Risk categorisation of products used for the construction of electricity distribution assets

Abstract

The balance between risk and reward is the very essence of business, and companies take risks in order to generate returns. Eskom, the electricity utility in South Africa, endeavors to construct networks that are reliable and safe for its employees as well as the public. To ensure that product reliability requirements align with company goals, products should be categorised according to the risk they pose to the business. Mitigating strategies can therefore be reviewed for high risk items. A 3x3 risk matrix was derived to identify the risk category for products. The application of the process should result in an improvement in product profitability, either directly through a reduction in purchasing cost, or indirectly through avoiding the various consequential costs associated with poor risk management.

Om ’n balans te bereik tussen risiko en vergoeding vorm deel van die dinamiese bestaan van sakeondernemings wat risiko’s moet loop om opbrengste te genereer. Eskom, die voorsiener van elektrisiteit in Suid Afrika, poog om netwerke op te rig. Terplaatse produkte wat hiervoor aangewend word en die betroubaarheidsdoelwitte eerbiedig, moet gekategoriseer word teen die tafereel van ondernemingsrisiko. ’n Risikomatriks wat versagtende strategieë voorhou, word daarvoor aangewend. Die gebruik van die metode poog om die winsgewendheid van die onderneming te verbeter teen die agtergrond van verkrygingskoste en die gevolglike koste van swak risikobestuur.