Mark Beasley, KPMG Professor of Accounting and Director of the Enterprise Risk Management Initiative in the Poole College of Management at NC State University, interviewed Mike Schneider, Vice President of Risk Management and Compliance, and Chief Compliance Officer at San Diego Gas & Electric (SDG&E) about insights Mike has gleaned from helping his company navigate incredible challenges of managing risks related to wildfires in California during a once-in-a-century pandemic event where his team and key customers are in a work-from-home environment.
One of the lessons Mike shares is that there is tremendous value in “getting in front of things.” The more an organization can anticipate emerging risks and “get ahead” of potential risk issues before they emerge puts an organization in a much better position to navigate very complex risks. The advanced plans Mike’s company had previously developed to respond to potential risks provided a great foundation for quickly responding to risks as they begin to actually unfold. Because those plans were tested and validated well in advance of the events, management was able to activate them quickly with confidence.
Mike also notes that investments in advanced monitoring systems can provide valuable data that a company can use to better understand where risk possibilities might reside before they emerge. Analyzing that data can help an organization identify signals of possible risk conditions early on when they initially begin to unfold. Based on Mike’s experiences, investments in advance monitoring systems provide enormous benefits that far exceed their cost making them well worth the investment.
The wildfire experience has demonstrated the importance of all entities paying more attention to emerging risks related to the environment, social, and governance issues. Considering today how climate shifts may impact a business in the future can put the organization in a better position to be “solution-minded” in how it addresses a potential risk. Thinking in advance about this can help the entity be better stewards and it can pay dividends to the organization. In Mike’s organization, the wildfire challenges in recent years actually led to a rethinking of the company’s value proposition, a change in mindset, and new ways of delivery of their core products and services that ultimately are more valuable to its key stakeholders and communities the company serves.
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