P acific Gas and Electric Co. is establishing a chief audit officer role and making changes to the job profiles and responsibilities of those who oversee and manage risk at the San Francisco-based energy company.
PG&E is expected to exit bankruptcy later this month, after a turbulent time in the history of the 115-year-old utility. Last year the company agreed to pay $24.5 billion to settle claims related to its role in four massive wildfires in Northern California during the last five years.
PG&E announced last week that it is establishing a new risk and safety leadership structure to strengthen “enterprise-wide risk mitigation and operational safety capabilities.” It is expanding the responsibilities of some risk-related roles and creating new ones, including the chief audit officer job which will be filled by Stephen Cairns, former vice president, internal audit and chief risk officer.
PG&E said in a statement that it will restructure leadership roles related to risk. Previously, the role of Vice President of Internal Audit and Chief Risk Officer assumed the duties of enterprise risk, internal audit, SOX compliance, market and credit risk management, third party risk management, loss control and insurance.
Moving forward, the company has created a new role of Chief Audit Officer that will split the duties with the Chief Risk Officer. The company is also promoting the Chief Safety Officer to a Senior Vice President role.
Separation of Duties
The new role of Chief Audit Officer will oversee the internal audit function with an expanded role in supplier auditing and proactive fraud detection through advanced analytics. The role will also oversee a new program promoting quality assurance functions. Third-party risk management, SOX compliance, market and credit risk management, and loss control and insurance will also be part of the duties.
The Chief Risk Officer will manage risks related to operations and public safety, which includes wildfire risks that landed the company in trouble after causing wildfires across California and drove the company into bankruptcy after having to pay $25.5 billion for losses in the fires in 2017 and 2018. Other risks include nuclear, dams, natural gas, and natural disasters, as well as utility, pandemic, cyber-attacks, and other catastrophic events.
“Our new leadership structure is consistent with the commitments we made to the Governor’s Office and the California Public Utilities Commission to help improve our safety culture and our operational outcomes,” said PG&E Corporation’s Interim Chief Executive Officer Bill Smith in the statement. “We are bolstering our leadership team so we can further integrate industry-leading risk management approaches across all of our business.” 
PHOTO: By Grendelkhan / used under CC BY-SA
Stephanie Liu is assistant editor at Internal Audit 360°