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Manage Tomorrow's Surprises Today

Steven Minsky

ERM Report: the EPA Spill & Better Risk Assessments

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Last week, a "mistake" by the Environmental Protection Agency (EPA) caused "millions of gallons of pollutants" to overpower the Animas River in Colorado. The EPA, responsible for maintaining and protecting the environment, in fact did just the opposite.

Animas River after EPA Spill

The Animas River before and after the EPA spill. Source: CNN

The 3 million gallons of wastewater has the potential to cause health risks for humans and animals alike, as well as lead to the closing of wells. Spreading more than 100 miles thus far, one has to wonder, how did this oversight unfold? The EPA believes "the spill occurred when one of its teams was using heavy equipment to enter the Gold King Mine, a suspended mine near Durango. Instead of entering the mine and beginning the process of pumping and treating the contaminated water inside as planned, the team accidentally caused it to flow into the nearby Animas River."

The EPA made matters worse by literally adding insult to injury, going door-to-door to ask local Navajo Indians to sign settlement agreementsto limit the agency's long term liability for claims arising out of the spill.

As anger and frustration accumulate, a critical question still lingers. Are environmental misfortunes experienced by the EPA, British Petroleum, and West Virginia preventable and furthermore, could the EPA have salvaged their reputation with a more effective ERM process?

An ERM solution starts with a holistic risk-based approach to identify all the possible root causes of risk, and then systematically helps quantify the total risk consequence. This takes all the possibilities into consideration, and uses scenario analysis tools to aggregate feedback from multiple departments. It's likely that risk assessments would have helped expose lapses in the EPA's drilling processes, and they certainly would have revealed the reputational risks involved in EPA's business continuity plans.

Being able to prioritize activities and resources is crucial in maintaining an effective business continuity and disaster recovery program. Best practice risk assessments should be included in business continuity plans to reveal how various steps might expose the business to risk. A risk-based business continuity software helps organizations prioritize activities in the event of a disruptive scenario, while also requiring the organization to discuss risk-reward tradeoffs that may have prevented the EPA's missteps in the weeks following the spill. LogicManager's business continuity software enables organizations to conduct business impact analysis (BIA) to identify critical business processes and resources, then further that analysis with drill down risk assessments.

These solutions also help subject matter experts in different areas to quickly and effectively assess risks, and the effectiveness of policies and procedures. This allows them to address these risks, prepare appropriate responses, and facilitate the tracking remediation to completion and monitoring over time to manage change. A fully effective ERM program supported by software to cover the EPA's operations would cost only .005% of the expected $28 billion in expected clean-up costs.

 

To learn more about incorporating best practice risk assessments at your organization, download this Risk Assessment Template for Excel, or the  eBook: 5 Steps for Better Risk Assessments.


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In this blog, risk expert Steven Minsky highlights the differences between traditional risk management and true enterprise risk management, which is about helping things happen rather than preventing them from happening. Manage Tomorrow's Surprises Today is designed to help you think about risk in new ways and learn how to benefit practically from this rapidly evolving field.

Steven Minsky

Steven Minsky is the author of the RIMS Risk Maturity Model for Enterprise Risk Management and CEO of LogicManager, the recognized leader of enterprise risk management solutions. LogicManager provides an integrated, intuitive software-as-a-service platform that helps companies make better decisions through risk intelligence for more effective corporate governance, risk and compliance management.

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