Operating a complex electric and gas delivery system always has come with a number of safety and operational risks.

In today’s world of expanded infrastructure, emerging technology and ever-increasing customer expectations, the safety and security risks associated with utility operations has only grown.

Utilities face growing threats that were not as prevalent 20 years ago, including cyberattacks and terrorism. In addition, utilities continue to address risks in the physical operations of their electric and gas systems.

Regulators, including the California Public Utilities Commission (Commission), are working to raise the profile of risk management. In fact, in response to several well-publicized events (such as the San Bruno natural gas incident and the Metcalf sniper attack), the Commission is now undertaking a comprehensive review of how it addresses the prioritization of safety, security and reliability issues in decision-making.

Starting with a “Safety First” culture 

Cultivating a successful safety culture doesn’t happen overnight. It takes years of high-level and evolving commitment to incorporate risk management principals into employee culture “At Southern California Gas Company (SoCalGas) and San Diego Gas & Electric (SDG&E), the safety of our customers, our employees and the communities we service has become part of our cultural DNA,” said Diana Day, vice president of risk management. “For more than 100 years we’ve continued to evolve our risk management processes to enhance our preparedness and response, and to adapt to the ever-changing risk landscape.”

In the 1990s, SoCalGas and SDG&E heightened the awareness of risk management by introducing behavior-based, safety training to further improve employee safety practices. More than a decade later; the utilities are celebrating their ranking in the 93 percentile for safety culture.

While the accomplishments in creating a safety-first culture should not be overlooked, SoCalGas and SDG&E recognize the importance of continual improvement in risk identification, analysis, evaluation and prioritization, in order to focus on the risks that are most critical.

Complementing “Safety First” with “Risk Aware”

SoCalGas and SDG&E pay significant attention to the development of structures, roles and processes to address operations and facilities risks. At all levels, the utilities are taking a thoughtful and measured approach to developing a risk-aware culture.

In order to be industry-leading you have to integrate risk management into the organization’s process.

One of the first steps is to establish a lexicon to discuss risk. Each utility is implementing an investment management process that is used to prioritize investments to mitigate risk. This includes conducting workshops with managers to develop and discuss risk identification and mitigation.

While the process is ongoing, SoCalGas and SDG&E have developed risk | 6 registries, which identify and prioritize top risks within each organization. The utilities are working to:

  • Incorporate safety and security risk management as an integral part of key organizational decision-making processes;
  • Evaluate and address risks in a more systematic, structured, transparent and timely manner;
  • More closely integrate risk, asset and investment management; and
  • More fully inform risk, asset and investment management decisions with qualitative and quantitative analysis.

In addition, SDG&E has developed formal guidelines for enterprise risk management, developing comprehensive guidelines, with defined, substantive roles and responsibilities established throughout the organization, and transparent repeatable processes to support the assessment of riskreduction impacts.

As SoCalGas and SDG&E strive to improve consistency in risk identification, analysis, evaluation and prioritization, the framework will be refined, as needed, to reflect ongoing changes in the risk environment of business unit operations, industry practices, Commission priorities and new regulations.

Raising the profile of risk management

In order for risk management to continue to be at the forefront of key decision-making, SoCalGas and SDG&E have established the a vice president of risk management position, held by Diana Day, who is dedicated to building an enterprise-wide risk management organization for both utilities.

“The risks we face are not static,” said Day. “New and often serious threats to the safe, secure and reliable operation of our infrastructure will continue to emerge. It is important to continually evaluate, evolve and address risks in a more systematic, structured, transparent and timely matter.”

The executive-level focus on risk-management is important, but the utilities are also working to build a focused team dedicated to enterprise risk management. A significant part of the team has an operational background and works closely with the utilities’ operational groups. The team has a day-to-day focus on developing, reporting and monitoring industry risk management issues. They are responsible for working collaboratively across business units to ensure that a consistent and integral approach is applied to risk governance.

“In order to be industry-leading you have to integrate risk management into the organization’s process,” said Day. “This cannot be accomplished without the right people.”