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a Global Filipino Water Company

2021 Integrated Report

Enterprise Risk Management

Enterprise Risk Management

Manila Water operates in a regulated and dynamic business environment where uncertainties, both detrimental and opportune to the Company, abound. The Company is accountable to its regulators, shareholders, employees and customers, among others, even as profitability, sustainable development and corporate social responsibility are expected to be continuously enhanced. To achieve its corporate objectives, Manila Water recognized the need for the active management of risks inherent in its business, involving the entire organization.

Manila Water continues to implement its Enterprise Risk Management (ERM) Program based on a globally accepted approach, the ISO 31000:2018.

The ERM Program operationalizes the Company's Manual of Corporate Governance which mandates the Board of Directors (BOD) to ensure the presence of organizational and procedural controls supported by an effective management information system and risk management reporting system.

In addition, the Company's Board Risk Oversight Committee (BROC) provides oversight to management functions relating to strategic, financial, operational, compliance, legal, environmental, social and other risks of the Company. This involves periodic disclosure of significant risk exposures and related risk management activities.

The President is the comprehensive risk executive and is ultimately responsible for the ERM priorities, strategies, tolerances and policies. He chairs the Enterprise Risk Management Executive Committee (ERMEC) which is composed of Senior Leadership Team including the Chief Risk Officer (CRO).

The CRO is the ultimate champion of ERM at Manila Water and he is supported by the ERM Department. The department is responsible for developing the risk management tools, methodologies, and processes. It also leads the implementation and dissemination of ERM across the Manila Water Group in coordination with the risk owners, the CRO and ERM Champions/Risk Owners of the business units. With the ERM mindset continuously being assimilated into the Company's culture and practices, ERM has been embedded in the strategic, tactical and execution planning as well as in key decision-making processes including insurance management.

The ERMEC has been established to oversee and ensure the efficient and effective management of Manila Water's enterprise risks. The Committee is composed of the Senior Leadership Team, consisting of the Manila Water President, Chief Administrative Officer, Chief Regulatory Officer, East Zone Business Chief Operating Officer, Non-East Zone Business Chief Operating Officer, and the Chief Finance Officer.

The RMEC on the other hand has been established to oversee the effective risk management in each respective business unit within the strategic business units (SBU). The Committee is responsible for establishing, maintaining and reviewing procedures at management and tactical level to identify, assess and measure, and mitigate risks in accordance with the Company's enterprise risk management policy. It is composed of the entire Management Committee of the SBU headed by the Chief Operating Officer.

The risk management system of Manila Water is reviewed and assessed annually by an Internal Audit function using a risk maturity assessment framework aligned with the best practices to determine the system's adequacy, suitability and effectiveness.

Manila Water understands that the success of the ERM program depends heavily on the framework providing the foundations and arrangements of what it will embed throughout the organization at all levels and process is designed to be repeatable and tailored to the needs of the business.


Framework and Process


The ERM Framework is centered on the strong and sustained commitment by the Company's leadership to risk management by defining risk management policy, objectives, ensuring legal and regulatory compliance, ensuring necessary resources are allocated to risk management, and by communicating the benefits of risk management to all stakeholders. Meanwhile the ERM process was designed to be an integral part of management and embedded in the company's culture and practices.

2021 Activities and highlights
For 2021, ERM Department's main goal was to continue the wheel rolling while looking at the critical processes to identify areas that can strengthen the conduct of ERM within the organization. The following activities were carried out to improve the risk management discipline of the Company:

ERM Policy Revision
As the core document that guides and helps everyone within Manila Water on how ERM should be carried out, the ERM Department reviewed and improved the ERM policy by incorporating global best practices.

ERM Rollout
Business units have always been an integral part of the risk management system. In 2021, Manila Water reinforced the ERM discipline by conducting a risk awareness thru re-training program of key roles and department heads.

Risk Assessment
The primary activity within which Manila Water identifies and analyzes risks. The activity was conducted together with the different business units to come up with this year's top enterprise risks.

Establishment of Key Risk Indicators
To manage risks more effectively, the ERM Department together with the different risks owners identified key risk indicators (KRI) which serve as early warning signals if a risk is turning into an event that can adversely impact Manila Water. KRIs will also serve as a monitoring tool to prevent crises and mitigate them in time.

The use of the KRIs enhances the analysis of risk levels and risk mitigation strategies. The status of the KRIs is discussed at the RMEC and ERMEC and reported to the Board Risk Oversight Committee.

Task Force on Climate-related Financial Disclosure (TCFD) Reporting Readiness
The Company recognizes the importance and criticality of disclosing climate change risks to its stakeholders. In 2021, the Company gears up to strengthen its climate reporting readiness by appointing Aon UK to capacitate our risk owners on how to disclose clear, comparable and consistent information about the risks and opportunities presented by climate change.


ERM Structure

Management of Top Enterprise Risks
The Enterprise Risk Management Executive Committee (ERMEC), composed of Manila Water Company's Senior Leadership Team (SLT) consisting of the Manila Water President/CEO, Chief Administrative Officer, Chief Regulatory Officer, East Zone Business Chief Operating Officer, Non-East Zone Business Chief Operating Officer, and the Chief Finance Officer determines the most significant risks facing the Company.

For both Manila Water East Zone and Non-East Zone business, the Risk Management Executive Committee (RMEC) is composed of the President/Chief Operating Officer and their Leadership Team and has been established to oversee the effective risk management in each respective business unit within the strategic business units (SBU).

Management of top enterprise risks has been mapped up to the department level and was delegated to the appropriate Risk Owners.

Risk Owners formulate and commit to a risk management plan, monitored by the ERM Department, which defines specific action points, accountability, milestones and timeline. The status of the Top Enterprise Risks is regularly discussed at the ERMEC and RMEC and is reported to the Board Risk Oversight Committee.


Top Risks Discussion (Risks, Mitigating Measures)

2021 Top Enterprise Risks Updates and Mitigation Strategies

Water Supply

Failure to ensure the adequacy, quality, and reliability of water supply across service areas. Covers raw water availability, water quality and distribution.

To ensure adequate raw water supply especially during the dry season, Manila Water continues to implement MWSS-approved short and mediumterm water source development projects such as rehabilitated and new deep wells, rehabilitation of the Alat source, and the new Wawa-Calawis and Laguna Lake East Bay sources.

The Company commits to provide quality water to the public by (1) having a Water Safety Plan; (2) securing the air vents along the aqueducts; and (3) rehabilitating La Mesa Dam.

Demand, Billed Volume and Revenue

Failure to meet growth in demand and revenue, and collect payments in a timely manner.

Implementation of a regular meter replacement program to ensure accurate consumption readings and to properly align non-revenue water (NRW) reduction activities. The monitoring of base business accounts properly determines supply requirements and consumption trends, while the provision of 24/7 online payment channels facilitate payment convenience and leads to improved collection levels.

CAPEX Delivery

Failure to execute projects consistent with the approved Service Improvement Plan in a timely manner, in line with cost estimates, and at desired quality, thus avoiding disallowances, penalties or tariff clawback.

The Company conceptualized and implemented Project Ark, a cross-functional initiative that addresses the various risk drivers and gaps that lead to the delay in the execution of major capital works across the respective project life cycles, from project development to execution.

The first phase of the program addressed core capital expenditure (CAPEX) processes, policies, tools, and structures critical to being able to fasttrack the water supply and used water commitments and meet CAPEX delivery targets. Among the improvements in the CAPEX organizational structure and delivery strategy are: (a) creation of a more aligned and streamlined project team structure within Corporate Project Management Group (CPMG); (b) maximizing technical talents in the organization by decentralizing project execution; (c) establishing the Strategic Procurement and Supply Chain Management Group to allow for a more flexible and targeted approach to procurement; (d) implementing a more structured and holistic approach to land acquisition; and (e) applying a more efficient approval process.

The second phase of the project specifically addressed process improvements, aimed at further improving end-to-end CAPEX delivery by reducing touch points and cycle times across all critical processes. This phase aims to improve CAPEX throughput by utilizing workflows, automation, reports, and dashboards to improve visibility and streamline coordination across all units.

Manpower augmentation is also being performed to help meet the CAPEX target alongside awarding of framework agreements.

Effluent (BNR) Compliance

Failure to comply, consistently and in a timely manner, with the provisions of the revised effluent standards, particularly on the removal of nutrients from wastewater.

Manila Water applied a five-pronged approach to manage the compliance risk associated with the revised effluent standards:

Technical Track - Identifying feasible technical solutions for each facility and accelerating implementation to comply with the Department of Environment and Natural Resources (DENR) Administrative Order 2016-08 (DAO 2016-08) before the CAP deadlines.

DENR/Laguna Lake Development Authority (LLDA) Track - Obtaining environmental regulator's approval of the submitted Compliance Action Plans and establishing a legal defense strategy should any challenges arise.

Stakeholder Track - Obtaining the buy-in of concerned local government units for the individual projects and timely acquisition of necessary project permits

Legislative Track - Advocating to extend the timeline of grace period to 10 years since the release of DAO 2016-08 in 2016 and to suspend the implementation of Section 19F (grace period) of the Philippine Clean Water Act of 2004 in times of national emergencies.

Metropolitan Waterworks and Sewerage System (MWSS) Corporate Office (CO)/ Regulatory Office (RO) Track - Obtaining the support of MWSS on the continuing implementation of facility and network retrofit plans vis a vis any outcomes of the various stakeholder-driven developments at the environmental policy maker (DENR).

Political and Regulatory

Failure to manage regulatory and socio-political uncertainties which may create business challenges, delay project completion, restrict market opportunity, hamper investment, hinder rate approval on proposed rates and negatively impact returns on existing assets.

Covers failure to adhere to the provisions of the Revised CA, and failure to submit an updated RR18 Plan with reasonable and attainable commitments, which may lead to potential penalties and disallowances.

Manila Water's political and regulatory exposure lies heavily on compliance with the original Concession Agreement, and applicably with the Revised Concession Agreement. The company's mitigating action is the submission and approval of an updated Service Improvement Plan (SIP) superseding the targets for 2021 and 2022.

MWSS BOT Resolution No. 2021-142-RO dated 07 December 2021 deferred the approval of the updated RR18 plan and penalties were suspended in case of non-attainment of the RR18 targets.


Failure to manage and close major legal disputes that will impact reputation and incur significant financial penalties.

Legal risks are handled by Manila Water through the Legal and Corporate Governance Group. The Company monitors its outstanding legal cases and keeps track of the status of each case. Assessments are also made in terms of likelihood and impact of each to the Company.

Accordingly, the Company makes provisions for financial exposures and such are duly reflected in the Company's financial statements.


Failure to ensure availability of competent talents for critical roles and keep them engaged and motivated to deliver results. Covers risks on Talent Capacity, Capability and Connection.

Manila Water addresses talent risk by implementing programs that are focused on honing one's individual talent and strengthening the successor's development plan.

A year-round program is also in place from onboarding, technical development, leadership, and functional development.

To mitigate the exposure related to talent capability, Manila Water ensures that there are talent assessments and reviews to identify competency gaps and design development plans.

Natural Calamities

Failure to effectively ensure business continuity and immediate recovery in response to disruptive natural calamities such as earthquake and weather extremes.

Business continuity plans, emergency response teams and incident management plan are in place to address the risk related to natural calamities.

Regular earthquake drills are conducted in compliance with the Metro Manila Development Authority (MMDA)/National Disaster Risk Reduction and Management Council (NDRRMC) regulation.


Failure to sustain business operations, and maintain employee health and safety due to public health crises (COVID-19, Delta variant, etc.)

Manila Water addresses the pandemic risk by adhering to standard COVID-19 protocols, implementing workplace safeguards, and organizing vaccination activities.

The Company also ensures sufficient inventory level of health supplies in the workplace such as alcohols, facemasks, disinfectants, and vitamins.

The Company continuously implements work from home arrangements to minimize the number of workers in a workplace.


Failure to protect critical company data, information and systems from internal and external threats.

The Company is continuously improving security and resiliency based on zero trust principle to protect the computer environment from sophisticated cyberattack. It has updated the Information Technology (IT) security policies, improved the back-up environment and strengthened the detection and response capabilities.

Foreign Exchange

Failure to manage or mitigate the effects of foreign exchange volatility to Profit and Loss.

The Company implemented Foreign Exchange Risk Management Policy and foreign exchange hedging structures to address the foreign exchange risk.

Fund Sourcing & Capital Availability

Failure to source and provide timely and cost-efficient funding to cover operating requirements, capital expenditure commitments, capital requirements of new businesses, and funding of debt obligations in both Philippine Peso and Foreign Currency.

The Company has secured loan agreements for identified funding and working capital requirements and has established new credit lines for both East Zone and Non-East Zone entities for projected requirements.

The Company establishes new banking relationships to build up additional liquidity buffer.



Manila Water operates in a regulated and dynamic business environment where uncertainties, both detrimental and opportune to the Company, abound. The Company is accountable to its regulators, shareholders, employees, and customers, among others. In order to achieve its corporate objectives, Manila Water recognizes the need for the active management of risks inherent to its business which involves the entire organization.

In its report to the BOD for the year ended December 31, 2021, the BROC confirmed that it discussed the significant risk exposures, the related risk-mitigation efforts and initiatives, and the status of the mitigation plans. The report indicates that the review of the BROC was conducted in the context that Management is primarily responsible for the risk management process. The BROC also increased the frequency of its meetings from semi-annual to quarterly basis, to provide sufficient time for deeper discussions on risk analysis as well as to provide ample attention to the risks of new business operations.

The Chief Risk Officer

The Chief Risk Officer (CRO) oversees the entire risk management function and leads the development, implementation, maintenance, and continuous improvement of Enterprise Risk Management (ERM) program, processes, and tools. The CRO is the Vice Chairman of the Enterprise Risk Management Executive Committee (ERMEC). He also leads the ERM Department in facilitating the ERM process and in collecting and analyzing key business risk information for reporting to the risk management committees (ERMEC and RMEC) and to the Board Risk Oversight Committee (BROC).

Enterprise Risk Management Department

The Enterprise Risk Management (ERM) Department is responsible for the sustained implementation of the ERM Program across the Manila Water Enterprise, acts as the primary driver of developing a risk-aware culture, and ensures that key risks are identified and managed by the respective risk owners.


Report of the Board Risk Oversight Committee to the Board of Directors

For the year ended December 31, 2021

The Board Risk Oversight Committee (“Risk Committee”) was established by the Board of Directors at its August 11, 2015 meeting to provide assistance in fulfilling the Board's oversight responsibilities in relation to risk governance in Manila Water. The Risk Committee's roles, responsibilities and authorities are defined in the Risk Committee Charter approved by the Board of Directors during its November 26, 2015 meeting.

In compliance with the Risk Committee Charter, the Committee confirms that:

  • An independent director chairs the Risk Committee. The Committee has three out of four members who are independent directors.
  • The Committee had four meetings in 2021 with the following attendance rate:
Directors No. of Meetings Attended/Held Percent Present

Cesar A. Buenaventura1



Sherisa P. Nuesa



Eric Ramon O. Recto



Donato C. Almeda



Jaime C. Laya2



Jose L. Cuisia



Gerardo C. Ablaza



Oscar C. Reyes



  • The Committee discussed with Management the significant risk exposures, the related risk-mitigation efforts and initiatives, and the status of the mitigation plans.
  • The review was undertaken in the context that Management is primarily responsible for the risk management process.
  • The Committee has reviewed the Enterprise Risk Management Process in Manila Water Company, Inc. and is satisfied that sufficient risk management systems are in place.
  • The Committee appointed the Chief Audit Executive as the concurrent Chief Risk Officer.
  • Initiatives such as risk awareness campaigns, focus group discussions, and change management sessions that will strengthen the risk culture of the organization were put in place.
  • Key risk indicators (KRI) that will serve as the primary tool to monitor the risks within Manila Water were introduced.


Cesar A. Buenaventura

Sherisa P. Nuesa

Eric Ramon O. Recto

Donato C. Almeda


1 Mr. Buenaventura was elected as a Director during the Annual Stockholders' meeting on April 16, 2021
2 Ms. Nuesa was elected as a Director during the Annual Stockholders' meeting on April 16, 2021
3 Mr. Recto was elected as a Director during the Annual Stockholders' meeting on April 16, 2021
4 Mr. Almeda was elected as a Director during the Annual Stockholders' meeting on April 16, 2021
5 The term of Mr. Laya as a member of the Committee ended on April 6, 2021
6 The term of Mr. Cuisia as a member of the Committee ended on April 6, 2021
7 The term of Mr. Ablaza as a member of the Committee ended on April 6, 2021