Enterprise Risk Management

PG&E takes an integrated approach to risk management, to the benefit of our shareholders and customers. As part of our risk management strategy, we established an enterprisewide program. Companies are increasingly using Enterprise Risk Management (ERM) to improve their management of major risks in order to achieve their business objectives.

PG&E's ERM program takes a holistic approach to managing potentially catastrophic risks that face our business. Cross-functional teams, guided by subject matter experts and experienced managers, employ a systematic method to identify, evaluate and monitor risks. Oversight by a risk committee comprised of senior officers ensures risk management activities are consistent with the company's overall corporate strategy. Regular communication to the Boards of Directors ensures accountability and reinforces the importance of risk management at all levels of the company.

PG&E's enterprise-level risks span the spectrum of business risks, and include those associated with energy commodities, strategy, operations, natural hazards, political and regulatory issues, economics and the environment. Risk assessments and mitigation plans have been developed to enhance how PG&E addresses risks. These assessments and plans continue to be refined and improved by taking into account changing market, regulatory and other forces.

PG&E is realizing benefits from the holistic approach taken by ERM. For example, the increased attention ERM brings to mitigating potentially catastrophic outcomes highlighted the need to collaborate with stakeholders in the community who influence the company's ability to manage these risks successfully. As a result, many of the risk management plans include engaging with external stakeholders in a more structured and systematic way.

Looking forward, our plans for ERM include continuing integration of the program with business operations to ensure sustainability, evaluating and refreshing the program focus to ensure alignment with business strategy and external stressors and tracking and validating the effectiveness of risk management plans.