Risk Management In Hydro Power Plants –
18th African Hydro Symposium
October 2006
By Joshua Chirikutsi –
Zimbabwe Power Company-
Kariba South Power station
Abstract
Hydro power plants like any other business encounter risks in all areas of its operations, but especially in the areas of producing and marketing electricity. As the Electricity supply industry reforms unfold the resultant deregulation brings in several market regulatory and trade related risks. The paper will discuss the general risks affecting Power utilities and will place particular emphasis on hydropower plant operations by analysing the effect of maintenance and operations quality in power plant risk management.
1.Introduction
Electric power companies and their
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The kinds of risks to be managed are decomposed into various classifications as described below. Risk can also be analysed along the value chain and risk management interventions are applied at each stage of the value chain
4.1 General Risks
4.1.1 Price Or Market Risk - comprises the risks to which the company is exposed due to uncertainties in the price of electricity on the market.
Volumetric Risk encompasses risks arising from production uncertainty, consumption uncertainty, and uncertainties in the power supply.
4.1.2 Financial Risks, - credit or liquidity risk is especially important in trading. We can divide this risk into two segments; specific credit and systematic credit. Other financial risks include interest-rate risk and currency risk.
4.1.3 Regulatory Risk arises from extra-market factors, such as legal complications, changes and ambiguities in regulations, and political decisions. This risk is especially present in the initial phases of deregulation of the ESI
4.1.4 Modelling Risk can arise when a company's portfolio has been incorrectly valued due to flawed modelling assumptions flawed modelling methodology, or the wrong choice of a model.
4.1.5 Human Error Risks include mistakes in evaluation and analysis, and errors in all aspect of the value chain form power plant operations, maintenance, trading etc.
4.1.6Operational risk
At utility level Operational risk is defined as the risk of incurring
Usually, the most common risk management strategies can be subdivided into multi-stage approach in order to obtain a better impression of the underlying risks and thus to increase the probability of mitigating the firm’s risks properly and successfully. Also General Motors Corporation has developed various rules and guidelines to help manage minimize the risks associated with their business and investment operations.
Risk refers to any potential problems that would threaten the likelihood of success for or any project. These potential problems might prevent a project from achieving some or all of its objectives by increasing time and cost. Risk factors can even
At the end all the risk are finance related, because the liability’s cost money and this will have an effect in the company’s earnings, so what is important is not only to try to avoid such events but also to be prepare in case they happen and have a plan, is like the saying “Hope for the best but be prepare for the worst”.
Risk #4: Lack of clarity - The lack of clear and concise goals and or confusion about the goal of the scope.
Within business, there will always be operational risks to consider. "Operating risk is the basic
Risk is defined as the probability that a company will become insolvent and will not be able to meet its obligations when they become due for payment. The profitability versus
Risk in relation to functions- HR management, economic operations, OHS, supply chain, local governance and compliance issues.
Risk is defined as an event that has a probability of occurring, and could have either a positive or negative impact to a project should that risk occur. Project managers should keep a watchful eye on all of the project 's risks as they have a direct impact on a project’s cost, schedule, and performance. All projects assume some element of risk, and it’s through risk management where tools and techniques are applied to monitor and track those events that have the potential to impact the outcome of a project.
Potential key risks have been identified in the earlier sections of this project as this is task three of assessment number one. There are four risks that the board have particularly picked according to the level of risk and its likelihood that could affect the company. These risks include the following:
Defined by Coopers textbook, risk is the exposure to the consequences of uncertainty and has two elements: the likelihood of something happening that has an impact on the project objectives, and the positive or negative consequences of something impacting the project objectives (Cooper, Grey, Raymond, & Walker, 2005)
Market risk is the risk of potential loss in value of investment and other asset liability portfolios, including financial instruments, caused by changes in market variables, such as interest and currency exchange rates and equity and commodity prices. GE is exposed to market risk in the normal course of business operations as a result of ongoing investing and funding activities.
The subjective risk is uncertainty based on one’s mental condition or state of mind. Accordingly, the objective risk is measurable and statistical; the subjective risk is personal and not easily measured.
Financial risk for the hotel includes money such as the capital availability, the cash-flow management, the investment evaluation and the credit default.
Risk management is an activity which integrates recognition of risk, risk assessment, developing strategies to manage it, and mitigation of risk using managerial resources. Some traditional risk managements are focused on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death). Financial risk management, on the other hand, focuses on risks that can be managed using traded financial instruments. Objective of risk management is
Concept of risk, risk assessment, risk management and how uncertainty affects the process will be discussed.