This is the second article in our ‘Rethinking Water Risk’ series. If you missed the introduction, you can read it here: Rethinking Water Risk: Part 1.
This article explores how physical water-related risks impact key sectors while outlining proven solutions, including nature-based systems and circular water models, that build resilience and create long-term value.
Physical water-related risks represent an escalating challenge for businesses and industries across all sectors. For major resource-intensive industries, physical water-related risks are now a defining factor in operational resilience and long-term growth. These risks include changes in water quality and availability driven by climate change, growing demand, and cumulative environmental pressure. Addressing these risks is no longer optional – it is a strategic imperative for operational continuity, investor confidence, and long-term sustainability.
“Understanding where and how water risks materialise across the value chain is the first step toward building operational resilience and stakeholder trust.”
Table 0‑1: High Level Industry Breakdown of Impacts and Opportunities
| Sector | Industries | Impacts | Opportunities |
| Primary | Mining | Production loss, equipment damage, environmental harm | Nature-based solutions, circular water use, water stewardship innovation |
| Agriculture, Forestry, Fishing | Poor yields, contamination, infrastructure damage | Efficient irrigation, stakeholder collaboration, water quality initiatives | |
| Secondary | Food Processing, Manufacturing, Construction, Utilities | Disruptions, supply issues, health/safety risks | Water recycling, green design, infrastructure upgrades |
| Tertiary | Tech, Healthcare, Transportation, Hospitality | Operational loss, health hazards, social risk | Smart water tech, community engagement, sustainable tourism |
To mitigate physical water-related risks, businesses can integrate the following into their strategies:
- Water-efficient practices – Installing closed-loop systems, reusing wastewater, and investing in smart metering to cut usage and cost.
- Nature-based solutions – Using constructed wetlands, green roofs, and permeable surfaces to treat water naturally and manage stormwater.
- Collaborative water governance – Partnering with basin stakeholders, from communities to regulators, to co-manage shared water resources.
Together, these approaches lower exposure, improve resilience, and align with sustainability reporting frameworks.
Real-World Impact
Constructed wetlands have proven to be an effective solution for water purification and treatment since the 1950s. These systems are increasingly being adopted across multiple industries as part of broader efforts to manage wastewater and turn it into a valuable resource. Besides improving water quality, constructed wetlands help create habitats, enhance biodiversity, and even contribute to local economies through tourism and recreational spaces.
Proactive water strategies are showing tangible returns, where nature-based design unlocks environmental, economic, and social value:
- Arcata Marsh and Wildlife Sanctuary (USA): A wastewater treatment facility that also serves as an environmental education centre and recreational park.
- Kagoshima City Environmental Management Centre (Japan): A facility focusing on wastewater purification whilst also promoting environmental awareness.
- Freedom Park Wetlands (South Africa): A facility for urban stormwater management and biodiversity conservation facility that also serves as a recreational park.
- Hammarby Sjöstad Eco-District (Sweden): A model for sustainable urban development integrating stormwater treatment and green infrastructure.
- Bishan-Ang Mo Kio Park (Singapore): A naturalised river restoration project aimed at water supply, flood control and ecological improvements.
By integrating nature-based solutions into urban planning, businesses can contribute to the emerging concept of sponge cities. Sponge cities are urban developments that integrate green infrastructure to manage water, improve air quality, reduce heat islands, and mitigate extreme events. As the sponge city concept gains traction globally, businesses will be required to adapt their strategies and align with the broader objectives of climate resilience and sustainable development.
Implementation Tips
- Start with a risk audit – Map physical water risks across operations and supply chains.
- Engage early – Build partnerships with communities and regulators before crises arise.
- Pilot solutions – Test wetlands, recycling systems, or smart tech at high-risk sites.
- Scale what works – Use data from pilots to expand investment.
- Embed in strategy – Make water risk part of board-level discussions and ESG metrics.
Water is no longer just an operational input – it’s a strategic variable. For companies across all sectors, recognising and responding to physical water risks is not only necessary but valuable. Through a combination of water-efficient practices, collaborative action, and innovation, businesses can transform risk into resilience.
The time to act is now. The companies that lead in water stewardship will be the ones that lead in long-term sustainability and profitability.
Explore our full range of nature-based water management solutions here and discover how your business can turn water risk into long-term resilience.
