Risk management teams in the energy and utility sectors have been under a lot of pressure. The hailstorms that ravaged Texas in 2022 provide a microcosmic example of the challenges many in the industry have been trying to survive. The expenses passed to energy insurers are estimated to break the $300 million mark—from those storms alone. Hefty payouts inevitably lead to higher premiums as the cost of incidents gets passed down to energy and utility companies and ultimately consumers.
However, successful risk managers have found a way to reduce their total cost of risk despite the unpredictability of natural disasters and other risk events. Using integrated risk management software, energy and utility companies have been pinpointing areas of high risk, predicting the frequency of incidents, and uncovering opportunities to reduce costs. Here's how utility and energy companies can lower their total cost of risk and use data to build more effective risk management strategies.
Identify and Assess Risk
By using an integrated risk management solution, energy and utility companies can gain deeper visibility into the risks they need to insure against. This presents a key strategic advantage, especially when you take into account the broad array of risk events they have to account for.
For instance, an integrated risk management (IRM) solution can surface risks associated with the range of equipment, vehicles, and technologies that energy and utility companies work with. As a result, you can have all of your operational risks unified on a single screen.
Many energy companies, especially those in the renewable sector, have to build wind turbines or solar arrays in wide open areas vulnerable to tornadoes, hail storms, and other weather events. But with a risk management solution, you can have all of these incidents and their potential costs at your fingertips.
This depth of visibility reduces the total cost of risk by making it easier to purchase the right coverage ahead of time, minimizing the chances of having to come out of pocket to cover an incident.
Use an Incident Management System to Reduce the Costs of Risk Events
With a risk management solution that includes incident management as well, you can streamline important, time-sensitive communications, saving money in the process. Every risk incident comes with a price tag, the sum of which often stems from:
- The labor associated with repairing downed power lines, broken equipment, or other components of power distribution systems
- The time and people power it takes to identify root causes of outages
- Delays in notifying decision-makers about incidents as they occur
With an incident management system like what comes with Ventiv’s IRM solution, you can quickly gather and communicate time-sensitive information to stakeholders. You also have a system you can use to coordinate the efforts of disparate teams, making the best use of your resources in the midst of an incident and immediately following.
With all decision-makers connected through a central system, you can exchange information clearly while avoiding costly miscommunications.
Identify and Close Coverage Gaps
Because risk management software can present your risk alongside your coverage, it’s easier to spot potentially costly coverage gaps.
For example, suppose an electric utility has older power lines in an area known for high temperatures in July and August. Using the geospatial analytics available in an IRM, the utility can see how temps may rise the following year in those areas. The company can then estimate the chances of a spike in AC usage causing one or more lines to fail due to overloading.
With these figures in hand, the company is in a good position to add to or otherwise adjust its coverage. Also, if the lines in a neighboring area are newer, decision-makers can use data to figure out how coverage for these lines should differ from what they allow for the weaker ones.
Use Risk Event Data to Set Up Employee Training
Risk management software can surface the kinds of events employees need training to manage, saving money for energy and utility companies. Well-prepared employees fix issues faster, reducing downtime for customers. In turn, the organizations optimize both revenue and customer satisfaction.
However, it can be difficult to figure out the kinds of training employees need. Not so with a risk management platform. With an IRM, you have risk data for each area you serve or operate in front and center. Using this, you can decide which kinds of events are most likely and prepare your workforce accordingly. They can then address problems faster and provide comprehensive repairs that keep the power and other utilities flowing.
Ventiv’s risk management analytics software gives energy and utility companies access to the risk data they need to make well-informed decisions ahead of time, as well as in real-time. You can identify problem areas and coverage gaps before they boost your total cost of risk. And with this information, you can train your workforce into a well-oiled risk mitigation machine. No matter what the future holds, Ventiv gives you the data and insights you need to prepare now.
Chat with an expert to see how Ventiv IRM is right for your organization.
