Top Risks Facing the Utilities Industry in 2019

What are the top risks facing the utilities industry in 2019?

We’ve compiled a list of the most pressing risks for energy and utility providers based on industry research as well as our own observations.

The risks that made our list include regulatory uncertainty, employee turnover, risk culture, and more.

Regulatory uncertainty

According to research by Deloitte, regulatory uncertainty is one of the top challenges faced by companies in the energy industry. Specifically, "understanding new requirements and how they apply to their specific businesses" was cited as the top challenge. Other obstacles — like how quickly new regulations emerge, and a lack of clarity around new requirements — make it even harder to keep up.

Utilities need to rethink the "wait and see" approach and develop strategic systems to address policy changes. To that end, many utilities are investing in compliance and risk management software solutions to efficiently manage documents, deadlines, and regulatory requirements.

Employee turnover

As a growing number of baby boomers reach retirement age, employee turnover is poised to become a major risk for organizations across the board. Utilities will be particularly hard hit. According to the Department of Labor, as much as 50% of the nation’s utility workforce will retire in the next five to 10 years. Nearly 100,000 new workers will be needed to fill these gaps.

Utilities will need to ensure they have a succession plan in place to retain institutional knowledge. Information management systems and software can help centralize this knowledge and keep it from walking out the door with employees.

They'll also need a plan in place to onboard new employees and ensure they have appropriate training. Again, standardizing processes and workflows can help ease the transition for new workers. Training management software can help organizations keep track of training status and ensure compliance, even during periods of transition.


Smart meters, smart thermostats, smart appliances, and other 'smart' home devices have grown in popularity in recent years. So have connected devices in plants, smart equipment, sensors, and smart PPE. ABI Research projects that between 2018 and 2023 the utilities industry will spend $14 billion a year — or a total of $84 billion — on smart infrastructure.

These new technologies offer vast potential for utilities, but they also come with a new set of risks. Cyberthreats like customer data breaches, unauthorized access to physical assets, and cyberterrorism are among the leading concerns.

In fact, a recent KPMG report found that 48% of power and utility CEOs think a cybersecurity attack is inevitable. However, only 55% of the total security spend in the next 5 years will be spent on securing smart infrastructure, according to Help Net Security. If utilities want to avoid cyberthreats, they will need to increase their investment in security.

Climate risk

Climate change poses serious threats to organizations, and virtually no industry is immune — from food and fashion to cloud computing and banking. Utilities are particularly vulnerable to its effects, warns BlackRock.

So while utilities have been among the first sectors to feel the impacts of climate change, they have also been among the first to address it. For example, PacifiCorp, Consumers Energy, and Northern Indiana Public Service Company have all independently taken strides to fight climate change by announcing plans to retire coal-fired generators and replace them with lower-cost renewables.

It's imperative for utilities to establish a framework to identify and address climate-related risks such as physical damage, disruption, and financial and disclosure risks. Failure to sufficiently manage these risks could have severe consequences for the utility's reputation as well as its physical assets and the environment as a whole.

Customer expectations

When it comes to energy and utilities, today’s customers have more choices than ever before. More and more customers are choosing to generate their own power on-site using technologies like rooftop solar.

Not only that, but connected devices like smart thermostats, meters, and appliances have given customers more control over how and when they use energy and other resources.

As a result, savvy consumers are demanding more from their utility providers. For example, both residential and commercial customers are increasingly concerned with reducing their carbon footprint and exploring renewable energy options. To be successful, utilities will need to do a better job of engaging with customers to understand their needs and expectations.

Risk culture

While many of the risks facing utilities are external — such as regulatory or market changes — one of the biggest risks might come from within the company itself. Risk culture is defined as your employees' behaviors, perceptions, attitudes, values, capabilities, and commitment in relation to risk in the workplace. Without a strong risk culture, an organization might not anticipate future events or may fail to adequately address threats to the business.

Instead of focusing only on compliance, utilities will need to take a different approach — one that is focused on risk management. Senior management plays a crucial role in defining, communicating, and acting on a risk management strategy to help the company identify and mitigate potential hazards. As such, the first step in improving risk culture in the industry will be to make sure executives establish the right tone at the top.

Your takeaway

For the utilities industry, the saying “the best defense is a good offense” holds true. Good risk management practices will be essential to identify potential threats and minimize their impact.

To learn more, check out this article on how to survive the shift from compliance to risk.




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