Beyond The Risk Register –

From Risk Analysis to Creating Strategies

Larry Redd, P.E. – Redd Engineering William Johnson – Colorado DOT

Redd Engineering

Risk Register Framework

2

Risk Level

Asset Class Event/Occurrence Prob Safety Mobility

Asset Damage

Other Financial

ImpactRisk

Score

Project All

Flooding (or any inclement weather event) (resulting in long term impacts -- damage to assets, requiring replacement)

4 5 5 5 5 20.0

Agency ALLUncertainties that affect reaching performance targets; including revenue, costs, processes, etc.

4 3 3 2 4 12.0

Project TrafficWind damage to high-mast lighting, signals, overhead signs, VMS 4 1 2 3 2 8.0

Program ALLUncertainties that affect the ability to deliver projects as intended, and on time, within budget

5 3 3 1 3 12.5

Consequence Score

Overall Risk Analysis Pareto

3

Risk

Sco

re --

per

Risk

Risks Analyzed

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0 20 40 60 80 100 120

Overall Risk Scores by Asset Class – From the Risk Register

4

0

20

40

60

80

100

120

Sum of Risk Scores >10.0

A Completed Register – But… “Where do we go from here?” • Corridor-based risks

– Risks that have a location (geospatial) component – Examples -- rock fall, culvert failure, ITS/signs, etc.

• Risks to infrastructure performance – Uncertainties regarding the achievement of

performance goals (costs, revenue, models, processes) • Project Delivery risks

– Programmatic/systemic issues such as chronic delays, splits, overruns, & not delivering projects as intended

– Project-specific risks to cost and schedule

Risk Impacts in Transportation

• Safety – crashes, injuries, fatalities, property damage

• Mobility and trip time reliability • Costs of fixing the damage • Other economic costs – lack of access,

interrupted commerce • Performance costs – not delivering projects as

intended, and/or not hitting targets

Approaches to modeling risk

Hazard/Risk Index (top down)

Pros: fast, low data requirements, output easy to understand Cons: Low resolution, subjective

Historical Scenario (mix of top down and bottoms up)

Pros: based on event-specific data, good for frequent hazards Cons: misses extreme events, and site-specific risk event outcomes

Probabilistic (bottoms up)

Pros: accounts for both frequent/low-impact and rare/extreme events, for each site Cons: high data/expertise requirements, need to ensure outputs can be understood

Incr

easin

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Ultimate Site-Specific Analysis

Landslide hazard assessment Required data: • Height and angle of the

natural slope • Height and angle of the

cut/fill slopes • Slope material • Evidence of seepage on

the slope • Vegetation • Reinforcement (walls,

gabion baskets, etc.) • Expected rainfall

frequency/intensity • Inventory of past

landslides • …

Bridge Scour Risk

• Scour #1 Failure Mode – Scour Plan of Action (POA)

required by FHWA – Structure Collapse – Wildfire concerns

10

Costs of a Bridge Scour

11

Averaging about 1 major scour event each 2 years.

$66,630

1999 estimate is $12.16. Current values may be estimated by using the Consumer Price Index to determine the inflation factor. (Average wage in 1999 $30,469, in 2011 $42,979 (ssa.gov). 41% Increase)

Levels of Capability – Locating Risks

time

• Full Geospatial Risk information

• Risk Costs by Site/Location

Risk Management Capabilities

“Intermediate” Risk Mgmt Capabilities

• Total risk costs/score by corridor • Risk scores for each asset class by corridor • Strategy implications – project formulation

and packaging considerations • Allocation of funding (by region, asset type)

Mature Risk Mgmt Capabilities

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Spread Risk Scores by Corridor

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Risks Corridor 1 Corridor 2 Corridor 3 Corridor 4 Corridor 5

Framework – “Top 50 Risks” i.e. Risks with scores > 10 17 Corridor Types 8 Asset Classes

“This approach of assigning risk scores to locations enabled CDOT to analyze risk across asset classes and risk event types for the entire highway network, incorporating asset manager feedback on the impacts of risks related to terrain and traffic volumes.” JoAnn Mattson Project Manager, Risk-Based Asset Management Colorado DOT

Total Risk Score per Mile for Each Corridor Type

15

Mtn Rural -- Interstates -- Other H.T.

Mtn Urban Other Plains Urban I/S

Rolling Urban I/S Plains Rural I/S

Rolling Rural I/S

Risk per Mile for Each Asset Class (two corridor types shown here)

16

Risk score per mile Mountain Rural Interstates

Risk score per mile Plains Rural Medium Traffic, Non I/S

Bridge Risk Scores by Corridor

Overall Performance Risks

Project Costs

Available Revenue

Modeling Uncertainties

Project Formulation Processes

Performance Uncertainties Variability, Volatility of Parameters

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Performance Risks and Process Improvement Use of Leading and Lagging Indicators

Strategic Goals - Long-range planning - Balanced Scorecard - Performance Targets

Analysis - Mgmt System runs - Program Tradeoffs - Project Optimization - District input

Programming - 10 yr horizon - Fiscally constrained - Funding uncertainties - 6-yr STIP

Work Gets Done - Projects completed - Conditions monitored - Plan vs. Actual Results - Feedback to Decision Makers

“Plan”

“Do”

“Check” “Act”

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Root Causes of Plan/Actual Gaps – Enabling Process Improvement

• Good targeting • Tight Processes • Low Uncertainty

(cost or revenue) • Good Modeling

• Targeting issues • Tight Processes • Low Uncertainty

(cost or revenue) • Modeling issues

• Good targeting • Loose Processes • High Uncertainty

(cost or revenue) • Modeling issues

• Targeting issues • Loose Processes • High Uncertainty

(cost or revenue) • Modeling issues

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Overall Results -- CDOT

• Ability to analyze risks by location (geospatially), along with performance-based opportunities

• Processes and tools to formulate projects, considering both performance and risk-based opportunities

• Ability to include risk in overall investment and resource allocation decisions

• Ability to consider performance-related uncertainties in planning, target-setting, and project delivery processes – Gap analysis of projected (planned) performance versus actual – Making improvements in planning and project scoping processes – Reducing losses due to chronic project delivery issues

Contact Info

• Larry Redd, P.E., Redd Engineering • larryreddLLC@gmail.com • 970-219-4732 • www.larryreddllc.com

“Gap” Influences for Pavement

Gap Amount

Prediction Date

+4 +8 Prediction Time Horizon -- Years

Gap Influences – up to four yrs 1. Funding variations from the

inputs to “predictive analysis” -- Major

2. Modeling inaccuracies -- Minor

3. “Committed projects” that do not get completed as intended -- Minor

Gap Influences – past four yrs 1. Funding variations from the

inputs to “predictive analysis” -- Major

2. Modeling inaccuracies – Major

3. The “20% Wiggle Room” in the Match Indicator – Medium

Risk Reduction Strategy Development

Risk Register -- Excerpt

Gaps 2 & 3

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Risk Management Strategy Development

Event/Occurrence Ris

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Flooding (or any inclement weather event) (resulting in long term impacts -- damage to assets, requiring replacement)

Treat - determine risk and resilience strategy and organizational structure and communication plans to support future events

5.0% 0.50

Dir of Office of Emerg Mgmt for response; multiple cdot roles working on strategy

Vehicle damage to buildings, CDOT or other vehicles, including the traveling public,

Tolerate or treat 50.0% 0.2Property Mgmt Project Manager/State Buildings Delegate

Bridge Strike (Highest frequency) -- clearance less than 16 ft

Replace or raise low bridges, lower grade 65.0% 7.0

Bridge Engineer coordinating inspection, design and working with maintenance

Flood hazard assessment

Land use

Soils

Topography

Discharge

Precipitation

Geology

FY 15 Investment Strategy Risks & Consequences

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Risks

Scour

Bridge Strike

Rerouted commerce

Essential repairs

Likelihood

Most common Failure mode

1 every quarter

Daily

Monthly

Consequence

Bridge Failure & possible injury

Road closure & possible injury

Economic Impact & potential

failure

Lane closures & delays

Mitigation

Mitigation measures

average $535K

Bridge replacement

Bridge Rehab or replacement

Contingency Fund $5M

• “Extremes matter!” – Consider full range of frequent vs. “rare” occurrences – There is no “average culvert” – “The Black Swan”, by Nassim Taleb

• Consider a full range of strategies, such as:

– “Tolerate, treat (mitigate), transfer,…” etc. – How much to invest in a strategy? Are there tradeoffs? – Packaging of risk-based solutions

• Site-specific • Corridor-based • State-wide or regional/district-based programs/projects

Some Basics of Good Risk Analysis

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Profound Discoveries… (cont.)

• It is lucrative to manage risk opportunities -- – Thorough analysis can identify the best opportunities, e.g.:

• Geohazards “risk costs” in the tens of $millions (CDOT) • Performance and project delivery uncertainties can cost

up to 5% in losses (WYDOT)

– “Hey, we can fix that”, with good management strategies: • Using new and innovative methods and tools • Lower the impact, transfer the risk, lessen the

uncertainty, fix your processes, etc. • Lead time on risk analysis can be long, so get started

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Evaluating Risk-Based Opportunities

1. Identify and quantify risk event types, locations, etc. 2. Identify & define risk management strategies 3. Calculate the costs and benefits of each strategy 4. Determine how to “package” risk management

solutions for maximum impact 5. Prioritize candidate solutions 6. Include risk opportunities in overall asset

management investment tradeoff analysis

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Steps We Followed

1. Identified risk event types, levels, assets affected 2. Built a “Risk Register” – with probabilities/consequences

for each risk event type, and strategies with Benefit/Cost 3. Categorized risks:

a) Such as network, performance, & project delivery risks 4. Defined tools and processes to manage these risks 5. Located risks on the network (Lat./Long., LRS), thus

enabling project formulation & scoping that include risk 6. Defined process for formulating and “packaging” risk-

based and performance-based opportunities