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Economic Value

Risk management

Risk management enables Eaton to meet stakeholder expectations despite a shifting business climate

Sustainability at its core is about analyzing and addressing risk. Our risk management system identifies and mitigates risks such as business continuity, travel and employee security, information technology, climate change, disaster recovery, intellectual property protection, supply chain risk and pandemic preparedness.

Systems and procedures address and mitigate the wide range of risk potential across our operations and our global footprint

Risk management

Customers, suppliers and shareholders understand the value of including the financial risks and business impacts of sustainability issues in risk management. Our compliance and business risk assessment and management process identifies and mitigates our most material environmental, health and safety and workforce-related risks.

Every business unit, region and corporate function participates in our annual enterprise-wide compliance risk assessment. Results are reviewed by the senior leadership committee. The business units establish coordinated mitigation plans, monitor progress and report biannually to leadership.

Supply chain risk management

Our Supply Chain Management (SCM) group's risk management objectives are to:

  • Employ a structured approach to capture existing or potential SCM risks.
  • Create SCM awareness around existing and potential risks.
  • Drive SCM mitigation priorities and risk programs.¬†

SCM conducts quarterly risk assessments following a five-step process:

  1. Conduct a risk scan using external sources.
  2. Conduct a risk scan using internal intelligence.
  3. Analyze and align the internal and external findings.
  4. Assign a risk ranking based upon the risk's severity and probability. 
  5. The SCM Leadership Team determines how we are managing or mitigating the risks identified.

Climate change risk management

Our strategy focuses on solving our customers' most challenging power management problems through the use of our power management technologies and services. We actively monitor and manage the following risks and opportunities resulting from climate change:

  • Increasing global energy costs for ¬†extraction, processing, distribution and utilization.
  • An evolving regulatory environment focused on carbon reduction, renewable energy standards, mileage and bio-fuel requirements and energy efficiency.
  • Increased demand for new carbon reduction technologies to respond to the impacts of climate change.
  • Need for increased transparency on sustainability efforts to position Eaton as a leader.

We utilize our own energy-efficient solutions and best management practices to minimize risk. The realities of climate change also pose an opportunity and an imperative to achieve our vision of improving the quality of life and the environment. Our power management technologies (both current and future) provide climate management tools that allow our customers to prepare for inevitable regulatory changes and improve the environment through reducing emissions.

Integrated risk management approach

Our risk management processes include:

  • A disciplined set of processes and tools (Eaton Business System (EBS)) that ensures organization-wide alignment, rapid recognition and transfer of best practices.
  • Facility-level planning and evaluation integrated into strategic planning. Local response plans address such business continuity challenges as changing weather patterns, rising temperatures and natural disasters.
  • A globally-deployed integrated system (Management of Environment, Safety, Security, and Health (MESH) Program) that establishes consistent goals, metrics and sharing of best practices. The MESH system addresses process, compliance, and culture and is assessed every three years.
  • A robust compliance risk assessment and mitigation process.
  • Board oversight of public policy, EHS and sustainability risks.

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