Electric utilities can successfully mitigate risks by leveraging appropriate technologies and incorporating proactive approaches.
FREMONT, CA: Technological advancements have driven electric utilities to improve their business models by delivering real-time visibility, data analytics, and decision-making. While these advances have resulted in a shift in business efficiency, they have also increased risk exposures. This increased risk exposure demands electric utilities to enhance enterprise risk management processes. A pan-enterprise Risk Management (ERM) holds the solution to pressing questions on recognizing, analyzing, and mitigating risks that utilities now face. It evaluates utility firms’ systems and processes and risk landscapes linked with them to formulate a customized risk control strategy.
One of the core practices that promote the implementation of a meaningful ERM program in electric utilities is identifying critical elements of a business environment and their interaction, for achieving the necessary flexibility to prepare and implement a strategic risk plan. An energy firm must assess how well its functional units are integrated with the overall organizational standpoint. Besides, technology infrastructure provisions must be factored in to allow an energy organization to streamline and automate risk management processes.
The right methods and models for risk evaluation and the suitable accounting methodologies must be given the highest preference to create a robust risk management policy. It is also necessary to have satisfactory controls that administer the various compliance requirements of a business. Laws and industry standards should steer these regulatory policies. Electricity firms must craft a strategic risk system based on essential elements like a dynamic network to leverage energy assets, the extent of asset handling, the presence of physical commodities, as well as a focus on the trends in the market. This strategy can be used as the foundation to determine the organizational risk tolerance, the risk control goals, and the risk capital.
A focused and comprehensive risk management program can direct electric utilities toward operational safety in the face of growing vulnerabilities.