Chasing Risk

Thrill seeker Narmada Nanjundan of East Kentucky Power Cooperative (EKPC) doesn't mind taking her work home with her, but not in the way you might think. The five-year director of risk regularly advocates for the value of risk mitigation from her office at EKPC's Winchester, Kentucky, USA, headquarters. Her charge to keep EKPC's business safe from harm is mirrored at home, where she "loves taking risks"—but only when she has a stable risk management plan for backup. Here, Nanjundan shares her background and EKPC's plans for continued success.

Tell us about your business.
EKPC is in the business of generating and transmitting electric power, which, obviously, is a very vital commodity. Power is consumed by hospitals, government agencies, businesses and individuals like us. When you flip on a light switch, you expect it to work. There's a lot that happens behind the scenes to make that power.

Where does risk management fit into the equation?
Our risk management department is a small team of two, but the whole organization is engaged—plant people, management and board members alike. Everyone is united in our mission to provide safe, reliable and affordable power to our 16 owner-member cooperatives throughout the state of Kentucky. To do this, we keep a close eye on our major assets, especially our large equipment and machinery that produce and transmit power. They must be well-maintained and functional for us to deliver our product at the price we promise to customers. Our approach is proactive and preventative. If it weren't, we could find ourselves in a situation where we have to buy power from the market, which would be much more expensive for our customers.

What risk management challenges are unique to the power generation industry?
The broader spectrum of risks in the power industry includes aging infrastructure, changing generation mix and customer preferences, supply chain vulnerabilities, regulations and reputation risks. The energy sector is considered critical infrastructure, and protecting the infrastructure from cyber and physical threats is essential. As a result, the industry has dedicated significant resources to enhancing risk management.

Explain what led you to this role at EKPC.
My background is in cost accounting and economics. I've worked 18 years in the power industry and a significant amount of that time has been at big Fortune 500 companies. Before coming to EKPC, I had a unique role as branch chief with the Federal Energy Regulatory Commission's Office of Enforcement. This was an exciting position because I was responsible for managing risk across the entire country and had to make sure there was no manipulation happening in the country's power and gas markets. That job gave me a very different perspective on risk management. I was sitting on the other side of the table from my days in the utility—which was what I was used to for a long time.

What evolution has EKPC seen in recent years and how has it influenced your business model?
A few years ago, all our plants were fueled by coal. But with tougher environmental regulations, we've had to rethink our long-term strategy. We've gradually begun to integrate gas-operated plants and solar technology into our operations. These changes have been time-consuming, but they are working to our advantage, too. Diversification is key to our business model. We need to diversify our assets so we have a well-balanced portfolio.

How do you deal with uncertainty?
As part of enterprise risk management, I have to think not only about operational risk, but strategic risk, market risk, political risk, etc. I do a lot of risk scanning to keep an eye on what's happening in the world that might challenge the way we do business. This includes monitoring risks in other industries—risks that may impact us. I try to stretch my imagination as to what that can be. Customer preferences change frequently, especially as technology evolves, so we must be prepared.

How has your experience been with FM Global?
We have been very pleased, especially when it comes to claims. Whenever we suffer a loss, FM Global does everything it can to get our operations back up and running quickly. And they are fast with payment. Most of our claims have been paid in under six months and have been eligible for advance payment. That flexibility is very important to us. Many of my colleagues in the industry feel their insurance carriers are there only to take premium and find as many exclusions to their policy as possible. That's not the case with FM Global.

Your colleagues joke that, for a risk manager, you engage in a lot of risky behavior.
It is a bit of a running joke here, but they are referring to my life outside of work. I have a private pilot license, I climb high-altitude mountains, I backpack in rough terrains and I'm training for my 19th marathon. I love taking risks, but only when I have a sound risk mitigation strategy in place to protect myself. For instance, I never climb a mountain without someone who is very experienced. It's like riding a roller coaster; everyone likes to have fun on the ride, but we wear seatbelts to protect ourselves.

You have a lot of energy. What motivates you?
I feel very fulfilled in my job because I have a lot of support from management and our board of directors. When our staff sees that they care about risk management and that the work is taken seriously, it sends a good message. It makes my job easier because now everyone is thinking about risk.

What do the next 10 years look like at EKPC?
The future is the path we set forward. We can somewhat control the future if we plan for it, but there will always be curveballs. I constantly ask myself, 'Where is our industry going? Where are our customers going? What are their needs?' There are many unknowns, but they are manageable. My challenge is to keep tabs on dramatic changes so EKPC can react and be a part of that change rather than be left out.

Watch Voices: Narmada Nanjundan of East Kentucky Power Cooperative