Forecast risk for weather, crime, terrorism and more.
by Christopher Cherry
Utility companies are relying on location and customer intelligence solutions more than ever before to make more informed decisions about customers, infrastructure management, expansion plans and risks. From managing complex distribution network schemas to simply managing customer addresses, location is ingrained in almost every operation and opportunity.
The location of a utility's infrastructure, customers and regulatory boundaries are all important elements of daily operations. For these reasons, many electric utility companies use location and customer intelligence solutions to control and monitor network infrastructure, reduce mailing and operational expenses, and serve their customers more effectively. And recently, location intelligence began helping to provide value in the area of enterprise risk management.
From weather to criminals
Electric utility providers have to assess, understand and mitigate many different types of risk such as weather-related risk, crime, terrorism and political risk, or financial and regulatory risk.
It may seem obvious to mention weather-related risk?we're all aware of the ramifications of severe weather. Location intelligence solutions, however, allow electric utility providers to bring real-time weather into their operations centers in a whole new way. By integrating weather data onto the desktop within network management solutions, electric utility providers can do more than simply watch the unfolding weather on television. They can view weather occurrences in conjunction with their network assets, their customers, and their repair crews and supplies. This allows providers to make better decisions regarding the management of both large-scale and localized weather disruptions. Historical weather data is also available to further analyze the risk of weather. This allows electric utility providers to better understand the potential for loss or interruption based on knowledge of historical tornado and hurricane patterns, fault lines, flooding and distance to shoreline, and much more.
Electric utility providers also need to manage the risk associated with crime in their service territories. While historic crime data is available to look at past criminal activities, of more impact is the ability to apply predictive modeling to determine the risk of serious crime in the future. A strong relationship exists between a neighborhood's "social disorganization" and the amount of crime that is perpetrated there. Crime modeling correlates demographic data, survey information and other databases with known indicators of crime. Each of the 65,322 census tracts in the U.S. is scored to determine its risk of crime. The overall risk of crime, by weighted average, is identified based on crime against person or crime against property. This allows electric utility providers to establish safe proximity rules and modify employee scheduling if needed when considering crime analytics.
It is a reality today that electric utility providers need to manage terrorism and political risk. With location intelligence, electric utility providers can access data that models the risk of terrorism. This allows for the evaluation of terrorism risk exposure on a building-by-building basis or by desired political or geographic boundary?by a city or country, for example. It employs location-specific metrics to score the propensity and likely severity of violent and political risk. A risk score of 1 to 10 is developed to represent the most likely maximum severity that an attack will hit a given target over the next 12 months. This allows electric utility providers to control liabilities and understand optimal placement of facilities and movement of employees by incorporating terrorism forecasting into their business continuity planning.
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Electric utility providers will also have to comply with the Federal Trade Commission's Red Flag program. The Red Flag initiative is scheduled to take effect on Nov. 1, 2008. Electric utility providers will need to check all customers and suppliers against a database of known online criminals. Electric utility providers who fail to perform such due-diligence will face the possibility of fines and other penalties. Customer intelligence solutions provide an answer, however. Electric utility providers can run their customer and supplier data through data cleansing processes that will standardize their customer information. They can then analyze and compare their customer data to the database of known criminals. This will allow providers to identify customers who they should not be doing business with, in compliance with the federal mandate, while continuing to serve their desirable customers.
And then there are taxes
Electric utility providers also have to manage their tax obligations. This may not seem like it falls within the scope of enterprise risk management, but a failure to accurately pay the required sales and use taxes, payroll taxes and property taxes will create the risk of significant penalties. Again, location intelligence can help mitigate these risks. Through enterprise tax solutions, electric utility providers can make certain that they are correctly assigning the proper tax jurisdictions for their customers; they can accurately determine the amount of property taxes that are due for all of their assets in the field; and they can make certain that they are paying the proper payroll taxes for their employees and contractors.
Location and customer intelligence solutions combine software, data and services to help organizations measure, compare, visualize, analyze and model data in unique and powerful new ways. The notions of "where" and "who" have become critical factors in a provider's decision-making.
In the end, electric utility providers must rely on location analysis to help them plan, predict and make decisions with greater accuracy.
Author
Christopher Cherry is the director of communications industry strategy at Pitney Bowes MapInfo, a leading provider of location-based solutions, intelligence and expertise to businesses and governments worldwide. Cherry has been analyzing and advising in the communications sector for 15 years, and has worked to develop strategies for many of the largest providers. You may contact him at Chris.Cherry@mapinfo.com.
