Colorado Adopts California's Grid Shutdown Strategy to Combat Wildfires - An ERM Perspective

Saturday, April 20, 2024

The One Minute Risk Manager/ERM/Colorado Adopts California's Grid Shutdown Strategy to Combat Wildfires - An ERM Perspective
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In light of the recent moves by Colorado and other states to implement Public Safety Power Shutoffs (PSPS) as a wildfire prevention measure, organizations need to be increasingly vigilant and adaptive. The use of PSPS, pioneered in California, involves preemptively turning off electrical grids in high-risk conditions to prevent wildfires, a practice that can have significant operational impacts on organizations.

Enterprise Risk Management (ERM) Considerations:

Emergency Preparedness and Business Continuity Plans:

Organizations should develop robust business continuity plans that include strategies for dealing with electricity outages. This includes installing backup power sources like generators or battery systems, and designing systems that can safely shut down when power is cut off to prevent damage to equipment.

Communication Strategy:

Effective communication is crucial. Organizations need to establish clear protocols for communicating with employees, customers, and suppliers during outages. Real-time information sharing about power status and expected resumption times can help manage expectations and reduce business interruption..

Financial Impact Analysis:

Organizations should assess the financial impact of potential power shutdowns. This includes analyzing the costs associated with shutdowns, such as lost revenue, overtime expenses, and any penalties for delayed service or delivery. Understanding these potential impacts can help in strategizing financial reserves or insurance coverage needed to mitigate risks.

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Technology and Data Integrity:

With the risk of sudden power loss, protecting data integrity is paramount. Organizations should ensure that data backup systems are in place and that critical information is regularly saved to secure off-site locations. Cloud storage solutions can be particularly effective in providing data accessibility and security during unexpected power interruptions.

Regulatory Compliance and Transparency:

Organizations must stay informed about regulatory requirements related to power outages and wildfire risk reduction. Compliance with these regulations not only helps in minimizing legal risks but also in enhancing the company's reputation for reliability and safety. Transparency about the steps a company is taking to comply with regulations and protect the community can bolster public trust.

Partnering with Utilities:

Engaging with local utilities to receive timely information about potential PSPS events and other grid-related risks is beneficial. Utilities often provide resources and guidance on how to prepare for and respond to outages, and they might offer programs or incentives for organizations implementing energy resilience measures.

Given the growing frequency of climate-related disruptions like wildfires and the resulting shift towards practices such as PSPS, businesses need to proactively integrate these considerations into their risk management and operational planning strategies. By doing so, they can enhance their resilience against potential power outages and contribute to the broader community's safety and stability.

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