Energy Risk Framework

Definition

An Energy Risk Framework is a formal set of rules, policies, prescriptions, tools etc. that indicate how an entity organizes its energy risk management activities.

A well structured framework will, in accordance with the materiality of Energy Risk to an entity's operations, involve the following components:

• Energy Risk Identification, which involves the application on an ongoing basis of analytical approaches that identify, classify and enumerate various existing and emerging energy risks that an entity is facing
• Energy Risk Measurement, which in combination with an entity's Energy Accounting, quantifies (produces numerical measures) for the energy risks that the entity is facing (and which are amenable to such quantification)
• Energy Risk Mitigation, actions to reduce or eliminate perceived energy risks through the exercising of whatever options are available to do so