Pandemic Prep, Wildfires Among Biggest Challenges For Ariz. Utility Risk Manager

Zimmel: 29 Years. And I've been with TEP, a $1.4 billion utility company, since December 2008.

NU: What brought you into the risk-management field?

Zimmel: After I graduated from college, the recession of the 1980s made it very difficult to find a job. After selling steaks door to door and working retail, my first viable offer was a claims-adjuster position.

When deciding how to advance my career, the natural choice was to extend my claims background into the emerging field of risk management. I have enjoyed my profession, and I'm pleased to have wandered into it.

NU: What has been your biggest risk-management challenge?

Zimmel: Within a few months of starting my current job, the swine-flu pandemic hit. As a new employee without established relationships within the company, it was a challenge to promptly develop a plan for an emerging risk.

My most recent risk-management challenge is with the various wildfires in Arizona. The Wallow Wildfire came within about 15 miles of our largest generation plant in Springerville.

As of today, that wildfire is within one mile of our transmission line near Luna, New Mexico, which provides a significant portion of electricity to Tucson.

I have learned a lot from what so far has been a near hit from wildfires. This experience has continued to develop my understanding of the technical-operations side of the utility industry and all of the sophisticated redundancies in place to keep the national electrical grid reliable.

The utility business has been a much more significant learning curve than any of the other industries I've worked in.

These wildfires have reinforced the need to continue developing plans for pandemic-type events—especially since we had similar issues [to a widespread medical emergency] when most of our Springerville Generation Station employees were recently evacuated from their homes because of the wildfires. Fortunately, we had a plan in place to assure coverage at the nearby facility.

NU: How has risk management helped your organization, and what changes have you made to the program? 

Zimmel: The utility industry deals with potential emergencies virtually every day, and our company has had very detailed emergency-management plans and business-continuity plans (BCP) in individual departments ensuring reliable electricity.

However, we did not have a consolidated, enterprise-wide BCP. My risk-management experience helped identify the need for a centralized BCP. I volunteered to chair a BCP committee, and under my direction we are just about finished with our formal BCP plan.

One of the primary changes I made to our insurance program is restructuring our D&O program, resulting in:

• Reducing counterparty risk with insurers (by doubling the number of insurers taking risk);
• Expanding various coverages, amounting to a premium reduction of 33 percent annually.

My experience with other public companies enabled me to immediately recognize the need to restructure our D&O insurance program.  

NU: Do you use enterprise risk management and if so, for how long? 

Zimmel: Our company has had a basic ERM program for about 10 years. Just recently I was one of eight added to an ERM committee charged with taking our program to the next level.

As part of that program, our department managers have been identifying their top-three risks annually for the past 10 years. We are now looking at sophisticated tools to enhance reporting of ERM metrics.

NU: How do you get buy-in from the rest of the organization?

Zimmel: Collaboration goes a long way. This proved to be very helpful when developing our pandemic plan as well as our business-continuity plan. We worked with a consulting firm, which minimized the amount of time spent by our employees. 

In total, we conducted interviews with 30 department heads, which was necessary for a strong continuity plan. Our employees took the process very seriously and provided invaluable input.