The Client and Its Challenge
After experiencing serious cash flow and credit issues, a major utility holding company in the midwestern United States embarked on building an integrated, strategic risk management process. The long-term objective of its strategic risk management process was to enable the enterprise to prioritize risks, proactively manage those risks, support the successful execution of the corporate strategic plan, and satisfy compliance requirements.

In the immediate term, the client wanted to actively involve the entire organization in the risk-management process while building consensus around the key risks facing the company.

The Risk Consulting Solution
Marsh employed a systematic and inclusive process that enabled the organization to actively participate in the development of a “risk map” that estimated both the magnitude and frequencies of potential risks. Starting with a comprehensive risk inventory designed specifically for the power and utility industry, Marsh risk consultants were able to build consensus among key executives, within each functional area, with regard to the company’s major risks.

Risk consultants with deep industry experience were employed to ensure objectivity in the process. This objectivity allowed the combined team to highlight risk areas/issues that were difficult to distinguish due to an institutional and/or functional bias.

Results
Although the client perceived the building of a strategic risk management process as a long-term investment, it wanted immediate, pragmatic, and actionable results. Using the Marsh's business risk assessment process, the client’s organization had agreed upon the top four to five risks that would merit immediate attention for further study and the development of mitigation strategies. The results gathered from the risk map were presented to the board of directors and used to facilitate discussions with other internal and external stakeholders.

In addition, a large cross section of the organization was quickly brought into the risk management process. Interaction with a wide cross section of functional managers and executives across the organization served to effectively introduce and communicate the risk management process and principles while building support and consensus around key risks and mitigation responsibilities.