The emerging awareness of the dependence of business on water has resulted in increasing awareness of the concept of “Water Risk” and the diverse ways in which water can pose threats to businesses in certain regions and sectors. Businesses seek to secure sustainable income. To do so, they need to maintain a competitive advantage and brand differentiation. They need secure and stable supply chains. Their exposure risks related to increasing scarcity of water can come in a variety of forms at various points in the supply chain. Given increasing water scarcity and the associated deterioration of the quantity and quality of water sources in many parts of the world, many “tools” have been developed to map water scarcity risk or water risk.
A clear understanding of shortages induced by droughts, in terms of the magnitude, duration and recurrence frequency will better inform the water businesses and water related sectors. To properly diagnose water risk, one needs to examine both existing demand and variations in renewable water supply at an appropriate spatial resolution and unit.