4/20/2020 Understanding Enterprise Risk Management for Utilities © Copyright 2007, CCRO. All rights reserved. 15 2.3. The Utility Risk Environment To advance all the previously mentioned benefits of best practice risk categorizations for utilities, this paper has adopted the CCRO’s “four bucket” risk categorization system. The table below lists several risks a utility should consider when addressing their risk profile, and notes the appropriate category. This list should not be considered complete and applicable to every company, but rather a general guideline of areas to be considered when evaluating the risks associated with a regulated utility. In addition, many of these areas should be subdivided into critical components in order to gain more detail in identifying areas of concern. Figure 2.1: Risk Categories Risk Utility Application Risk Category Distrib. Co Trans. Co Integrated Utility Provider of Last Resort Market Credit Operative Business Asset Conditions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Audits ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Business Continuity ✓ ✓ ✓ ✓ ✓ Commercial Operations Performance ✓ ✓ ✓ Compliance ✓ ✓ ✓ ✓ ✓ Construction ✓ ✓ ✓ ✓ ✓ Corporate Security, Physical ✓ ✓ ✓ ✓ ✓ ✓ Corporate Security, Cyber ✓ ✓ ✓ ✓ ✓ ✓ Credit ✓ ✓ ✓ ✓ ✓ Distribution ✓ ✓ ✓ ✓ Environmental ✓ ✓ ✓ ✓ ✓ ✓ Fuel Supply ✓ ✓ ✓ ✓ ✓ Generation Operations Performance ✓ ✓ ✓ ✓ Growth ✓ ✓ ✓ ✓ ✓ ✓ ✓ Technology ✓ ✓ ✓ ✓ ✓ Interest ✓ ✓ ✓ ✓ ✓ ✓ Liquidity ✓ ✓ ✓ ✓ Organizational Readiness ✓ ✓ ✓ ✓ ✓ ✓ ✓ Production Cost Performance ✓ ✓ ✓ ✓ ✓ ✓ Regulatory ✓ ✓ ✓ ✓ ✓ Reputation ✓ ✓ ✓ ✓ ✓ ✓ ✓ Retail Customer Exposure ✓ ✓ ✓ ✓ ✓ Safety ✓ ✓ ✓ ✓ ✓ Staffing/Workforce Development ✓ ✓ ✓ ✓ ✓ ✓ Trading ✓ ✓ ✓ ✓ ✓ Transmission or Transport ✓ ✓ ✓ ✓ ✓ ✓ Wholesale Customer Exposure ✓ ✓ ✓ ✓ ✓