Enterprise Risk Management
The enterprise risk management (ERM) program was established to help protect the company’s long-term value for its shareowners, customers, and the communities it serves. The risk management team works closely with senior management and employees across all four subsidiaries (Con Edison, Orange & Rockland, Con Edison Transmission, and the Clean Energy Businesses) to proactively identify emerging issues and trends, align risk exposure to organizational priorities, drive risk informed business decisions and resource allocation, and monitor and assess known risks using quantitative metrics, sometimes known as key risk indicators.
The cornerstone of Con Edison’s enterprise risk management program is its governance practices, which are designed to focus on managing relevant and material risks to its strategy and operations and to recognize emerging issues and trends that may shape future risk exposure. The team is led by the director of enterprise risk management. The director reports to the chief financial officer and works broadly with hundreds of employees across operating, shared services and corporate functions to manage the risk profile.
The team creates and facilitates a risk management process framework, which includes risk identification, assessment, mitigation, monitoring, and reporting. The audit committee of the board oversees the risk management framework and meets with the director of risk management at least annually to discuss program initiatives and to provide strategic direction for the program.
The board of directors and its committees provide oversight of the company’s most material risks; these risks are managed by senior management and assessed, mitigated, monitored, and reported by employees. Public and employee safety, along with system reliability, the state of regulation within our service territories, and the viability of our business model, are some of the most important risks facing Con Edison. Some of these material risks are discussed in Con Edison’s 2020 Annual Report.
To improve our ability to navigate an increasingly dynamic business landscape, the company’s ERM framework includes a process to identify and monitor relevant emerging issues and trends. Review of emerging issues and trends stretches our lens of focus, identifying threats and opportunities that may develop in the next two to ten years. The following are a few of the issues and trends that are being monitored as they develop and evolve: the emergence and application of artificial intelligence, long-term implications of the COVID-19 pandemic, climate change’s impact to the company’s operations, a trend towards decarbonization of heating systems, the electrification of the transportation sector, and integration of distributed energy resources and renewable generation to the traditional electric grid.