1670 Beyster Building
Business Water Risk: Ripple Effects from Watersheds to the Capital Markets
In recent years, the impact of business water risk has been described not only in the context of the operational impact from watersheds where companies operate, but also from the ripple effect of risk management decisions on the capital markets. Corporate water risk exposure is a function of three variables: 1) company/sector-specific characteristics (e.g. water intensity of production), 2) the water conditions in particular geographies (e.g. drought-prone or strictly regulated), and 3) the strength of corporate management (e.g. proactive vs. reactive) in mitigating risks. The challenge is how the information from the physical world is translated in the financial world, and vice versa. My work since 2008 has focused on developing empirical models to bridge the physical and capital markets risks. As environmental engineers, we often perceive that the proper risk management strategy for water in a corporate context is technology-based (new supply, recycling, monitoring, etc.). In the corporate world, capital commitments for technology are often the last resort, because they are expensive, long-term, and often their cost cannot be passed on to the consumer. Short-term, financial risk management is preferred, such as hedging and insurance strategies. This seminar will explore the connection between CleanTech and financial technology (FinTech), discuss corporate water risk and response strategies, and how the environmental engineer's skills can be leveraged in financial market careers relevant to water.