Understanding and managing our risks is at the core of our business success. Crestwood implements a robust enterprise risk management (ERM) program to identify and mitigate risks across our business. In 2021, we matured our risk program to integrate environmental, social and governance (ESG) risks, reflecting Crestwood’s awareness that sustainability, commercial, operational, financial and audit risks are all relevant and correlated.
Focusing solely on traditionally managed risks, such as compliance, operations, customers, competition and financial, provided a short-term view of our risk profile. Incorporating ESG risks, including climate-related risks, into our ERM program allows for the inclusion of more long-term risks and integrates two previously independent programs into one comprehensive, singular process. This corporate-wide enhancement provides a more holistic approach to our risk management process. It allows us to mitigate risks and impacts across the full lifecycle of our business activities, while increasing risk awareness in the short, medium and long-term.
We carefully review, evaluate, monitor and manage climate-related risks and associated opportunities, focusing on both physical and transitional risks. Climate-related risks are routinely reviewed by our Board’s Sustainability Committee and evaluated based on our ability to adapt and strengthen our business resiliency.
Please refer to the Carbon Management page to learn more about Crestwood’s climate-related risks.
Our annual ERM review process, led by our senior vice president of internal audit, technology and implementation services and our senior vice president of ESG, is collaborative and dynamic. Leaders from across the company participate in annual reviews, identifying, evaluating and monitoring existing and potential emerging risks that could impact our business.
Based on internal interviews and discussions, the ERM team assesses each risk to determine:
- The impact of a risk event.
- The likelihood of a risk occurrence.
- The speed of onset of a risk consequence.
- The management and mitigation of the identified risk, ensuring that the organization has the right processes, systems and support in place.
Results of the annual ERM program are compiled into a risk assessment summary prioritizing and ranking Crestwood’s identified ESG business risks. Risk data is reviewed by executive management and provided to the Sustainability and Audit Committees. Following its completion, the findings from the ERM program are also provided to internal department leaders to drive continuous improvement.
Crestwood’s 2021 sustainability report reflects our commitment to transparency and accountability for our sustainability and ESG performance across all our business activities. During 2021, we leveraged existing, robust procedures used for our financial reports and developed similar controls and procedures for our sustainability report led by our Internal Audit and Financial Reporting departments. This program includes controls for all functional groups to be accountable for the data, methodologies and processes presented within this report.
Each functional group is responsible for designating a leader to certify that their content is accurate, with review and approval by the respective subject matter experts, and that the controls surrounding the data collection and reporting are effective. The Internal Audit team is then responsible for verifying that the controls executed by each functional group were adequately and appropriately performed. Finally, the Financial Reporting team authenticates all reported statistics and metrics, while validating alignment with other externally published reports and disclosures.
This process was fully implemented during the preparation of the 2021 sustainability report. As such, we uphold with confidence the accuracy of information we are delivering to our stakeholders.
More information about the risks applicable to Crestwood can be found in our Form 10-K filed with the SEC.