By Anthony M. Wagar

Executive Vice President, Willis Towers Watson

Most businesses and organizations consider risk management an integral part of their operations and continually prioritize the importance of assessing actual or potential threats to their capital and earnings. Evaluating various exposures, such as legal liability, financial uncertainty, cyber risk, business interruption, natural disasters, reputational risk and many others, is critical to running a profitable and sustainable business. Managing risk and exposures employs the identification, assessment and contemplation of a company’s risk tolerance level, insurability of risk, premium costs, loss control, preparedness and various other risk management strategies. Similarly, on the insurance market side of the business, insurers contemplate additional factors that include the ability to accurately predict and profitably underwrite risk.  

So, should something as seemingly simple as water be of real concern, and where should the risk associated with water factor into your overall environmental risk management strategy? The short answer is “yes and almost everywhere.” We know that we are all connected through water in one way or another: it is a major component of human survival, food, development, manufacturing, energy production, healthy ecosystems and the list goes on and on. However, from an environmental risk management perspective, the basic threats to and from water extend well beyond the rather obvious and more traditional environmental exposures (such as contaminated aquifers, natural resources and potable wells). Emerging risks stemming from extreme weather-related events and cyber risk have more recently presented a variety of business risks, liabilities and concerns.

Extreme weather-related events, the devastating impacts resulting from too much water (e.g., during hurricanes, storm surges, flooding) and cyber risk have led to many unexpected pollution, legal liability and cleanup scenarios and threats experienced by businesses and organizations over more recent years. Some of these “war stories” include:

Historic/Pre-Existing Contamination

Properties having historical or pre-existing contamination could be disturbed during flooding and, subsequently, carry pollutants to multiple locations resulting in the cross-contamination of various parts of the property and/or neighboring properties.

Landfill Containment Breaches

Heavy water infiltration can cause landslides carrying pollutants and/or contaminated wastewater into nearby waterways or sensitive third-party receptor areas.

Floating Drums of Chemicals and Storage Tanks

Drums containing hazardous waste and storage tanks containing oils and other chemicals could be raised afloat and damaged/ruptured during movement from their original locations, thereby releasing pollutants downstream.

Sewerage Authority System Back-Ups

Sewerage authorities have limited storage and processing capacity; therefore, large unanticipated volumes of water could result in the overflow and/or release of raw untreated sewage. 

Chemical Reaction/Explosion

Power outages caused by heavy winds or flooding have disabled refrigeration systems used for keeping certain chemicals stable at low temperatures (for example, a manufactured organic peroxide plant had a rise in temperature causing peroxides to become unstable resulting in a violent chemical reaction).   

Mold Damage

Damage can also happen after the water recedes. Mold can grow at alarming rates given proper moisture, temperature range and food source (cellulose-based substrate) following a saturation event.   

Cyber Attacks 

Municipal water supply and other systems are susceptible to varying levels of cyber risk (especially with increased interconnectedness provided by the Internet). A recent example involved a water treatment plant where a hacker initiated a remote attack accessing a computer linked to the treatment facility and began increasing the amount of sodium hydroxide, or lye, in the water. The levels were increased to an incredibly dangerous level of more than 100 times normal levels. Fortunately, a vigilant supervisor working remotely noticed the changing chemical levels and was able to stop the attack. Unfortunately, there have been several prior attempts to gain control over command and industrial control systems of wastewater treatment plants, pumping stations and sewage.

Safe Drinking Water

The relationship between safe drinking water and extreme weather-related events (such as higher temperature, drought, rising sea levels, flooding, storm surges, increased precipitation and more frequent and severe natural hazards) can affect the availability and quality of drinking water. Increased turbidity, sedimentation, elevated nutrients, toxic chemicals and waterborne diseases are a major concern as these factors can negatively impact the treatment, production and distribution of safe drinking water. 

In summary, it’s clear that multiple loss scenarios could take place around water which involve various types of claims alleging third-party liabilities, cleanup/remediation obligations, legal defense costs and other concerning issues. Government regulators, plaintiff attorneys, environmental consultants and insurance underwriters are paying attention. And, many insurers are quickly taking steps to better understand the overall exposures, keep pace with the science and modify their underwriting appetite and guidelines accordingly. We’ll need continual engagement from all stakeholders (i.e., business leaders, public officials and politicians, regulators, local and regional leaders and citizens) to monitor, assess, plan, invest, adapt and mitigate water risks to reduce vulnerability as appropriate. 


Anthony M Wagar, Executive Vice President, Willis Towers Watson. For more than 27 years, Anthony has been helping clients understand and assess their environmental exposures and develop risk management solutions. His experience earned as an environmental regulator, consultant, underwriter and broker has enhanced his ability to provide unique perspectives and insights. Anthony holds a master’s degree in Public Health (with a concentration in Hazardous Materials Management) from the University of South Carolina, a Bachelor of Science in Biology from St. Michael’s College. He was the winner of the “2009 Power Broker” award for environmental broking.