Enterprise Risk

The five companies and respective businesses that comprise Con Edison are influenced by many factors that are difficult to predict, and that involve uncertainties that may materially affect actual operating results, cash flows, and financial condition. The companies have established an enterprise risk management program to identify, assess, manage, and monitor its major business risks based on established criteria for the severity of an event, the likelihood of its occurrence, and the programs in place to control the event or reduce the impact. The companies also have financial and commodity market risks.

A robust discussion of each enterprise risk below is located here on pages 47-50 of Con Edison’s 2014 Annual Report.

Regulatory / Compliance Risks

• The company is extensively regulated and subject to penalties
• The utilities’ rate plans may not provide a reasonable return
• The company may be adversely affected by changes to the utilities’ rate plans
• The intentional misconduct of employees or contractors could adversely affect the company

Operations Risks

• The failure of, or damage, to the companies’ facilities could adversely affect the company
• A cyber-attack could adversely affect the companies

Environmental Risks

• The company is exposed to risks from the environmental consequences of their operations

Financial and Market Risks

• A disruption in the wholesale energy markets or failure by an energy supplier could adversely affect the companies
• The companies have substantial unfunded pension and other postretirement benefit liabilities
• Con Edison’s ability to pay dividends or interest depends on dividends from its subsidiaries
• The companies require access to capital markets to satisfy funding requirements

Other Risks

• The companies’ strategies may not be effective to address changes in the external business environment
• The companies also face other risks that are beyond their control