Proactive and thoughtful management of our regulated distribution, transmission and generation infrastructure is essential to delivering safe and reliable electricity to customers. We are focused on understanding risks that could impact our system, and we leverage FirstEnergy’s strengths to turn risks and challenges into opportunities.
A formal, comprehensive Enterprise-Wide Risk Management (EWRM) program is in place to ensure FirstEnergy thoroughly addresses risks and opportunities that could impact our electric system, including those posed by climate change, industry technology, regulatory policy and customer preferences. These risks are assessed on a short- (0-1 years), medium- (1-3 years) and long-term (3-5 years and beyond) basis, with emphasis on long-term planning for potential climate-related issues. The EWRM’s framework identifies individual risks at the enterprise, business unit or project level and groups them into four main categories: strategic, operational, compliance and financial.
In addition to our EWRM program, FirstEnergy’s Enterprise Risk Management (ERM) group, led by our chief risk officer, works closely with the business units to identify emerging risks that could have an impact on our financial results. The ERM group runs risk workshops and conducts analyses to: understand the drivers of emerging risks; recognize the potential consequences or impacts; discuss risk with stakeholders; and identify appropriate mitigation strategies. Risks that could impact the business more than five years in the future are evaluated and analyzed to understand potential long-term impacts.
The EWRM process and oversight of risk management is led by FirstEnergy leadership, the Board and the Board’s Audit and Finance Committees. Risks and opportunity management strategies are presented to these committees on a short- and long-term basis, which enables each committee to play an active role in the oversight process.
The Enterprise Risk Management group is active in various industry associations as we continuously strive to enhance our risk management processes. For example, our participation in Edison Electric Institute (EEI) Enterprise Risk Management (ERM) Committee created the opportunity for a peer-to-peer benchmarking review of our EWRM program. The peer assessment showed our program was successfully embedded in the foundation of our company and valued across business units for its contributions to day-to-day operations and strategic decision-making. EEI’s risk management benchmarking review established a robust knowledge-sharing opportunity between member companies striving for continuous improvement of their EWRM programs.