1. Implementing a Risk Management Program Scott Jones MEAG Power APPA Business & Finance Conference - 2009

2. About MEAG Power Created by Georgia Legislature in 1975 Provide wholesale electricity to 49 communities in Georgia Total Assets - $4.6 billion Total Revenues - $770 million Nine generating units at four plant locations with about 2,100 MW 120 employees

3. What is EWRM? “Methods and processes used by organizations to manage risks and seize opportunities to the achievement of their objectives” Most agree it to be some version of a comprehensive risk management program Ideally include a centralized approach to evaluation and/or monitoring

4. Is the Ideal.. Ideal? Difficulties with EWRM implementation: –Most can not devote numerous resources –“Academically ideal” program is expensive, system driven, sometimes not needed What does your entity need? Seriously. –Must balance value of risk management with company size, complexity, resources –Something short of “ideal” might be appropriate

5. MEAG – Pre EWRM Reasonable risk management and analysis A “silo” approach – each department handled their own process No company-wide culture of risk management No formal communication lines or company-wide oversight

6. MEAG – EWRM Phase One EWRM Policy –Board approved –Established Board committee, Executive committee, RM Department, single Executive over RM / Internal Audit –Defined roles of each authority level

7. MEAG – EWRM Phase One Created more formal communication Required risk assessment process RM Department reported to committees regularly, submitted work plan Some analysis by RM, some by individual departments

8. MEAG – EWRM Phase One We combined RM and Internal Audit –Saw similarities in philosophy of both –Internal audit had moved toward more risk- based approach, less small-dollar audits –Moved to project-based approach with both audit and RM work being done in concert

9. Phase One - Lessons Learned Reasonable approach, worked well Having single Executive was ideal, but perhaps not necessary with our size Recognized importance, but size and staff limitations made us think Made progress in creating a RM culture Good sign: People came to RM for advise, review of ssues

10. MEAG – EWRM Phase Two Reorganization in April RM / Internal Audit remain combined Manager of RM / Audit reports to Controller (under Chief Accounting Officer) Manager has dotted line to CEO and RM Committee of Board RM remains an important area with high exposure and heavy involvement

11. What makes a good program? Not a clue... –Each company is unique, solution is unique –Experimentation is alright, don’t be afraid to try different structures –Communication and Analysis are key –Empowerment of groups needed –Make policies that memorialize your intent

12. Bottom Line: Good Communication Good programs need focus on communication Set a structure that makes sense, put analysis where it makes the most sense (centralized or departments), but force areas to communicate Better communication of issues, analysis, and decisions has been the primary benefit of our program