Risk assessment at Light and Power Holdings Limited Essay

Module Final Project – Risk Assessment
Assurance and Management Control
Trevor R. Cozier
4/21/2014

Table of Contentss

  1. Nature of the undertaking
  1. Brief sum-up of the company
  1. Business lines
  1. Business environment
  1. Strategic aims
  1. Hazard factors
  1. Assurance and direction control

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  1. Nature of the undertaking

The nature of this undertaking is to choose a publically traded company and execute a hazard analysis on the entity. The ultimate purposes are to:

  • Define and analyse the strategic aims of the company
  • Identify and analyze events that have the possible to adversely impact the company
  • Assess the built-in hazards every bit good as the likely impact that these hazards might hold on the company
  • Describe the appropriate signifiers of confidence and direction control that the company uses to extenuate the assorted hazard factors.
  1. Brief sum-up of the company

The name of the company selected is Light and Power Holdings Limited ( LPH ) .

LPH was incorporated under the Torahs of Barbados on October 9, 1997. It is presently listed on the Barbados Stock Exchange. Emera Inc. , a Canadian registered company purchased about 79.7 per centum of the portions in 2011, efficaciously doing Emera Inc. , the bulk stockholder in LPH. LPH has besides invested in St Lucia Electricity Services Limited for 19 % shareholding.

  1. Business lines

Its nucleus concern activity is the coevals and supply of electricity in Barbados through its chief subordinate the Barbados Light & A ; Power Company Limited.

It is regulated by the Fair Trading Commission of Barbados. LPH provides electricity to over 124,000 clients on the island. LPH besides operates a self-insurance fund which is used to pull off some of the company’s insurance hazards. It besides holds investings in existent estate.

  1. Business environment

LPH is at present runing in a clime where it is being badly threatened by the coming of renewable energy to the island. As the universe is looking for options to fossil fuels, The Barbados Government has endorsed this hunt by supplying revenue enhancement inducements to persons and companies who get involved in the proviso of renewable energy. To help the general populace, Barbados Light & A ; Power Company Limited ( BL & A ; P ) has introduced a Renewable Energy Rider which allows connexion to the bing electrical grid and sells extra electricity generated back to the BL & A ; P.

  1. Strategic Aims

Homburg et Al ( 2013 ) suggest that stakeholder theory looks at the house as being a link of stakeholders who can impact or are affected by the attainment of the aims of the house ( Freeman, 1984 ) .

Jones ( 1995 ) developed three attacks:

  • The descriptive attack – a expression into the house and stakeholder relationship to find how the steadfast trades with different stakeholders
  • The normative attack – a expression at what is the sensed involvement of the stakeholders and how to cover with it by utilizing moral and philosophical methods
  • The instrumental attack – similar to the normative attack with the clear differentiation being the firm’s public presentation effects that result from accounting for these involvements.

The chief aims of LPH are to:

  • Turn a successful Caribbean energy concern paying particular attending to the betterment of energy security and sustainability
    • Achieve through its stakeholders
    • Deliver energy with universe category dependability
    • Have security of energy supplies
    • Leverage information engineering
    • Construct on stakeholder associations
    • Achieve robust fiscal public presentation.
  1. Hazard factors

Formal hazard managingMascini et Al ( 2012 ) introduces Sabatier’s constructs of top down and bottom up methods for managing hazard within a public-service corporation company. Based on the top down attack, hazard appraisal starts with the official policy and so a finding is made as to how the individuals tasked with its execution, are making so and the extent of the success. The underside up attack trades with the function of the actions of the persons using the policy.Informal hazard managingMascini et Al ( 2012 ) once more introduces two mechanisms to be dealt with. The first is discretional specialisation which suggests, from several academic surveies, that employees de-emphasize the function that regulations and processs play within the house.

Therefore the outlook develops where they suggest the regulations do ever anticipate all the hazards and hence do non supply the best solutions to repair the job. Second, there is silent cognition where the value of formal preparation comes under the microscope. The statement is developed by some manual workers who are convinced that formal preparation does non learn the novitiate every bit much as on the occupation experience. Formal preparation is hence blamed for learning novitiates techniques without the appropriate context, based on an ideal universe state of affairs.These hazards can fall into several classs which can include:

  • Operational Hazard

Globally, clime alteration is holding a major impact on the environment.

The usage of fossil fuels is alleged to be a major perpetrator in the emanation of nursery gases. Power companies worldwide are now confronting an addition in demand for electricity as the population of the universe, particularly in the development states, strives to mime the more developed states with improved criterions of life. It is estimated that developing states will demand most of the electricity consumed in the close hereafter.The chief hazard will be the power company’s failure to run into the increased demand.

The Company at present obtains most of its electrical coevals through the usage of fossil fuels sourced chiefly out of Trinidad. Trinidad is an agreement with the Barbados Government to provide this trade good. The hazard relies on the ability of the Trinidad oil producers’ ability to keep a changeless supply nexus to Barbados at competitory monetary values. Venezuela has entered agreements with other Caribbean states when Chavez was alive to run into their fuel demands.

This in bend would hold the negative consequence of power outages and increase in the cost of the electricity.

  • Reputational hazard

A major hazard to the public-service corporation company is that it emits immense sums of nursery gases. The energy sector is rapidly being seen as a heavy subscriber to climate alteration. Consumers worldwide are now demanding the usage of greener methods of energy coevals. In this manner the power company can utilize this chance to be a portion of the solution.

  • Regulatory hazard

As electricity monetary values coiling upwards due to the heavy trust on dodo fuel to bring forth electricity, consumers are fomenting to hold the monthly measures lowered. This is holding the consequence that consumer lobbying organisations are petitioning authoritiess and politicians to move.

New Torahs are being put in topographic point – Electric Light and Power Bill, 2013 ( Barbados ) . This new jurisprudence has broken the monopoly of LPH and will let new greener methods of bring forthing electricity to be used and even sold back to the grid.

  • Hurricane and calamity hazard

Populating in the Eastern Atlantic Ocean, Barbados is in the hurricane belt of the hurricanes which are birthed in Africa and normally run into their death in North America. Most of LPH substructure including poles and lines are situated above land and as such are capable to terrible harm from the elements.

The hazard is that power supply could be affected for extended periods normally ensuing in loss grosss. This may besides hold the consequence of higher operating costs due to the Restoration of power to clients.

  • Currency exposure hazard

The Company’s fundss are denominated as Barbados dollars.

Most of the LPH debt and merchandises are purchased utilizing United States dollars and the stableness of the Company depends on the continuance of the nog of the Barbados dollar to the US dollar.

  • Technology hazard

Technology worldwide is continually being upgraded to be faster and more efficient. To stay feasible, investing in engineering will necessitate to be made as the client will demand an increased usage of engineering e.g. e-billing platform to have and pay public-service corporation measures. The demand will besides be at that place to hold increased security around critical systems as hackers could easy keep a little state to redeem.

  • Economic hazard

Barbados, every bit good as most Caribbean states, is confronting terrible asceticism steps. The demand for electricity could be badly depressed by the prevalent conditions as households find it difficult to run into monthly committednesss. LPH is portion of an international pudding stone ; Emera, Inc. What-ever shocks the parent company faces will hold the trickle-down consequence of LPH.

  1. Assurance and direction control

Having identified the hazard factors that can impact the company, it is now incumbent on direction to turn to these issues. With respects to the undermentioned hazards:

  • Operational – recovery of fuel costs due to changeless fluctuations in market monetary values– the company at nowadays has the permission from the Fair Trading Commission of Barbados ( FTC ) to implement a fuel accommodation clause.

    This mechanism allows the company to retrieve its fuel disbursals from clients through monthly fuel rate accommodations. This in kernel will vouch the company some step of profitableness and safeguard the investing made over clip in the substructure.

  • Reputational hazard– the company remains committed to the betterment of its coevals platform. In recent times, LPH has begun to put in renewable energy. It formed LPH renewable Energy Ltd. in 2012, which now imports distributes and installs little renewable energy systems to its Barbadian Customers.

In 2012, LPH introduced an e-billing system which has significantly reduced the size of its C footmark. Customers can now choose for a summarized measure which they can have electronically.

This will in due class cut down the sum of printed measures being distributed along with the needed decrease in printing and postage costs to LPH.

  • Regulatory hazard– a section has been established entirely to turn to any issues related to regulative maps. LPH determines that this will vouch a more consistent interaction with the FTC.
  • Hurricane and calamity hazards
    • LPH views its occupational wellness and safety really earnestly. LPH received its ISO enfranchisement in Occupational Health and Safety Management ( OHSAS 18001:2007 ) . It besides has ISO 14001:2001 in Environmental Management. The linesmen of the company are the first in the Caribbean to successfully finish the CARILEC Linesmen Certification Program.

      Elementss of the preparation emphasized the “value of error-free work, safety, teamwork and communication” .

    • There is self-insurance fund ( SIF ) which was established in 1993. This was done because of the inaccessibility of equal commercial insurance screen to see against harm caused by hurricanes and other natural catastrophes. The SIF is regulated by the Insurance Act of Barbados every bit good as the Insurance ( Barbados Light and Power Company Limited ) ( Self Insurance Fund ) Regulations, 1998. Consequently, the SIF covers the BLPC against the hazards of calamity hazards inclusive of hurricanes, tropical storms, twisters, volcanic eruption, temblor, inundation, overflow of the sea. And rain.

      The SIF is presently managed by legal guardians and is regulated by the Financial Services Commission of Barbados. None of the assets can be used for mortgage intents and the SIF can merely put in securities with a evaluation of AA or higher.

  • Technology hazard– Isakson ( 2012 ) stated the traditional public-service corporation companies have seen significant alterations over clip as the “traditional one-way, franchise monopoly, service model’ has evolved. Isakson continues by stating new schemes and tools will be needed by public-service corporation companies to let them to:
  • Understand the engineering which has to be integrated and the demands of the stakeholders who own and operate the engineering
  • Detect the accomplishment sets to run into the hereafter client driven engineering demands

In decision, from an scrutiny of the hazards and hazard extenuating schemes of the LPH, the company is adequately covering with a resource that can impact the lives of 1000000s across the Caribbean. Its future programs seem good developed and articulated.

Stakeholders should rest assured that the house is taking on its function as a sustainable energy supplier really earnestly by implementing programs that will guarantee the continued dependable supply of power irrespective of the calamity that might bechance the part.MentionsFreeman, R. ( 1984 )Strategic Management: A Stakeholder Approach, Boston, HarperCollinsHomburg, C. Stierl, M. & A ; Bornemann, T. ( 2013 ) ‘Corporate Social Responsibility in Business-to-Business Markets: How Organizational Customers Account for Supplier Corporate Social Responsibility Engagement ‘ ,Journal of Marketing, 77, ( 6 ) , pp. 54-72, Business Source Complete, EBSCOhost, [ Accessed 8 March 2014 ]Isakson, C.

( 2012 ) ‘Operational Risk Management During Uncertainty ‘ ,Electric Light & A ; Power, 90, ( 6 ) , pp. 38-39, Business Source Complete, EBSCOhost, [ Accessed 26 March 2014 ]Jones, T. ( 1995 ) ‘Instrumental Stakeholder Theory: A Synthesis of Ethical motives and Economics’ ,Academy of Management Review, 20, ( 2 ) , pp.

404-437Light & A ; Power Holdings Ltd. ( 2013 )Annual Reports. Available: hypertext transfer protocol: //www.blpc.com.bb/co_rep.cfm.

Last accessed 26 March 2014.Mascini, P, & A ; Bacharias, Y. ( 2012 ) ‘Integrating a Top-down and a Bottom-up Approach: Formal and Informal Risk-Handling Schemes in a Utility Company ‘ ,Hazard Analysis: An International Journal, 32, ( 9 ) , pp.

1547-1560, Business Source Complete, EBSCOhost, [ Accessed 26 March 2014 ]Reding, K. Sobel, P. Anderson, U. Head, M. Ramamoorti, S. Salamasick, M. Riddle, C.

( 2013 ) . Internal Auditing Assurance & A ; Advisory Services. 3rd Ed. Florida: The Institute of Internal Auditors Research FoundationRosnes, O. , Veritas, D. , Nelson, W. , Cramer, E.

, & A ; Torstad, E. ( 2010 ) . Climate Change-A New Risk Reality For Utility Companies. In Det Norske Veritas, World Energy Congress Montreal.

Stewart, J. & A ; Subramaniam, N. ( 2010 ) ‘Internal audit independency and objectiveness: Emerging research chances ‘ ,Managerial Auditing Journal, 25, ( 4 ) , p. 328-360, Scopus® , EBSCOhost, [ Accessed 8 March 2014 ]Tashman, P. , & A ; Raelin, J. ( 2013 ) ‘Who and What Really Matters to the Firm: Traveling Stakeholder Salience beyond Managerial Perceptions ‘ ,Business Ethical motives Quarterly, 23, ( 4 ) , pp.

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