Risk oversight and management is a critical role for our Board and all of the members of our Executive and Senior Management Teams. The Audit, Finance and Risk Committee of our Board has oversight and accountability for the Enterprise Risk Management Framework which ensures that appropriate systems are in place to monitor, manage and mitigate potential risks to the different segments of our business.
Based on that framework, Management provides an annual comprehensive Corporate Risk Assessment (CRA) report to the Board and regularly updates the Board and the Board Committees on the status of material risks. Our CRA analyzes and prioritizes enterprise-wide risks and treatments, highlighting top risks and trends in Enbridge’s risk profile. It identifies mitigation measures and demonstrates that treatments are appropriately prioritized, effective and resourced.
Strategic planning and forecasting functions leverage the CRA results to identify material risks to the priorities identified in our Strategic Plan. To better identify, manage and mitigate risk, the CRA is reviewed by the Board committee with responsibility for the risk category relevant to their mandate. The Board Committees are empowered to make recommendations and authorize implementation and monitoring of systems to address risk.
Risk owners and specialists throughout our Company are responsible for continuously managing risks within their respective areas. The two most senior management groups within our Company—our ELT and our Operations and Integrity Committee—are directly responsible for overseeing the management of our most significant operational risks.
At the governance level, our CRA report is reviewed annually by our four Board committees with enterprise-wide risk management responsibility: the Audit, Finance and Risk Committee; the Safety and Reliability Committee; the Corporate Social Responsibility Committee; and the Human Resources and Compensation Committee. As a result of this review, each committee makes recommendations to the Board in respect of Company practices. In addition, the Board Committees can authorize the implementation of systems that address risks within the scope of their responsibility and monitor them to ensure they remain effective.
Our annual report on Form 10-K contains information on the risks applicable to Enbridge and is publicly available in the Reports and SEC Filings section of the Investment Center at enbridge.com.
Climate-related risks are integrated into multiple larger Enbridge risk categories that encompass operational, financial and stakeholder consequences. This is done because the interconnected nature of climate impacts (economically, socially and environmentally) requires a comprehensive review within the context of other risks impacting Enbridge.
We limit exposure to the physical risks and impacts of extreme weather and other natural disasters through enhanced inspection and maintenance of assets, emergency response planning, business continuity planning and emergency response training and exercises. Improved alignment on contingency planning with other parties in broadly-based logistics networks enables us to coordinate on shutdowns in advance of severe weather events and on resumption of energy supply as a first priority following a storm. We include planning for extreme weather events in our operational response plans, and have installed on-site emergency generators at many of our operational facilities to provide power in the event of extended outages (during ice storms, for example).
Policies and regulations addressing climate change vary at the federal, state, and provincial levels in which Enbridge operates. While international agreements on emissions reduction are influential in a directional context, our assets and growth opportunities are much more directly affected by local policies, legislation and actions which can be highly variable and subject to change. Many of the jurisdictions in which we operate have some form of regulation in place aimed at accelerating reduction in greenhouse gas emissions through public policies that can range from carbon pricing to renewable energy portfolio standards. Other jurisdictions are actively debating the merits of different climate change policies.
At Enbridge, we seek to engage governments to ensure that proposed climate policies are both effective and efficient. It is important that climate policies do not lead to carbon leakage or other unnecessary competitiveness impacts. We have equally important rigorous management systems and accountabilities in place to ensure ongoing engagement with local communities and stakeholders, particularly on issues involving safety, environmental protection and energy efficiency.
We are taking proactive steps to understand potential liabilities as different explicit and implicit regimes for carbon regulation and pricing emerge in the jurisdictions in which we operate. While we consider existing carbon pricing regimes as part of determining the levelized cost of energy, we are also developing a regionally specific internal carbon price for our Capital Allocation Process. An internal price on carbon will enable us to better identify the potential impact of a carbon-related compliance liability to a project and/or the economics of an ongoing operation.