Progress Energy 2010 Annual Report Download - page 159

Progress Energy Proxy Statement
21
Board Role in Risk Oversight
We have established a framework that supports the risk management activities that occur across Progress
Energy. The framework establishes processes for identifying, measuring, managing and monitoring risk across the
Company and its subsidiaries. We also maintain an ongoing oversight structure that details risk types and the internal
organizations and Board Committees that have oversight and governance responsibility for each risk type. Our Chief
Executive Officer and Senior Management have responsibility for assessing and managing the Company’s exposure
to risk. In this regard, we have established a Risk Management Committee, comprised of various senior executives,
that provides guidance and direction in the identification and management of financial risks. The Board is not
involved in the Company’s day-to-day risk management activities; however, the Board and its various Committees
are involved in different aspects of overseeing those activities.
The risks associated with our strategic plan are discussed annually with the Board of Directors. Because
overseeing risk is an ongoing process and inherent in the Company’s strategic decisions, the Board also discusses
risk throughout the year at other meetings in relation to specific proposed actions.
The Audit and Corporate Performance Committee is responsible for ensuring that appropriate risk
management guidelines and controls are in place and reviews the oversight structure for managing risk. The Audit
and Corporate Performance Committee reviews and discusses with management the Company’s guidelines and
policies governing risk assessment and risk management. The Audit and Corporate Performance Committee is also
responsible for oversight of the risks associated with financial reporting and the Company’s compliance with legal
and regulatory requirements.
The Finance Committee is responsible for the oversight of the Risk Management Committee Policy and
Guidelines. It oversees the financial risks associated with guarantees, risk capital, corporate financing activities and
debt structure. The Finance Committee ensures that dollar amounts and limits are managed within the established
framework. The Finance Committee reports to the full Board at least once a quarter.
The Operations and Nuclear Oversight Committee is charged with oversight of risks related to operations,
major capital projects and environmental, health and safety issues.
The Organization and Compensation Committee is responsible for the oversight of risks that can result
from personnel issues and misalignment between compensation and performance plans and the interests of the
Company’s shareholders.
Our risk management structure is designed to enable the Board to stay informed about and understand
the key risks facing the Company, how those risks relate to the Company’s business and strategy, and the steps the
Company is taking to manage those risks.