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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2022. Implementation of the AASHTO Guide for Enterprise Risk Management. Washington, DC: The National Academies Press. doi: 10.17226/26516.
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Page 1
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2022. Implementation of the AASHTO Guide for Enterprise Risk Management. Washington, DC: The National Academies Press. doi: 10.17226/26516.
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Page 2
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2022. Implementation of the AASHTO Guide for Enterprise Risk Management. Washington, DC: The National Academies Press. doi: 10.17226/26516.
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1   In 2016, NCHRP sponsored research on enterprise risk management (ERM) for state departments of transportation (DOTs). AASHTO published the research results as the AASHTO Guide for Enterprise Risk Management (AASHTO and FHWA 2016; referred to herein as “the Guide”). A premise of the Guide is that state DOTs routinely manage risk, but they do so informally. When agencies formalize risk management, it provides them a methodology, tools, and documentation to systematically assess risk and adopt strategies to manage it. The formal- ization of risk management supports informed decisions, provides a record of decision making, and demonstrates the agency’s due diligence in decision making. This report documents activities conducted as part of NCHRP Project 20-44(02), “Imple- mentation of the AASHTO Guide for Enterprise Risk Management.” The objective of the project was to disseminate and build awareness of the Guide and to provide direct support to state DOTs to adopt and use the Guide. As described more fully in the Project Back- ground section of Chapter 1, activities included support to three states, creation of risk management tools, formation of a risk management community of practice (COP), peer exchanges, webinars, in-person and virtual regional and COP meetings, and outreach to many state DOTs. Over 36 formal meetings were held involving a number of state DOTs, along with numer- ous informal meetings with three state DOTs selected to pilot initiatives important to them. At least 23 states participated in one or more formal meetings. The pilot DOTs were pro- vided continuous implementation support, including a brief on ERM and guidance and support throughout the implementation of key initiatives selected by them. Overall, there was excellent participation in project activities by state DOTs, including those that had made significant strides and were willing to share their experiences. This project’s most important accomplishment was to demonstrate the utility of risk management to address a wide range of risks facing state DOTs. The risks included those related to: • Hiring and retaining employees with the skills the DOT needs, • Improving cultural sensitivity and inclusions and increasing employee diversity, • Enhancing employee performance and leadership development, • Managing knowledge, • Mitigating environmental threats to corridors, • Reducing variability in quick-clearance efforts, • Ensuring consistency and quality in construction plans, and • Reducing the risk of late or incomplete construction plans. S U M M A R Y Implementation of the AASHTO Guide for Enterprise Risk Management

2 Implementation of the AASHTO Guide for Enterprise Risk Management These risks are common to all state DOTs. As can be seen, there is an enhanced focus on risks associated with human resource issues. Other risks of priority related to safety, envi- ronmental threats, and construction plan quality/delays. This report documents how the pilot states mitigated these risks, and it includes the tools they developed. Links to the tools are included in the report with additional detail contained in the appendices. These tools could help other states advance their implementation of risk management. I think trying to implement this project during COVID probably could not have been better timing. We as DOTs had public health risks we were dealing with internally with our employees as well as within our community. We experienced financial risks due to lower incoming revenues. We were shifting towards a more mobile workforce working remotely and trying to maintain collaboration and engagement through our computers. I think this project and its timing reinforced the need to have viable working risk registers because in the face of a pandemic there was limited time to bring folks together and talk about the risks, and we needed to take action. I saw risk management in action with setting up an incident command system type format to handle COVID response, but formal utilization of a risk management framework still seemed like a difficult sell. I think it’s related to people not feeling like they have the time to devote to it when in actuality setting aside some time to address the risks and face the risks head on—even in the heat of battle—may have increased our overall effectiveness and streamlined areas of our response. —Chad Allen, Asset Manager, Seattle DOT (formerly of VTrans) The tumultuous year of 2020 provided the project many opportunities to demonstrate the value of risk management. State DOTs faced a pandemic and its subsequent recession, work restrictions, employee safety concerns, national demonstrations over racial injustice, and the worst wildfires in recorded American history. The onslaught of COVID-19 provided both an impediment to the implementation project and a re-affirmation of its need. All three pilot states faced implementation slowdowns as they abruptly shifted to virtual work- places. The pilot teams adjusted their immediate priorities to ensure the safety of their workers and the functioning of their departments. These shifts complicated the NCHRP Project 20-44(02) implementation efforts. At the same time, COVID-19 illustrated the need to anticipate risks and to have processes to manage them. Despite COVID-19, and in some cases because of it, this project achieved its objectives: • Three states received direct assistance, which resulted in them implementing strategies to manage risks that are common to all state DOTs. • Several tools were developed that will be useful to other state DOTs as they manage similar risks. • The COP promoted a national dialog on risk management and facilitated the exchange of ideas and strategies among state DOTs. Through a formal handover of the COP to the AASHTO Subcommittee on Risk Management, the important activities of the COP will continue. • Outreach meetings introduced state DOTs with limited experience to the benefits of ERM and introduced them to peers who could assist their nascent efforts.

Summary 3   • A nationally attended virtual meeting demonstrated how risk management helps state DOTs manage the many risks resulting from COVID-19. • Strategies for ingraining ERM based on practical experiences from various state DOTs were documented. • Suggestions for accelerating the adoption of ERM were included. The implementation effort demonstrated that risk management helps agencies identify and mitigate the risks to their performance objectives and is most useful when it supports decision making. Risk management provides a structure and framework for state DOTs to address the diverse and complex risks confronting their objectives. The logical and sequential steps within risk management provide guidelines for state DOTs to perform systematic analyses of their risks and to identify actions to manage them. The challenges of 2020 demonstrated that risk management supports decision making in times of crisis. In addition to managing external threats such as climate change or pandemics, this project illustrated the application of risk management to complex internal agency issues. These include employee hiring and on-boarding and developing a more diverse and equitable workplace. This project includes case studies of how agencies used risk management to focus diverse stakeholders on managing risks to these objectives. Looking to the future, the activities documented in this report offer examples of how states can manage ongoing and future risks, such as increased use of remote workplaces, more insistence on social justice, a changing climate, and uncertainty about how people will travel. ERM can help state DOTs manage the great uncertainty and variability they will face in the post-COVID world.

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The AASHTO Guide for Enterprise Risk Management, published in 2016, defines enterprise risk management as “the formal and systematic effort to control uncertainty and variability on an organization’s strategic objectives by managing risks at all levels of the organization.”

The TRB National Cooperative Highway Research Program's NCHRP Research Report 986: Implementation of the AASHTO Guide for Enterprise Risk Management documents how several state departments of transportation are adopting risk management principles and practices.

Supplemental to the report are a presentation, a risk assessment tool, a Washington State Department of Transportation budget template, and a video of a webinar by the project team.

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