement strategy must become a leadership priority. Messaging should be rooted in realism, clearly articulating the challenge and industry solution. This should be all underpinned by regular updates on tangible action, ultimately demonstrating that the industry is holding itself to account. 

The challenge facing utilities is significant. Proactive action is needed to thrive in an environment faced with the combined risks of cyber, climate change, and the erosion of public trust. Continual national infrastructure adaptation and focusing activity on resources to prepare and mitigate new and emerging risks will create a more resilient sector in the future.

 

[1] Storm Arwen Report, Ofgem, June 2022

Meet the authors

Placeholder Image

Carl Ratcliffe

Marsh UK Industries - Recycling, Utilities & Mining Industries Leader

Catherine Cyphus

Catherine Cyphus

Head of Risk, Resilience, and Technology

  • United Kingdom

Related insights

Distribution electric substation with power lines and transformers, at sunset

2023 UK Utilities Risk Report

13/06/2023
The power supply facilities of contour in the evening

2022 UK Utilities Risk Report

05/31/2022

More in Risk Consulting

Placeholder Image

Article

Business Continuity Management: How to boost its effectiveness

05/11/2024
Multi color blocks

Report

Building risk resilience into your business strategy

09/10/2024
dashboard data analytics on the screen of digital tablet computer, financial report statistics

Podcast

Risk in Context Podcast: Unravelling complex supply chains through a data-driven visibility strategy

01/10/2024
Business planning finance calculations

Article

How payroll classification can impact business interruption values

20/08/2024
View more