Case Notes/Answers
Enterprise Risk Management at Hydro One, Multimedia
Case, by Anette Mikes
Discussion Questions:
Suggested Questions for the Discussion of the Original Case (9-109-001):
1. What is Hydro One’s strategy and what risks does the company face?
2. Consider the three stages of Hydro One’s enterprise risk management (ERM) process: Workshops;
Risk-based Asset Planning; the Regular Update of the Corporate Risk Profile.
What are the strengths and weaknesses of this ERM process?
[Optional question, if the case is taught in conjunction with Jet Propulsion Laboratory (9-
110-031): Think about Gentry Lee and John Fraser, the leaders of the risk-management process at JPL
and Hydro One, respectively. What are the similarities and differences in their organizational roles
and approach?]
3. Should private-sector companies embrace ERM in a way similar to Hydro One’s approach? What
are the contingencies of this process?
4. What recommendations would you make to CEO Laura Formusa about the ERM process?
Suggested Questions for the Discussion of the Multi-Media Case (9-110-107):
1. To learn about Hydro One’s business, watch the video segments in Chapters 1–2. How would
you describe Hydro One’s strategy? What type of risks and uncertainties does Hydro One
face?
2. The video segments in Chapters 3–5 illustrate the three stages of Hydro One’s enterprise risk
management (ERM) process: Workshops (Ch 3); Risk-based Asset Planning (Ch 4); the
Regular Update of the Corporate Risk Profile (Ch5). What are the strengths and weaknesses
of the ERM process?
[Optional question, if the case is taught in conjunction with Jet Propulsion Laboratory
(9-110-031): Think about Gentry Lee and John Fraser, the leaders of the risk-management
process at JPL and Hydro One, respectively. What are the similarities and differences in their
organizational roles and approach?]
3. What recommendations would you make to CEO Laura Formusa about the ERM process?
, 5 -1 1 1 -0 3 6
REV: OCTOBER 9, 2014
T E AC H I N G N O T E
Enterprise Risk Management at Hydro One -
Multimedia
Teaching Objectives
1. To analyze the relationship between business strategy, key strategic uncertainties, and risk
management systems.
2. To study how an enterprise-wide risk management system is used in a company operating in
a high-risk environment under conflicting objectives.
3. To understand the potential for risk incubation in complex organizations and the need for
extensive risk communication to counter this tendency.
4. To recognize that clear goals and priorities must be derived from fair and equitable planning
processes. In this case, enterprise risk management provides the framework for planning, the
clarification of organizational objectives, and the prioritization of resources.
Case Synopsis
The case brings to life enterprise-wide risk management at the Canadian energy company Hydro
One. The company faces numerous risks, several stakeholders, and conflicting agendas in a changing
environment.
In 2006, after a tumultuous half-decade that saw the controversial departures from Hydro One of
two previous CEOs and an entire board, incumbent CEO Laura Formusa sought to bring stability.
First, she reiterated the five strategic objectives of the firm: achieving the best safety record in the
world; top quartile transmission and distribution reliability; 90% customer satisfaction across all
segments; top quartile employee productivity and operating efficiency; and an “A” credit rating. The
CEO and her management team anticipated new threats and opportunities in the industry, which
faced climate change and carbon legislation, shifting political priorities among political stakeholders
and regulators, and the greater adoption of alternative energy technologies among the customer base.
Given Hydro One’s multiple objectives and stakeholders, in the annual planning process, managers
had to strike trade-offs in order to prioritize work and allocate resources throughout the company.
Enterprise Risk Management at Hydro One, Multimedia
Case, by Anette Mikes
Discussion Questions:
Suggested Questions for the Discussion of the Original Case (9-109-001):
1. What is Hydro One’s strategy and what risks does the company face?
2. Consider the three stages of Hydro One’s enterprise risk management (ERM) process: Workshops;
Risk-based Asset Planning; the Regular Update of the Corporate Risk Profile.
What are the strengths and weaknesses of this ERM process?
[Optional question, if the case is taught in conjunction with Jet Propulsion Laboratory (9-
110-031): Think about Gentry Lee and John Fraser, the leaders of the risk-management process at JPL
and Hydro One, respectively. What are the similarities and differences in their organizational roles
and approach?]
3. Should private-sector companies embrace ERM in a way similar to Hydro One’s approach? What
are the contingencies of this process?
4. What recommendations would you make to CEO Laura Formusa about the ERM process?
Suggested Questions for the Discussion of the Multi-Media Case (9-110-107):
1. To learn about Hydro One’s business, watch the video segments in Chapters 1–2. How would
you describe Hydro One’s strategy? What type of risks and uncertainties does Hydro One
face?
2. The video segments in Chapters 3–5 illustrate the three stages of Hydro One’s enterprise risk
management (ERM) process: Workshops (Ch 3); Risk-based Asset Planning (Ch 4); the
Regular Update of the Corporate Risk Profile (Ch5). What are the strengths and weaknesses
of the ERM process?
[Optional question, if the case is taught in conjunction with Jet Propulsion Laboratory
(9-110-031): Think about Gentry Lee and John Fraser, the leaders of the risk-management
process at JPL and Hydro One, respectively. What are the similarities and differences in their
organizational roles and approach?]
3. What recommendations would you make to CEO Laura Formusa about the ERM process?
, 5 -1 1 1 -0 3 6
REV: OCTOBER 9, 2014
T E AC H I N G N O T E
Enterprise Risk Management at Hydro One -
Multimedia
Teaching Objectives
1. To analyze the relationship between business strategy, key strategic uncertainties, and risk
management systems.
2. To study how an enterprise-wide risk management system is used in a company operating in
a high-risk environment under conflicting objectives.
3. To understand the potential for risk incubation in complex organizations and the need for
extensive risk communication to counter this tendency.
4. To recognize that clear goals and priorities must be derived from fair and equitable planning
processes. In this case, enterprise risk management provides the framework for planning, the
clarification of organizational objectives, and the prioritization of resources.
Case Synopsis
The case brings to life enterprise-wide risk management at the Canadian energy company Hydro
One. The company faces numerous risks, several stakeholders, and conflicting agendas in a changing
environment.
In 2006, after a tumultuous half-decade that saw the controversial departures from Hydro One of
two previous CEOs and an entire board, incumbent CEO Laura Formusa sought to bring stability.
First, she reiterated the five strategic objectives of the firm: achieving the best safety record in the
world; top quartile transmission and distribution reliability; 90% customer satisfaction across all
segments; top quartile employee productivity and operating efficiency; and an “A” credit rating. The
CEO and her management team anticipated new threats and opportunities in the industry, which
faced climate change and carbon legislation, shifting political priorities among political stakeholders
and regulators, and the greater adoption of alternative energy technologies among the customer base.
Given Hydro One’s multiple objectives and stakeholders, in the annual planning process, managers
had to strike trade-offs in order to prioritize work and allocate resources throughout the company.
