FHWA defines risk and risk management, in the context of transportation asset management, as follows:
- Risk: The positive or negative effects of uncertainty or variability upon agency objectives. (23 CFR 515.5)
- Risk Management: The processes and framework for managing potential risks, including identifying, analyzing, evaluating, and addressing the risks to assets and system performance. (23 CFR 515.5)
Considering risk is important in developing TAM strategies, because transportation agencies often must spend significant resources responding to and/or mitigating risks. Reacting to the uncertainty presented by risks can be more expensive than proactive management. Risk management strengthens asset management by explicitly recognizing that any objective faces uncertainty, and by identifying strategies to reduce uncertainty and its effects. Being proactive, rather than reactive, in managing risk and avoiding “management by crisis,” helps agencies best use available resources to minimize and respond to risk as well as further build public trust.
Given the importance of risk management for supporting asset management, agencies should formally identify and manage risks at all organizational levels. Figure 2.6 shows four levels at which risks can be identified within an agency, and the individuals who may be responsible for the risks at each level.
Typically agencies manage risk every day. They are well-equipped to hand risks at the project and activity levels, and regularly consider risks on a larger scale. Formally considering and documenting potential risks at all levels can help bring greater attention to them and improve risk management.
Figure 2.6 Levels of Risk within an Organization
TRB. 2016. NCHRP Project 08-93 Final Report. http://onlinepubs.trb.org/onlinepubs/nchrp/docs/NCHRP08-93_FullGuide.pdf