The Rise and Evolution of the Chief Risk Officer: Enterprise Risk Management at Hydro One

Posted: 24 Nov 2004

See all articles by Tom Aabo

Tom Aabo

Aarhus University

John R. S. Fraser

Hydro One Inc.

Betty J. Simkins

Oklahoma State University - Stillwater - Department of Finance

Abstract

This case study describes the successful implementation of enterprise risk management (ERM) at Hydro One Inc. over a five-year period. Hydro One is a Canadian electric utility company that has experienced significant changes in its industry and business. Hydro One is at the forefront of ERM, especially in utilizing a holistic approach to managing risks, and provides a best practices case study for other firms to follow. This article describes the process of implementation beginning with the creation of the Chief Risk Officer position (the rise of the CRO) and the deployment of a pilot study involving workshops conducted with one of the firm's subsidiaries. Various tools and techniques critical to ERM are discussed including the Delphi Method, risk trends, risk maps, risk tolerances, risk profiles, and risk rankings. As a last step, we explain how ERM has become such an integral and successful part of Hydro One's culture that the Chief Risk Officer may now be becoming redundant (the transformation of the CRO).

Keywords: Enterprise Risk Management, Chief Risk Officer, Delphi Method, Risk Map, Corporate Governance

JEL Classification: G31, G34

Suggested Citation

Aabo, Tom and Fraser, John R. S. and Simkins, Betty J., The Rise and Evolution of the Chief Risk Officer: Enterprise Risk Management at Hydro One. Journal of Applied Corporate Finance, Vol. 17, No. 3. pp. 62-75, 2005. Available at SSRN: https://ssrn.com/abstract=622744

Tom Aabo

Aarhus University ( email )

Fuglesangs Alle 4
DK-8210 Aarhus
Denmark
+45 87 16 48 39 (Phone)
+45 86 15 01 88 (Fax)

John R. S. Fraser

Hydro One Inc. ( email )

483 Bay Street
10th Floor Reception
Toronto, Ontario M5G 2P5
Canada

Betty J. Simkins (Contact Author)

Oklahoma State University - Stillwater - Department of Finance ( email )

336 Business Building
Stillwater, OK 74078-4011
United States
405-744-8625 (Phone)
405-744-5180 (Fax)

HOME PAGE: http://spears.okstate.edu/~simkins

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