Traditional Risk & ERM Risk Practices Date:
Student Name/UNI ___________________________ Risk Management at Hydro Case
The purpose of the ERM Case Studies is to provide students with real-life risk scenarios and the challenges senior executive must address in order to manage a range of risk types that will be covered during the semester. Case studies are an immersive approach for students to put themselves in the shoes of risk professionals to acquire the critical thinking skills needed to understand how these issues first hand.
Laura Formusa, CEO of Hydro One, an Electric power utility, is preparing to review the company’s risk profile with John Fraser, the Chief Risk Officer. Laura is a 30-year employee of Hydro One and formerly Hydro One’s general counsel. Laura has only recently been appointed CEO and must now evaluate whether Hydro’s existing strategy is sustainable given the shifting priorities facing the firm.
You job is to identify the key issues in the case and consider the key risks issues that need to be done including internal controls, internal and external factors, strategic risks and potential mitigation plan(s) needed to reduce the impact of the realization of the key risks.
- Sir Graham Day, a renowned Canadian-born and prominent businessman, became chair of the Hydro One’s board to help the firm raise needed funding to upgrade Ontario’s transmission infrastructure and pay down debt. However, what actions played a role in undermining the IPO? Select all that apply: 5pts
- Hydro One rate setting depended the Ontario legislature via the Energy Board however several challenges created multiple competing and conflicting mandates. Briefly describe these challenges mandates, constituents and impacts to Hydro One’s operations and financial results. 5pts
- Hydro One’s strategic plan was also impacted by a number of external events. Please select the external factors distribution that were disrupting Hydro’s strategic plan to meet its conservation and financial performance mandates? (select that apply). 5pts
- Laura Formusa, the CEO, reevaluated Hydro’s strategic plan by taking the following steps. Fill in the blanks. 5pts
- Describe the three phases of Hydro One’s enterprise risk management program. 5pts
- Explain the Delphi Method used by Hydro’s Chief Risk Officer in Phase 1 of its ERM plan. 15pts
- Using Exhibit 6, the two-dimensional rank ordered chart of residual risks, please provide your own opinion of whether this is a reasonable distribution of risks? 15pts
- Summarize Phase 3 of the ERM process, Risk-based Investment Appraisal and Planning process. 15pts
- Ms. Formusa reevaluates here strategy after her meeting with John Fraser the CRO. Explain her changes to the prioritized risk list. 15pts
- Exhibit 9, includes the senior interviews with Ms. Formusa’s CFO, VP of Corporate & Regulatory Affairs, and Chief Regulatory Officer. Based on the interview responses please how the chief risk officer prioritizes the senior team risk rankings in your opinion. 15pts