Performance of Generating Plant - World Energy Council

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14Performance of Generating Plant: Managing the Changes Executive Summary World Energy Council 2007Figure 6 Spectrum of integrated risk managementSpectrum of Integrated Risk M anagem entEmergencyresponse planRoadm ap toRecovery TMRiskI.D .ReportRiskMngt.RiskEval.Stage 1Stage 2Crisis m anagem ent/communication planStage 3Businessrecovery planTimeRisk Identification& ManagementIncident M anagem entBusiness Continuity M anagem entThe thrust is therefore towards a pro-activeapproach to sustaining and enhancing businessperformance, rather than fire fighting anddefence in preventing corporate failures. Thisapproach focuses on a positive contribution.Therefore, corporate governance, and as suchalso enterprise or integrated risk management,includes opportunity management.Risk management is not an ‘add on’ activity,but an integral part of business managementwith the ultimate objective of minimising thevariability and unpredictability of expectedperformance outcomes.Risk Identification, Evaluation and Managementare therefore a process directed at decreasingthe likelihood of an unpredictable outcome, andalso the relative impact of an unpredictableevent, should it occur. Despite our best effortsthough, some events can be either beyond ourcontrol (floods or earth quakes) or cannot befully managed (fire).Such events require some form of predeterminedemergency processes and businessrecovery strategies, with the ultimate objective ofre-establishing business capability within theshortest possible time and with minimum humancasualty, financial and sustainability impact onthe organisation and the environment. It istherefore advisable to clarify risk managementstrategy up front to ensure that the riskassessment and management process coverboth prevention / reduction of exposure andrecovery processes post an event. This is thepoint at which risk assessment and riskmanagement strategy can be brought togetherin the risk assessment model.When undertaking risk assessment, it is criticalto have a good understanding of the business aswell as the environment within which it operates.Some important lessons have been learnt fromoperational experience:• Most non-operational risks emanate fromthat interface and if not timely identifiedand managed, like during contractingphase, could result in significant exposureat a later stage when changes in theenvironment occur.• Operational risks are often seen as easyto manage, thus the amount of time spenton understanding the full systems impactof either the risk or the solution are oftentoo little, resulting in unintendedoutcomes.• Risk management is integral to any job. Itcannot be done by someone else.With the above in mind it is useful to identify socalled ‘flash points’ or ‘hot spots’ (areas ofinterface in the supply chain) from where it islikely that key risks may arise. Some examplesof such flash points are:• Regulatory Interface• Suppliers• Fuel Delivery• Trading
Performance of Generating Plant: Managing the Changes Executive Summary World Energy Council 200715Figure 7 Operating environmentSocio Political EnvironmentCompetitionFuelSupplyTradingHigh VoltageSubstationsEng.ServicesShareholders& FinanciersGenerator-Assets-Operations-Maintenance-Engineering-Business SupportProcessesLegislative / Policy EnvironmentLowVoltageCustomersThe Triple Bottom Line – Dilemma oropportunity?Many a company has battled with the questionof balancing Triple Bottom Line performance(i.e. the 3 elements of sustainability, i.e.economic, social and environmentalperformance). It is not the intention to resolvethis predicament here. However, somefundamental underlying truths are necessary toreflect on from an ERM perspective.The following depiction of the sustainabilitydilemma may be familiar:sustainability for both the environment and thecompany. It is only when one is sidetracked bythe pursuit of short-term profitability that it ishard to accept the need for such balance.Over the last 10 years massive strides havebeen made in the development of ERMprocesses.These developments have been captured invarious publications, and have also given rise tothe development of well-respected internationalstandards, e.g.:• Risk Management Standard byFederation for European RiskManagement Associations (FERMA)• Australian / New Zealand RiskManagement Standard 4360• British Standard on Business ContinuityManagement (PAS 52 and BS 25999)One is even tempted to say: “What is thequestion?” Is it not obvious that profitability is afunction of sustaining the environment thatenables the creation of wealth? Therefore, it isnot the one or the other, but rather how the onecan be used to grow the other.The move towards triple bottom line reportingstandards is driving the focus towards long-termThe work presented in the report is aligned tothese standards, as confirmed by variousworkgroup participants but represents a furthercustomisation specifically directed at applicationin energy utilities. As with all processes, it willcontinue to be further developed and refined,based on experience and new developments inthe discipline of Enterprise Risk Management.
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Performance of Generating Plant - World Energy Council

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