Harvard Case - Enterprise Risk Management at Hydro One

1) What is Hydro One’s strategy and what risk does the company face?

Hydro One’s vision was to be the best transmission and distribution business in North America. To achieve its vision, Hydro One’s strategy was to implement enterprise risk management, a risk-based investment planning system, and a balanced score card that featured a strong emphasis on customer services. So that Hydro One could achieve following - best safety record in the world, top quartile transmission and distribution reliability, 90% customer satisfaction across all segments, top quartile employee productivity and operating efficiency

Risks Hydro One faced were:

* Adequate electricity supply (not being able to meet the demand)

* Government and Regulatory Uncertainty (due to upcoming election)

* Performance, Productivity, and People (Getting the work done)(employees had too much workload, Negotiating with Unions)

* Capacity of Transmission (due to equipment failure, or too high demand)

* Environment issues

* Safety (safety of the employees)

2) Consider the three stages of Hydro One’s ERM process: Workshop; Risk-based Asset Planning; Regular Corporate Risk Profile Update. What are strength and weakness of this ERM process?

Main strength of Hydro One’s ERM process is that it had full involvement of every aspect of the business. All the managers were polled on what they think are potential risk or threat to the business or the project, the list was then narrowed to 8-10 potential risks. The selected risk were discussed and voted on their relative significance using Delphi method.

Identified and assessed risks were charted in two –dimensional rank-ordered chart of ‘residual risk’ (Risk Map) which allowed management to easily see the risks the organization is currently facing and be able to make key strategic decision based on it.

There was also complete separation of between risk management and internal audit so that people could speak candidly at the...