Managing risk in the new power business

Abstract

Managing risk is central to engineering, to business, and, in fact, to most human endeavors, and computer analysis is central to managing risk. This article gives a broad exposition of risk in the competitive and privatized electric power business. Contrary to much that is being written today, the emphasis of this article is on nonfinancial risks, hazards that are neither measured nor hedged using tools of financial markets. The focus is on practical methods for modeling and managing risk, and real examples are provided.