ENTERPRISE RISK MANAGEMENT AT GREAT PLAINS ENERGY
Karyl Leggio & Marilyn Taylor
University of Missouri at Kansas City
Enterprise Risk Management at Great Plains Energy is intended for use in Finance courses including basic finance or those that focus on risk management. It may also be used in Strategic Management courses. In finance the case provides opportunity to examine a company’s early progress in establishing a corporate-wide enterprise risk management program and to identify potential risks that the firm confronts. Among the concepts that can be applied are: Enterprise Risk Management, risk assessment, and financial analysis.
In Strategic Management the case provides opportunity to undertake a basic strategic analysis and to assess the effects of the changing regulatory environment on a firm’s choice of strategies as well as the opportunities and threats it faces. Among the concepts that can be applied are: mission/vision, Value Chain, core competences, and diversification.
This case reviews the early moves by Great Plains Energy (GPE) to establish a corporate-wide Enterprise Risk Management program. The corporate Chief Risk Officer is CFO Andrea Bielsker. Andrea appointed Jana Utter in charge of coordinating the design and implementation of the ERM program. Utter faces a number of challenges. She has had to first conceptualize the program given the charge by the Board of Directors, then design a process by which she identifies the risks that the corporation faces, make recommendations regarding the prioritization of her efforts, and assist in designing measures for the risks for the various operating units as well as processes to mitigate them.
GPE was the holding company formed in October 2001 as the parent company for the regulated utility Kansas City Power & Light (KCPL, its largest subsidiary), and several unregulated subsidiaries including Strategic Energy (an energy management firm) and KLT Gas (a firm that identifies and develops gas sources). At year-end 2002, GPE’s assets were valued at $3.5 billion with annual revenue generation of $1.9 billion.
This case was prepared by Karyl Leggio and Marilyn Taylor, University of Missouri at Kansas City, and is intended to be used for class discussion rather than to illustrate either effective or ineffective handling of the situation.
Presented to and accepted by the North American Case Research Association (NACRA) for its annual meeting, November 2003, Tampa, Florida. All rights reserved to the authors and NACRA. 2003 Karyl Leggio and Marilyn Taylor.