4/20/2020 Understanding Enterprise Risk Management for Utilities © Copyright 2007, CCRO. All rights reserved. 6 Figure 1.2: Energy Utility Degree of Regulation 1.4. Who Should Implement ERM? The business structure and size of a company should not drive whether or not an entity employs ERM principles, but rather should determine the extent and complexity of such a framework. An ERM framework can be applied by an entire company or by a subsidiary. Even a small cooperative or distribution company can find benefit in implementing aspects of ERM, but should scale the efforts to the extent of the risks faced by the organization and risk management capabilities of the firm. An ERM framework may result in extensive governance, policies, tracking systems and processes for a company with a large, diverse portfolio, while a small company may have simple reports and policies that are more in proportion to their organization’s size and complexity. For both entities, an ERM framework will improve risk management and decision making and could be critical to the financial and operational stability of the company. Energy Utility Degree of Regulation More Regulated Less Regulated Marketer Integrated Utility Gas or Electric Distribution Company Merchant Generator Regulation