RISK MANAGEMENT APPROACH
Managing risks and opportunities – from those related to evolving regulatory and market conditions to those associated with climate change – is a vital component of our company's governance and oversight functions. Our comprehensive Enterprise Risk Management (ERM) program helps ensure we understand and mitigate potential risks that could impact our business and key stakeholders while capitalizing on opportunities that align with FirstEnergy's mission and business strategy.
RISK MANAGEMENT OVERSIGHT
The ERM process is overseen by FirstEnergy leadership, the board of directors and board committees. Risk and opportunity management strategies are presented to the board committees on a short- and long-term basis, which enables each committee to play an active role in the oversight process.
For additional information about FirstEnergy's risk oversight structure, please view our Proxy Statement.
Board of Directors
Provides oversight of risk management practices, reviews material company risks and helps ensure processes are in place to support a strong risk management culture.
Audit Committee of the Board
Oversees the ERM program and process for identifying, assessing, managing and monitoring enterprise risks; ensures risks are appropriately communicated with the board and its committees; oversees risks related to the specific Committee responsibilities, including risks related to financial statements, controls and reporting, as well as steps taken to monitor, control and mitigate such exposures; reviews the risk management governance, guidelines, policies and procedures annually.
Executive-level Enterprise Risk Management Committee (ERMC)
Provides oversight and monitoring to help ensure that appropriate risk policies and management processes are established and executed; vets risk prioritization and mitigation to help ensure that risks – including climate-related ones – are managed in accordance with our expectations.
and Chief Risk Officer
Provides highest executive-level oversight of day-to-day risk management efforts; prepares enterprisewide risk management reports for presentation to the ERMC, Audit Committee and the full board; provides additional timely reports on significant risk issues as appropriate to employees, senior leadership, respective board committees and the board.
Corporate Risk Department
Executes ERM process.
RISK MANAGEMENT PROCESS
Our ERM program is designed to help ensure we thoroughly address risks and opportunities that could impact our business. The ERM framework consists of identification and assessment of the company's full enterprisewide risk profile, clear risk ownership and mitigation accountability, and continual monitoring and reporting.
Our Enterprise Risk Management (ERM) framework consists of identification and assessment of the company's full enterprisewide risk profile, clear risk ownership and mitigation accountability, and continual monitoring and reporting.
Risk Identification and Assessment
As part of our ERM identification and assessment process, we categorize risks according to our risk taxonomy – strategic, financial, operational, compliance and litigation, and reputational. With subject-matter expert support, we then assess risk size and scope and make risk prioritization decisions by quantifying potential impact, identifying time horizon for onset and assessing likelihood of occurrence.
A summary of FirstEnergy's current material risks, including some climate-related risks, is included in our Annual Form 10-K.
Monitoring and Managing Risks
Oversight and accountability are key facets of our ERM process for monitoring and managing risks. We assign risk owners as well as responsibilities for control and mitigation of risks. The Corporate Risk department works with those owners cyclically as part of our ERM process to certify risk controls and make any needed management adjustments.
To understand the key risks that are managed through the ERM process, please view the risk factors included in the Annual Form 10-K. as well as our 10-Qs filed in 2022. For details regarding how climate risks are integrated into our ERM program please visit the Climate Story page and read our Climate Report.