National Grid 2014 Annual Report Download - page 26

Internal control and
risk management
continued
Strategic objective Risk description Example of mitigations
Deliver
operational
excellence
Failure to achieve levels of financial
performance required to meet regulatory
requirements.
The Group operates under a number of
regulatory regimes and we must maintain
theperformance levels required. Failure to
achieve the agreed returns could damage
ourreputation and threaten future growth
opportunities and regulatory arrangements.
• We have a US strategy focused on safety and reliability,
customer responsiveness, stewardship and cost
competitiveness. Performance measures are tracked
andreported monthly. US jurisdictional presidents
continue to develop strong relationships with local
regulators and communities. A process excellence
initiative was launched to deliver sustainable and
innovative performance improvements with initial
focuson six core end-to-end processes.
• The UK operating model implemented in 2013 to support
our performance under RIIO is now established and we
continue to roll out our performance excellence
framework across the business.
• We monitor network reliability and customer satisfaction
as KPIs, as described on page 10.
Failure to deliver appropriate information
systems and data integrity.
The Company is increasingly reliant on
technology to support and maintain our
business-critical processes. We must be able
to rely on the performance of these systems
and the underlying data to demonstrate the
value of our business to our shareholders, and
to meet our obligations under our regulatory
agreements, and comply with agreements with
bond holders and other providers of finance.
• In November 2012, our new US back office system went
live. A business improvement team has been established
to ensure that a comprehensive and integrated approach
is applied to the execution of system changes (such as
enablement of the LIPA MSA transition) and enhancements
to drive business value (such as payroll, supply chain and
finance process improvements).
• We are undertaking a programme to strengthen identified
weaknesses in US controls over financial reporting.
• We are implementing a global information management
framework focusing on data integrity and security.
• We have completed a data assurance programme,
andwe are developing actions to improve our data
qualityand integrity processes based on the results.
We experience a catastrophic/major cyber
security breach.
Due to the nature of our business we recognise
that our critical national infrastructure systems
may be a potential target for cyber threats.
Wemust protect our business assets and
infrastructure and be prepared for any
malicious attack.
• We use industry best practices as part of our cyber
security policies, processes and technologies.
• We continually invest in cyber strategies that are
commensurate with the changing nature of the security
landscape. This includes collaborative working with
DECC and the Centre for Protection of National
Infrastructure (CPNI) on key cyber risks and development
of an enhanced critical national infrastructure (CNI)
security strategy and our involvement in the US with
developing the National Institute of Standards and
Technology (NIST) Cyberspace Security Framework.
Failure to prevent a significant process
safetyevent.
The nature of our day-to-day operations is
such that safety incidents can occur. The safety
of our employees, contractors, suppliers, and
the communities in which we operate is critical.
We must operate within local laws and
regulations relating to health, safety and
theenvironment.
• We have established safety and occupational health
plans, programmes and procedures that are aimed
atcontinuous improvements in safety performance.
• We supplement Company-wide initiatives with specific
regional safety programmes. These are aimed at
addressing specific areas so that safety is at the
forefrontof every employee’s mind. We also benchmark
against other industry groups to seek and implement
best practice.
• We continue to focus on process safety, aimed at
preventing major incidents. A baseline assessment has
been completed and a 10 year plan is under development.
• We monitor employee IFR as a KPI as described on
page10.
24 National Grid Annual Report and Accounts 2013/14