RISK MANAGEMENT COMMITTEE UPDATE
PRESENTED BY:
Cory KuchinskyInterim VP, Strategic Pricing & Enterprise Risk Management & Solutions
(ERMS)
Shane BemisInterim Sr. Manager, Power Generation (PG)
December 6, 2019
I n f o rma t i ona l Upda t e
OBJECTIVES & TAKEAWAYS
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• REVIEW ERMS RISK FRAMEWORK• HIGHLIGHT RISK MITIGATION PLAN (RMP)
ENHANCEMENTS• REVIEW RMP EXAMPLE
o COMBUSTIBLE DUST RISK • LEVERAGE KEY PARTNERSHIPS
AGENDA
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• ERMS RISK FRAMEWORK• RMP ENHANCEMENTS• RMP IN ACTION
o COMBUSTIBLE DUST RISK
• ERMS & PG PARTNERSHIP • RECAP
Competitive Benchmarking with APPA, LPPC, Gartner, Deloitte, etc.
Annual Strategic Risk prioritization exercise, through inputs from Strategies, Business Unit Leads, Audit exceptions, and other Business trends
Board Risk Committees & Governance, Risk & Compliance (GRC) Alignment
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4
1
Audit Services to consider RMPs implemented by business units in the annual Audit Plan
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RISK PROGRAM ALIGNMENT
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Board of Trustees & Committees
Our program is designed to support multiple stakeholders across the enterprise.
2. CompetitiveBenchmarking
& Mgt.Strategy
4. Governance Structure
5. Audit Services
1. Annual Risk Assessment
3. Priority Areas & Targeted Reviews
Enterprise Risk
Management Identification of Priority Areas and Partner Vetting –Plant Admin., Underground, etc. and Self-Assessments
3
5
We take a cohesive approach by incorporating excerpts from risk management frameworks & lessons learned from peers.
ERMS FRAMEWORK
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ERMS PROGRAM ALIGNMENT
CPS Energy Risk Activities ISO 31000 Framework Elements
Risk ScanEach Business Unit develops / updates risks for their area that are challenged by all the Chiefs.
RMPsDetailed RMPs are developed for each High & Swan Risk.
Active Risk ManagementRisk Owners work on RMPs that address key risk drivers.
Risk Identification,Analysis, Evaluation
Risk Treatment
Monitoring & Review
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RMP ENHANCEMENTS
We have added new components to drive better quality & effectiveness for our risk owners.
CURRENT YEAR
• FY 2020 RMP Enhancementso Addresses key drivers (impact x
probability) & status of fundingo Defines success in a way that is
measurableo Considers gaps in plan design RMP Template
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RMP EXECUTION
SYSTEM OF
INTERNAL CONTROL
IMPACT ON INTERNAL CONTROL
Procedures Developed / Revised
Validated to Industry Standard
Approval Implementation
Internal Control Example:
Through RMP development & execution, we are identifying actions that could impact our system of internal control.
RMP
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RISK MANAGEMENT FRAMEWORK BEST PRACTICE
• Integrating ERMS with PG enhances decision-making & performance through:
o Anticipation of risks earlier, which provides more options in mitigation strategy
o Enhanced analytics & improved responses to deviations in critical components
o Improved collaboration, trust & information sharing
Integrating risk into the business is a best practice & a key element of risk management frameworks.
RMP OVERVIEWCOMBUSTIBLE DUST RISK
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GLOBAL TAIFFS
SUPPLY CHAIN
FINANCIAL CUSTOMER
• Historyo Combustible dust risk is a major hazard that spans across multiple industries
OSHA National Emphasis Program (NEP) on Combustible Dust
o PG identified risk on Enterprise Register in FY 2015
• Objectiveo Protect our employees and infrastructure
o Reduce coal spillage & dust accumulation
o Mitigate risk of fire or explosion
• RMPo Perform third-party engineering assessment to identify & prioritize dust
mitigation projects
o Multi-year phased approach for project implementation
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RMP STATUSCOMBUSTIBLE DUST RISK
Successful completion of RMP actions reduced the risk level from high to medium.
Phase 1 Phase 2 Phase 3• Belt wetting• Dust suppression• Dust collector
demolition• High priority chutes
& load zones
• Rebuild remaining chutes & load zones
• Equipment upgrades to crusher & tripper
• Automated wash down system
• Spruce1 dust collector removal
100% Complete
100% Complete
75% Complete
2015 2016 2017 2018 2019
Phase 1 Start
Phase 1 Complete
Phase 2 Start
Phase 3 Start
Phase 2 Complete
Phase 3 Complete
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RMP IN ACTIONCOMBUSTIBLE DUST RISK
RMP actions have resulted in a safer work environment.
Before Mitigation After Mitigation
• Enclosed structures are washed down at least twice per week
• Open structures are washed down weekly
• Coal dust suppression systems have been installed
RMP brought to life
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Ris
k P
rofi
le
Risk Lifecycle Stages
FY 2019FY 2019
FY 2020FY 2020
Introduction Growth Maturity Reduced Mitigated
RISK LIFECYCLECOMBUSTIBLE DUST RISK
FY 2015
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AVR Plant518 MW
Gas
Spruce Plants
1345 MWCoal
Sommers Plants
830 MWGas
Braunig Plants
859 MWGas
Milton B Lee Plants
375 MWGas
Rio Nogales Plant
752 MWGas
CPS Energy Solar Plants
(PPAs)547 MW
Solar
CPS Energy Wind Plants
(PPAs)1067 MW
Wind
PG has worked with
ERMS to expand its
risk program
South Texas Project1036 MWNuclear
• Developed PG Risk Matrix
• Expanding PG Risk Matrix to include plant specific risk registers
• Developing RMPs for all plant-specific risks
ERMS & PG INTEGRATION IN ACTION
Each plant now has its own specific risk register.
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RISK ANALYTICSILLUSTRATIVE EXAMPLE• Asset 360 is an equipment condition monitoring system used by PG
We utilize risk analytics tools to mitigate risk for PG assets.
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RISK ANALYTICS
• Partnering with ERMS & FM Global (Property Insurance Carrier) to reduce our potential risk exposure by: o Taking advantage of risk
assessments & inspection programs
o Utilizing engineering plan review services for power plant projects
o Accessing loss prevention tools & resources to incorporate leading practices into the organization
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RECAP
• Grow existing partnerships with business units• Continue to develop & execute on RMPs• Management is working & engaged in making
improvements to their risk environment
Thank You
Appendix
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GLOSSARY / DEFINITIONSAcronym or Word Definition Acronym
or Word Definition
APPA American Public Power Association MW Megawatt
Represents Board of Trustee feedback that has been implemented into the Risk Program
NEP National Emphasis Program
COSO Committee of Sponsoring Organizations of the Treadway Commission
OSHA Occupational Safety & Health Administration
ERMS Enterprise Risk Management & Solutions PG Power Generation
GRC Governance, Risk & Compliance PPA Purchase Power Agreement
ISO International Organization for Standardization
RMP Risk Mitigation Plan
LPPC Large Public Power Council
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