INSIGHT

Risk assessment frameworks for electric cooperative organizations 

Ryan Ferran, Josh Schmidt • September 9, 2025

Services: Cybersecurity Risk Assessments

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Electric cooperative organizations face operational, financial, and regulatory challenges that require sophisticated risk management approaches. Unlike investor-owned utilities, cooperatives operate under member-ownership structures while maintaining the same critical infrastructure responsibilities that keep communities powered and connected. Your organization’s ability to identify, assess, and mitigate risks directly impacts not only your financial stability but also the reliability of the service you provide to member-owners who depend on you for their daily operations.  

The complexity of managing an electric cooperative extends beyond traditional utility concerns. You must navigate fluctuating energy markets, aging infrastructure demands, cybersecurity threats, regulatory compliance requirements, and the growing integration of renewable energy sources. Weather-related disruptions, supply chain vulnerabilities, and evolving technology standards add additional layers of complexity to your risk landscape.  

This article will explore comprehensive risk assessment frameworks specifically designed to help electric cooperatives build resilience while maintaining operational efficiency and member satisfaction. 

Understanding electric cooperative-specific risk factors 

Your electric cooperative operates within a distinctive regulatory and operational environment that creates specific vulnerabilities that require tailored assessment approaches.  

Member-ownership governance complexities 

Member-ownership structures introduce governance complexities that traditional risk models often overlook. Board composition, member engagement levels, and democratic decision-making processes can either strengthen or complicate your risk management efforts depending on how well they align with your strategic objectives. 

Financial structure differences 

Financial risks in cooperatives differ significantly from those in investor-owned utilities. Your organization relies on member equity, retained earnings, and debt financing rather than stockholder capital. This structure affects your ability to respond quickly to major infrastructure investments or emergency repairs. Rate-setting processes must balance member affordability concerns with operational necessity, creating ongoing tension between financial sustainability and member satisfaction. 

Developing comprehensive cybersecurity risk assessment methodologies 

Cybersecurity risk assessment begins with establishing clear risk categories that reflect your operational reality. Effective risk assessment begins with organizing potential threats into distinct categories: 

• Operational risks: equipment failures, workforce safety, supply chain disruptions, service reliability 
• Financial risks: interest rate fluctuations, bad debt exposure, power purchase agreements, capital cost overruns 
• Regulatory risks: compliance requirements, rate case outcomes, environmental standards  

Your assessment methodology should also incorporate both quantitative and qualitative measures.  

• Quantitative analysis provides measurable data on frequency, severity, and financial impact of potential risks.  
• Qualitative assessment captures harder-to-measure factors such as reputational damage, member satisfaction impacts, and regulatory relationship effects. 

Combining these approaches gives you a more complete picture of your risk exposure. 

Managing risk interdependencies 

Risk interdependencies require special attention in cooperative settings. A single event can cascade across multiple risk categories, amplifying overall impact. For example. severe weather might simultaneously create operational disruptions, financial losses, regulatory scrutiny, and member dissatisfaction.  

Your framework must account for these interconnections to avoid underestimating potential consequences. 

Technology integration and cybersecurity considerations 

Modern electric cooperatives increasingly depend on digital infrastructure, creating new vulnerability categories that require specialized assessment approaches. Your SCADA systems, smart grid technologies, and member information systems are critical assets that need protection from cyber threats. The interconnected nature of these systems means that a breach in one area can compromise multiple operational functions. 

Cybersecurity risk assessment for cooperatives must consider both technical vulnerabilities and human factors. Your smaller IT teams may lack the specialized knowledge needed to identify emerging threats or implement advanced security measures. Third-party vendor relationships introduce additional access points that require ongoing monitoring and assessment. Member data protection requirements add regulatory compliance dimensions to your cybersecurity risk profile. 

Technology modernization efforts themselves introduce risks that your framework must address. System integration projects can create temporary vulnerabilities while new technologies may have unknown reliability characteristics. Your assessment process should evaluate both the risks of upgrading systems and the risks of maintaining aging infrastructure.  

Regulatory compliance and environmental factors 

Your cooperative operates under multiple regulatory jurisdictions that create overlapping compliance requirements. Federal agencies, state public utility commissions, and local authorities all impose standards that affect your operations. Changes in regulatory priorities, particularly around environmental standards and renewable energy integration, can significantly impact your risk profile and require ongoing assessment updates. 

Environmental risks extend beyond regulatory compliance to include physical climate impacts on your infrastructure. Extreme weather events are becoming more frequent and severe, requiring enhanced assessment of your system’s resilience. Flooding, ice storms, high winds, and extreme temperatures can all compromise equipment reliability and service continuity. Your framework should incorporate climate projections and infrastructure vulnerability assessments to prepare for changing environmental conditions.  

“The many new data centers being built in the United States have sent compliance ripples throughout the power industry. Power coops all over the country are preparing for increased NERC CIP requirements as they build new infrastructure to meet key accounts’ data center demand. The NERC CIP requirements for a “low impact coop” change considerably when a facility is upgraded to medium impact. These requirements invariably require more resources and expertise to properly meet compliance standards.”  – Ryan Ferran, Senior Manager – Cybersecurity 

Building organizational resilience 

Risk assessment frameworks provide the foundation for building organizational resilience, but implementation requires sustained commitment from your leadership team and board of directors. Key components of effective resilience building include: 

• Regular assessment updates to ensure your understanding of risks evolves with changing conditions 
• Staff training programs to create organization-wide awareness of risk factors and response procedures 
• Clear communication protocols that keep board members, management, and staff informed about risk status and mitigation efforts 
• Member transparency initiatives that build confidence in your cooperative’s leadership while maintaining appropriate boundaries around sensitive operational information 

Your framework should include clear communication protocols that keep board members, management, and staff informed about risk status and mitigation efforts. Transparency with members about risk management efforts can build confidence in your cooperative’s leadership while maintaining appropriate boundaries around sensitive operational information. 

Working with BPM for comprehensive cyber risk management 

Implementing effective risk assessment frameworks requires specialized knowledge of both cooperative operations and risk management best practices. BPM brings deep understanding of the electric cooperative industry combined with comprehensive risk assessment capabilities. Our team works directly with cooperative leadership to develop customized frameworks that address your specific operational environment, regulatory requirements, and member expectations. 

BPM’s collaborative approach ensures that your risk assessment framework integrates seamlessly with existing governance structures and operational processes. We provide ongoing support to help your organization adapt to evolving risk landscapes while maintaining focus on reliable service delivery and financial sustainability. To discuss how we can help strengthen your cooperative’s risk management capabilities and build long-term organizational resilience, contact us.