National Academies Press: OpenBook

Implementation of the AASHTO Guide for Enterprise Risk Management (2022)

Chapter: Chapter 6 - Tactics for Successful Risk Management

« Previous: Chapter 5 - Other Case Studies
Page 98
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 98
Page 99
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 99
Page 100
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 100
Page 101
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 101
Page 102
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 102
Page 103
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 103
Page 104
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 104
Page 105
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 105
Page 106
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 106
Page 107
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 107
Page 108
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 108
Page 109
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 109
Page 110
Suggested Citation:"Chapter 6 - Tactics for Successful Risk Management." 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.
×
Page 110

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

98 Tactics for Successful Risk Management 6.1 Lessons Learned from Risk Management Practitioners Beyond the three pilot states, this project engaged nearly half of all state DOTs with one or more of the implementation activities. ese processes were part of the outreach that exposed state DOTs to risk management and its benets. e outreach and involvement processes included: • Participating in the COP, • Attending the in-person peer exchange, • Attending the virtual regional outreach meeting, and • Attending the special web-based event, Managing Risks in Uncertain Times. ese events accomplished the project objective of exposing state DOTs to ERM and its benets. In all, participants from at least 23 state DOTs were identied as attending one or more meetings. Additionally, several FHWA sta participated. At each opportunity, the project team members elicited examples from state DOTs on the risks they faced and their ERM strategies for mitigating them. e following sections summarize some of the strategies state DOTs used to promote ERM or to benet from it. 6.1.1 Promoting ERM to Senior Leaders Participants discussed at length the need to promote ERM to senior state DOT leaders. ERM promotion is needed because of turnover among agency leaders and because many leaders come from non-DOT backgrounds. e risks that seem obvious to agency veterans may not be apparent to leaders who are new to transportation. • Participants agreed that more promotion of ERM is needed. ERM is a valuable tool but one that is not widely understood among senior executives. • It is important to mainstream risk management with DOT executives. e risk management concepts used in core functions such as safety are the same as are used in managing other risks. Mainstreaming risk management into more agency functions is a means to demonstrate the utility of risk management. • Risk management can be made relevant to agency leaders by linking it to issues important to them, such as the threats and opportunities presented by connected and automated vehicles (CAV). Using risk management to identify threats and opportunities around emerging issues such as CAV makes risk management relevant and useful to agency leaders. 6.1.2 Risk Management Is Not a Stand-Alone Activity COP members oen emphasized the linkage of risk management and performance manage- ment as a helpful way to promote ERM in their agencies and to enhance the usefulness of ERM. It is a natural complement to performance but oen is not understood in that way. C H A P T E R 6

Tactics for Successful Risk Management 99   • Some state executives think of risk management as a stand-alone activity. Presentations during the project illustrated how managing risks is common across many programs, and it supports achieving the DOTs’ core missions. • It is important to understand that risk management has a life cycle and that agencies trans- form themselves through risk management. Often, risk management is presented as an activity, but it is a system that fits within the performance management system. It enhances quality because it reduces variability, and it contributes to lean management. Risk can be conceptualized to achieve other objectives such as performance. • Linking the management of resilience threats with the agency’s risk management process is another way to demonstrate the value of risk management. • Another way to promote risk management is to communicate in a way that shows how risk management supports quality. Maybe it would be more effective to discuss risk management as tied to quality management and not as a stand-alone activity. • Risk management is opportunity management. Its practice could take agencies to a higher level of performance. Because risk management emphasizes capitalizing on opportunities, ERM should be linked to strategic planning. One state had success by changing risk state- ments into opportunity statements. ERM allows agencies to consider risk management as an opportunistic strategy. 6.1.3 Linking Risk Management and Asset Management FHWA asset management regulations require development of risk-based asset management plans. These plans have exposed many state DOTs to risk management for the first time, which has helped promote understanding of risk management. However, several times during COP discussions, participants noted that the asset management risk efforts often occur in isolation and do not influence wider agency operations. This led to questions and comments such as: • How can the asset management plan risk analyses catalyze broad appreciation of risk manage- ment in DOTs? • Can synergies between AASHTO and TRB asset management and risk management commit- tees illustrate the linkages of risk and asset management? • There are risks with constructing bridges with a 100-year design because many assumptions must be made about design inputs over a century. These decisions can be improved when both asset management and risk management are considered. • Some agencies, such as VTrans, Caltrans, WSDOT, and MnDOT, found that managing risks to assets helps them cost-effectively manage the assets over their life cycles. Understanding the importance of managing risks to assets can help promote risk management. Assets can be better managed by: – Identifying asset risks to cost-effectively extend the useful life of assets, – Lowering the risk of premature failure because of lack of preservation or maintenance, and – Reducing the risk that assets will not achieve and sustain desired condition levels. 6.1.4 Lessons from Mature Risk Management Agencies Staff from MnDOT, a mature risk management agency, offered the following observations: • Agencies can expect executives’ interest in risk management to ebb and flow over the years as leadership changes. ERM staff should expect the need to re-explain and re-demonstrate the benefits of ERM as leaders change. • MnDOT now is in an era of expanding the use of risk management. MnDOT does joint risk assessment with the FHWA to identify risks that both FHWA and MnDOT agree need to be managed. The agency has strong leadership support for risk management, and the risk staff offer risk management support to offices that want to assess their risks. If an office faces a

100 Implementation of the AASHTO Guide for Enterprise Risk Management major decision, the risk staff can help the office conduct a risk assessment workshop to iden- tify risks and potential mitigation steps. • The risk staff have also helped offices conduct quantitative risk assessment using Monte Carlo analysis. They recently helped an office that wanted to do a B/C analysis of accelerat- ing a project schedule. They also added a risk assessment that identified other pros and cons of accelerating the project. The result was the B/C ratio was only one of the factors that was considered; other risks and opportunities were considered as well. • The use of risk management at MnDOT has expanded, and risk analyses and assessments are now commonly included in major decision documents. Not only did the asset management plan include a risk analysis, but so did the Minnesota 20-year State Highway Investment Plan, the 5-year strategic operating plan, and the agency’s plan for safeguarding its staff, assets, and reputation. • MnDOT has also developed risk registers for individual offices. Tying risk management to agency and office business plans increased its relevance to the offices’ day-to-day efforts. • The legislature was impressed by the agency’s asset management and risk management efforts, which provided political support for them. The office risk registers resonated with the new agency director, who said they should be expanded to every district. The business plan risks help communicate to executives the risks that have been identified, how they are being addressed, and what their consequences could be. • When requested, the MnDOT risk team goes into offices and facilitates sessions. The risk efforts do not yet combine into a statewide risk register, but the hope is that they will. The list of risks statewide is useful, but it is also useful to help individual offices use risk management to address the issues they face. 6.1.5 Risk Management Can Help Agencies Be Resilient Strategies to manage risks to resilience arose several times throughout the project, although resilience was not a particular focus of the project. However, resilience has become such an important risk management effort that participants raised several times the importance of resil- ience to their larger ERM efforts. Two examples of the relationship between resilience and risk are described in the following. VTrans’ Transportation Resilience Planning Tool VTrans staff referenced their agency’s TRPT, which resulted from the agency’s application of risk management practices. The goal of the VTrans project was to improve the resilience of Vermont’s highway network to floods and erosion by providing data and tools to inform plan- ning and investment decisions. The VTrans effort resulted in the creation of the TRPT, which consists of the following: • A method to systematically identify road segments, bridges, and culverts that are vulnerable to flood and erosion damages. • A screening tool to pinpoint the most critical locations and mitigation options in the trans- portation network. • A web-based application to display risk and mitigation information. The need for the TRPT became apparent following the widespread damage to state and local roadways caused by flooding from Tropical Storm Irene in August 2011 and because of the increase in ongoing local damages that take place each year. Much of the agency’s effort fol- lowing Tropical Storm Irene focused on improving its emergency response and recovery capa- bilities to restore transportation functionality faster after a disaster. The TRPT’s purpose is to identify vulnerabilities in a proactive manner to avoid or minimize the impacts of future dam- ages in the most critical, highest-risk locations (Schiff et al. 2018).

Tactics for Successful Risk Management 101   The TRPT identified risk levels for roads, bridges, and culverts due to the consequences of failures associated with erosion, inundation, and deposition. A vulnerability scoring system was created and linked to different levels of transportation failures. Low levels of vulnerability may lead to small-scale damages such as from inundation or minor erosion/deposition, while high levels of vulnerability may indicate that asset failure is likely to occur, such as from severe erosion or deposition. The TRPT was developed and tested in three pilot watersheds and can be applied in these watersheds to inform project scoping, capital programming, and hazard mitigation planning for state and local highways. VTrans, in partnership with regional planning commissions, will add watersheds to the TRPT web application in the future. The tool and manual are accessible at https://vtrans.vermont.gov/planning/transportation-resilience. Colorado’s Risk and Resilience Analysis Procedure In 2020, Colorado experienced its three largest recorded fires, which reinforced the Colorado Department of Transportation’s (CDOT’s) need to manage risks to resilience. CDOT staff shared a tool and manual for conducting risk and resilience analysis. The tool can be found at https:// www.codot.gov/programs/planning/risk-and-resiliency-tool.xlsx, and the manual can be found at https://www.codot.gov/programs/planning/cdot-rnr-analysis-procedure-8-4-2020-v6.pdf. The manual is titled CDOT Risk and Resilience Analysis Procedure: A Manual for Calculating Risk to CDOT Assets from Flooding, Rockfall, and Fire Debris Flow (CDOT 2020). The purpose of the guidance is to establish an approach for prioritizing highway assets considering applicable risks and to determine potential financial impacts to highway asset owners and their users from these threats. The approach provides methods for assessing criticality to system resilience, cost estimating procedures for replacement of damaged assets from natural hazards, user impact procedures for estimating additional user travel time/distance due to natural hazards, vulner- ability tables for a range of assets to a range of physical threats, and methods/sources to estimate threat probabilities of select natural hazards in Colorado. The manual and its procedure focus on risks from the following categories: • Rockfall-roadway to the roadway prism, or cross-section • Rockfall-bridge • Rockfall-on post tensioned concrete slabs • Flood-roadway prism • Flood-bridge • Flood-bridge approach • Flood-minor culvert • Flood-major culvert • Scour-bridge • Fire-debris flow-culvert • Fire-debris flow-roadway prism The Excel-based tool allows for calculation of costs and impacts for each of these risks. FHWA Resilience Resources Although not part of the project pilot, the FHWA provides numerous resources for state DOTs and metropolitan planning organizations (MPOs) that want to manage risks from extreme weather and disasters. The FHWA sustainability website (https://www.fhwa.dot.gov/ environment/sustainability/resilience/) provides numerous resources, including: • An extreme weather adaptation framework; • Numerous case studies of state DOT and MPO resilience studies, efforts, and examples;

102 Implementation of the AASHTO Guide for Enterprise Risk Management • Ongoing research; • Pilot agency case studies; • Policy and guidance links; • Tools, such as those for downscaling climate projections and assessing the sensitivity of assets to extreme events; • Recorded webinars; and • Proceedings from workshops and peer exchanges. 6.2 Managing Risks from COVID-19 e year 2020 turned out to be an appropriate time to focus on risk management implemen- tation. e year saw unprecedented challenges, including nationwide demonstrations for social justice, historic wildres in the west, and the COVID-19 pandemic and ensuing recession. is project sought to provide resources, examples, and discussion venues to focus on the real-time issues that state DOTs were facing. Most of the project-related sessions held in 2020 focused on managing risks brought on by the pandemic. In addition, one COP meeting was dedicated to sharing examples of how state DOTs were managing the pandemic. In October 2020, the Managing Risks in Uncertain Times virtual session attracted 59 participants from across the country. Selected examples of the risks and mitigation strategies raised during these sessions are summarized in the following. 6.2.1 The Value of Current Continuity of Operations Plans Several agencies noted the value of their continuity of operations plans in relation to 2020. Although some plans had not anticipated a pandemic, they nonetheless gave the agencies a framework for quickly assessing and responding to the risks of 2020. • Some of TDOT’s risk management eorts started with the Tennessee Continuity of Operations Plan. It was originally developed because of the seismic risks that Tennessee faces, and it was updated aer Hurricane Katrina. ose plans were based on natural disasters and were not based on a pandemic. In about 2010, TDOT conducted a pandemic planning exercise that con- tributed somewhat to its ability to respond quickly to COVID-19. What TDOT’s continuity plan was missing was steps to clean oces and vehicles, and responding to keep the agency productive while protecting the workforce. What the continuity plan contributed was deploy- ing the technology and practices to allow TDOT to begin more quickly working remotely. • MnDOT found that the COVID-19 pandemic reinforced the value of its continuity plan, and in particular, how the plan anticipated the need for remote operations. When considering how the plan could be updated in light of the pandemic, MnDOT considered the possibility of the sta of a remote winter operations outpost becoming sick. If such an event were to occur, an area’s snowplow operations could be aected. MnDOT managed the risk by developing back-up drivers and redundant plans to cover the truck garages if they were aected by the pandemic. • e Idaho Transportation Department (ITD) found that its continuity of operations plan needed to be updated because of COVID-19. ere was an emergency at ITD headquarters, and employees had to evacuate the building. ITD sta realized the continuity of operations plan was out of date because the agency lacked oor monitors with the reduced stang levels. Sta could not scan the building, and a handicapped person was unable to evacuate. Although ITD had a continuity of operations plan, the COVID-19–related experience identied areas where it needed to be updated. • When COVID-19 arose, the UDOT Operations Center was activated, but the existing conti- nuity of operations plan did not anticipate a pandemic. Five days aer the center was opened, Utah experienced a 5.7 magnitude earthquake, and then a large snowstorm. However, by

Tactics for Successful Risk Management 103   May the department of operations was coping with COVID, and the operations center stood down. The department then developed a stabilization plan to continue coping with COVID. The plan addressed major areas of operations and described the level of reaction based on the severity of the COVID impact. UDOT operated for much of 2020 under what it calls “unstable conditions,” which call for limited public interaction and employee social distancing. 6.2.2 Managing Risks to Employee Health and Safety Agencies cited many examples of how they quickly assessed the risks posed by COVID-19 and adopted mitigation strategies to protect their workforce as well as the public that interacts with them. A strong emphasis in many of the efforts was continuous communication, which is integral to the ISO/AASHTO ERM framework. • UDOT Executive Director Carlos Braceras made it clear that employee safety, as well as con- tractor and consultant safety, would be an agency priority. As early as March 2020, UDOT developed plans focused on safety first. Employees bought into and accepted the intent. The information technology staff had already prepared the agency for remote working; it was then just a matter of ensuring cybersecurity for the employees who were working from home. • Caltrans shifted all staff who could work remotely to remote working. It made an unprece- dented distribution of laptops and even shifted to a paperless payment system so that employees would not have to report to an office to get paid. • WSDOT, in addition to supporting remote working, developed an extensive communication plan to keep employees informed and advise them on how to work safely when they could not work remotely. Figure 6.1 shows a screenshot from WSDOT’s Frontline Heroes informa- tion campaign. The campaign encouraged taking the right steps to protect workers from the pandemic, such as wearing masks and using personal protective equipment, as well as taking action to protect employees’ mental health. • TDOT quickly identified communication tools as a risk-reduction strategy. One of the early risks TDOT faced when the pandemic began was misinformation. Misinformation about fatalities was common, and the pandemic developed political overtones. Also, while the office staff were sent home to work, the field staff felt that the office staff were paid to not work while the field staff had to continue working. Figure 6.2 is a screenshot of a TDOT-produced video that capitalized on the theme of “working together, staying apart” to capture the intent of the COVID-19 response. • Communication strategies were among the most effective risk-mitigation strategies that TDOT developed. TDOT produced many videos and conducted web meetings with the regional staff to convey accurate information and explain how TDOT was responding to the pandemic. TDOT had to address employees’ fear, which led to the agency communicating basic information about the virus. • Masks were a big issue that the agency had to deal with. Ironically, after 9/11, TDOT had thousands of masks, but it had given them away to health-care workers before the masks expired. TDOT had difficulty finding masks and even promoted a video on how to make a homemade mask. • TDOT thought it was important to communicate basic information about how employees could keep themselves safe and when they should wear a mask and when they do not need to. Figure 6.3 is a screenshot from one video. The safety officer uses a simple spray bottle to illustrate how the virus attaches to droplets that spread when people talk, cough, or sneeze. The video explains that the value of the mask is to prevent people from spreading the virus, particularly if they do not know that they are infected. • TDOT provided information on how it planned to clean offices, vehicles, and equipment. Leadership wanted to ensure that staff were not infecting equipment that had to be used by

104 Implementation of the AASHTO Guide for Enterprise Risk Management S ource: W S DOT. Figure 6.1. Examples of WSDOT steps to protect workers from COVID-19. S ource: TDOT (https: / / youtu.b e/ 8 S aC 3 Mb wfj M). Figure 6.2. Screenshot of TDOT video communicating to staff some of the safe work practices.

Tactics for Successful Risk Management 105   other employees. TDOT also organized an oce decluttering eort so that workspaces could be sanitized more eectively. Reducing clutter allowed TDOT to keep the workplaces cleaner by allowing the private cleaning crews to sanitize oces more eectively. TDOT also focused on keeping vehicles clean so that they could be sanitized for the next driver who was to use them. • UDOT’s employee safety eort provided another means to incorporate COVID-19 preven- tion strategies into the pandemic responses. e eort is called “CARES,” which stands for “Communicate, Ask, Responsibility, Empower, and Share.” Communication should be open and frequent. Employees should feel empowered to ask about safety measures and get their questions answered. Safety is viewed as everyone’s responsibility. Employees are empowered with the necessary resources to nd and x problems. e sharing of information is seen as an opportunity for improvement. Among the ways the CARES framework incorporated COVID-response measures was through restricting visitor access to workplaces, allowing telework for eligible employees, instituting protocols for sanitizing workplaces, and keeping employees masked and socially distanced. 6.2.3 Managing Risks Related to Working from Home Although remote working was an eective risk-mitigation strategy to reduce the threat of COVID-19 to employees, the practice brought with it another set of threats and opportunities. Cyber Threats • Cyber threats are a signicant risk for every agency but were more signicant for ITD because of its management of the Division of Motor Vehicles and the signicant personal data it must secure. Other priorities were updating, maintaining, and expanding its existing tech- nology systems as well as developing new systems and having the necessary support and infra- structure in place. Also, recovery from system outages and dealing with data breaches were identied and included in the data categories of ITD’s risk register. Source: TDOT (https://youtu.be/EzdYqL5yb_Q). Figure 6.3. Screenshot of TDOT educational video showing how the coronavirus can spread.

106 Implementation of the AASHTO Guide for Enterprise Risk Management • The Caltrans IT staff moved quickly in supporting the work-from-home needs created by the pandemic and providing cybersecurity protection. Caltrans had staff undergo cybersecurity training by October 31, 2020. Employee Stress • TDOT established a COVID-19 team to help employees manage the pandemic’s impacts. Among the efforts was a survey to determine what employees needed to enable them to work remotely. Remote working has saved TDOT money, and the agency is assessing what is the best long-term balance between working from home and working in offices. • MnDOT participated in a Twin Cities Enterprise Risk Management Roundtable group, from which came the idea to survey employees about the stresses they experienced from working during the pandemic, such as the stress of balancing working from home and helping children who are attending remote learning. • Another lesson learned from the roundtable participants was that many employers are moving to a staggered workplace approach. There is a growing recognition that bringing back all employees presents the need to continue isolating people at work. If people must be isolated in the office, it negates the benefits of returning to the office. 6.2.4 Managing Risks to Agency Productivity and Activities Although protecting employee health and safety was important, so was protecting the productivity of the agencies. Functions such as winter operations and highway construction must continue, or they create their own threats to public safety. The agencies involved in the project identified several threats and opportunities that a pandemic presented to their productivity. • TDOT developed a multidisciplinary COVID-19 team to develop strategies to cope with the continued pandemic and to keep the agency operating. The team identified about 55 issues TDOT needed to address to sustain its operations through the pandemic. Each of the strategies resulted in tasks that were performed by agency staff. One example is how to quickly get information to staff when many did not have ready access to email. Because almost all employees have cell phones, TDOT used technology to push information quickly to employees’ cell phones. Another team developed performance measures for when crews worked remotely. • One opportunity cited by several agencies during the pandemic was to accelerate project construction when traffic volumes were reduced. • UDOT found a compounded risk because its construction workload increased during the pandemic as the agency accelerated projects to take advantage of decreased traffic volumes. At the same time, it was losing staff to consultants and because of increased absences related to COVID-19. • To diminish risks to construction staff, TDOT also staggered staff time in the office. It expanded the use of video meetings to keep staff out of the office but still productive. • Pre-COVID, TDOT’s approach to a minor resurfacing job was to mix the specialty paving crew with the county maintenance crew to perform the work. Because of COVID, TDOT had the maintenance crew set up traffic control in advance, and then the paving crew separately performed its tasks. With the staggered approach, the two crews could remain apart and not risk spreading the virus. • UDOT and TDOT said a challenge was keeping up with the materials and testing certifications. An opportunity that TDOT capitalized on was to move to virtual testing and certification. • Another opportunity was to accelerate wireless filing of construction reports, which TDOT capitalized on to keep employees distanced.

Tactics for Successful Risk Management 107   • Another risk presented by COVID-19 was a slowdown in the hiring process at TDOT. at resulted in 100 vacancies above the 400 vacancies that TDOT usually has. As winter snow and ice operations approached, TDOT brought back retirees on 120-day contracts to augment winter operations. • ITD found that recruitment, retention, and having subject-matter expertise in-house were increasing risks. e agency is reliant on consultants, particularly in the IT area. Because ITD may have only one person doing a specialized job, an area of concern is monitoring the skills and vacancies of internal sta and seeing where there are vulnerabilities. Mitigation strategies have included employee development, cross training, and horizontal career paths for employees to progress within their pay scale. As they get new skills, they can move horizontally in their pay scale. • Another opportunity that agencies experienced was cost savings by not having to light, heat, and clean oces. UDOT, TDOT, and WSDOT said those savings are inuencing longer- term considerations about how and when to return employees to oces. 6.3 Longer-Term Risks Attributable to the Pandemic Participants in the project said that the pandemic will accelerate or enhance several long-term risks that state DOTs will face for many years. Some risks present threats, others may present opportunities, and others will increase the uncertainty around decision making. 6.3.1 Revenue Risks It is likely that the pandemic will accelerate what already has been a long-term trend toward decreases in motor fuel tax receipts. Nearly all the project participants said their agencies incurred revenue losses, which were most acute for mass-transit services such as buses, light rail, and ferries. Most DOTs reported marginal declines in fuel tax receipts as highway travel declined. Some reported increases in diesel fuel receipts because of the increased reliance on trucks to make at-home deliveries. However, those increases did not oset the decline in overall fuel tax receipts. Although states such as Tennessee reported about a 5 percent revenue decline for highway receipts, transit services were hit much harder. WSDOT reported that transit ridership on some days on some systems fell more than 80 percent compared to ridership from a year before. ere were similar declines for ferry ridership. Highway travel was down but rebounded somewhat from the early days of the pandemic. Participants estimated that even when the pandemic declines, transit ridership and highway travel will not return to pre-COVID levels. is is in part because COVID accelerated the trend of working from home. Participants noted that their agencies had been studying working from home or slowly expanding it before the pandemic. e success of telework combined with the cost savings employers experienced are likely to combine to decrease commuting, and this will have a commensurate impact on fuel tax receipts and transit ridership. 6.3.2 Remote Work Trends In addition to long-term commuting patterns being aected, agencies will continue to see more remote work activities, which will create opportunities as well as threats. Remote work opportunities can bring more parents into the workforce when jobs do not require everyday attendance at an oce. e need for TDOT to le construction reports remotely and for UDOT to train remote sta accelerated remote work opportunities that had been considered before the pandemic.

108 Implementation of the AASHTO Guide for Enterprise Risk Management However, the long-term eects also consist of increased Internet bandwidth requirements, an increase in the threat of cyber vulnerabilities, and an increase in the need for employees to have access to the computers and peripherals required for remote work to be eective. 6.3.3 Risks to Developing a Diverse Workforce Project participants said that 2020 illustrated the risks surrounding their goals of hiring a diverse workforce and then training and retaining them. e social justice issues highlighted for some agencies the continuing lack of diversity in their workforces. Agencies said the social justice demands caused them to renew their commitment to recruit and train a workforce that resembles the communities they serve. At the same time, agencies have been downsizing for decades and have fewer employment opportunities to oer new workers. Additionally, recruiting and training are among the rst functions cut when budgets are reduced and among the last functions to be restored. e lack of tools to recruit a diverse workforce was identied as a risk that will continue to challenge agen- cies’ eorts to develop more diverse workforces. 6.3.4 Risks to Retaining a Well-Trained Workforce e participants in the various project meeting forums expected to face continued long-term risks to training and then retaining a well-qualied workforce. Several risks exist that will probably increase, including those discussed in the following: • Salaries continue to lag those of many comparable private-sector positions, although agencies such as UDOT emphasize that long-term career-advancement opportunities can oset lower initial salaries. • Increasingly sophisticated technologies require a more technologically literate workforce, which can be harder to recruit when salaries are not competitive. • DOTs sometimes serve as training grounds for engineering consultants and contractors who value the DOT experience. 6.3.5 Risks from Climate-Related Natural Disasters None of the project participants predicted a decline in climate-related natural disasters. To the contrary, those risks have accelerated and grown more severe, as evident from 2020’s unprecedented western wildres. Agencies will likely need to be more resilient and nimble in responding to increases in temperature, rainfall, storm surges, hurricanes, and droughts. 6.4 COP Recommendations on Key Areas of Focus for Risk Management 6.4.1 Potential Follow-On Activities At several points in this project, members of the COP suggested additional steps that could be pursued to advance state DOTs’ practice of risk management. is section summarizes those suggestions. • It could be helpful to state DOTs to show how tools such as risk management and strategic planning help CEOs shape what the organization of the future should look like. It would be helpful if risk managers could demonstrate how ERM helps agencies meet their goals and objectives.

Tactics for Successful Risk Management 109   • State DOT executives would benefit from seeing research or examples of how risk manage- ment fits into an agency’s structure or to show how risk management supports the day-to- day decision making within agencies. • It would also be a benefit to illustrate how risk-based decisions can be made and then how they flow through the agency to interact with other decision-making processes, as well as to show how the risk analyses in various functions tie together. How do agencies create an umbrella where risks to assets, employees, and projects are linked in a cohesive and coherent way? • Because risk analysis may present several alternatives, all with some uncertainty surrounding them, it often is not possible to present one risk-free option. Tools or training on how to pre- sent options probabilistically would be useful. If alternatives can be presented probabilistically, decisions could be better informed. • Tools, training, or processes are needed to quickly make new CEOs conversant in risk man- agement. Someone described training of CEOs as “transient management” because they so frequently change in some agencies. Many come to DOTs without transportation experience or risk management experience. A toolkit or training to bring them up to speed quickly would be helpful. • Training or examples are needed for demonstrating how risk management supports asset management. Although asset management plans required risk analyses, the plans’ invest- ment strategies did not often indicate how investments were mitigating risks. Further work is needed to strengthen the linkage between risk and asset management. UDOT’s corridor risk process and the Washington State budget analysis are examples of how risk management and asset management can complement one another. • One way to advance the state of risk management practice is to document the B/C analysis of resilience investments. Demonstrating which investments produce more resilience benefits than costs would be a useful contribution to the practice of risk management. • Improved visualization tools to illustrate uncertainty would be helpful to explain risk and risk-based decisions. A cone of uncertainty is often used around forecast lines, but additional visual ways to demonstrate risk would be informative. Planning forecasts are often deterministic, whereas probabilistic forecasts could be more informative or realistic. Tools to illustrate the impacts of different scenarios would be an important contribution to risk management. • Also useful could be documents or brief guides showing how to manage risks to core pro- grams, such as pavements, bridges, safety, information technology, and workforce develop- ment. Those guides could make risk management relatable to the core programs DOTs manage every day. • WSDOT’s Gray Notebook (a quarterly performance and accountability report: https://wsdot. wa.gov/about/accountability/gray-notebook) is widely known because it has a name, formality, and history within performance management circles. Some parallel examples of that for risk management could raise the profile of risk management. • NCHRP Project 20-44(02) is the first national risk management implementation project that has focused on formal risk management implementation at the enterprise level. Other states have shown interest in being part of such implementations. Making resources available for more implementation support could be considered. • Other areas of emphasis to support implementation efforts could be considered, including: – Identifying education opportunities, and – Identifying the need to develop more state DOT curricula focused on ERM. • Additional opportunities such as peer exchanges could be provided. Participants said the peer exchange and COP meeting were valuable, particularly for state DOT risk managers, who often operate in isolation from their state counterparts. Providing more opportu- nities for them to meet periodically and exchange ideas about good practice could be considered.

110 Implementation of the AASHTO Guide for Enterprise Risk Management • Risk is a cross-cutting issue. Joint meetings that bring together researchers and practitioners from a range of subdisciplines, such as performance management, administration, opera- tions, and resilience, to focus on risk could be useful in better integrating risk management across state DOTs. • Explaining risk management at the AASHTO meetings of new CEOs could be a means to expose leaders to risk management. • State DOT CEOs could be provided with information, resources, and convening events on risk management that are designed for their needs and interests (e.g., briefing documents, fact sheets with examples, and peer exchanges). 6.4.2 Moving Beyond a Few Early Adopters COP members discussed strategies for how to expand the use of ERM beyond the stage where a few early adopters are practicing risk management to a situation where most state DOTs are doing so and making it a routine practice. These strategies include those discussed in the following: • Building from project risk management could be a means to communicate the value and applicability of risk management to other areas. • Having a risk management expert task group like the asset management expert group spon- sored by FHWA could be effective. • An AASHTO or other award for a state with effective risk management could help promote ERM. • It would be helpful to see what a risk-mature company looks like culturally. For example, presenting what a Level 5 company looks like and sharing examples from the corporate world would be helpful. • Safety remains a major opportunity for enhanced risk management. Although much focus remains on human behavior, risks can be caused by many other contributing factors that are not fully appreciated. Documentation related to managing risk related to safety could engage other state DOTs and be a vehicle to increase understanding and adoption of ERM. • Having state DOT risk practitioners who other agencies could call on as resources would be helpful.

Next: References »
Implementation of the AASHTO Guide for Enterprise Risk Management Get This Book
×
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

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.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!