Strategies to Renew Federal Facilities (2023) / Chapter Skim
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Appendix G: Value, Benefits, and Risks
Appendix G: Value, Benefits, and Risks
Pages 213-222
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From page 213... ...
From enterprise risk management perspectives, a strategic view of risk management seeks to add value and focuses executive management on execution risks by (1) recognizing there is a relationship between taking risks and receiving benefits, (2)
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From page 214... ...
information on risks versus benefits, including associated biases, subjectivity, and perceptions. The method generates inferred approximate lines (i.e., approximate thresholds)
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A federal agency with a facilities portfolio and a mission to sustain a set of ecosystems will be used as an example to discuss these distinctions, where an ecosystem is a biological community of interacting organisms and their physical environment. The federal facility addressing these ecosystems draws on, as an example, the instrumental value of these systems that is derived from their role as a means toward an end other than itself -- that is, its value is derived from its usefulness in contributing toward a mission.
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In some decisions, including environmental policy and law, the federal government does include biocentric intrinsic values, such as in the Endangered Species Act of 1973. VALUE AND BENEFITS OF RENEWAL Value generation requires a multidimensional representation as a matrix of stakeholders and their influence, wants, and needs, quantified through multiattribute decision-making processes; or stakeholder value can be reduced to a single number.
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From page 217... ...
requiring the tracking of factors that influence value generation. • During the investment or acquisition stage, assets are costs to the organi zation, but have value generated once in operation, with tension arising among asset acquisition, upkeep, repurposing, etc.
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CONSISTENCY IN RISK ANALYSIS AND MANAGEMENT A strategy to renew federal facilities should be rooted in meeting missions of agencies, economic values, benefits, potential losses, cost effectiveness, and cost efficiency.
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It also guides federal managers to improve accountability and effectiveness of federal programs and mission-support operations by implementing enterprise risk management practices and establishing, maintaining, and assessing internal control effectiveness. The Circular emphasizes the need to integrate and coordinate risk management and effective internal control into existing business activities as an integral part of managing an agency.
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, as discussed further in Chapter 3. A decision framework customized for a federal agency • Builds on accepted definitions for uncertainty, risk, decision, and eco nomic analysis; • Considers the initial and desired future capabilities and capacities in terms of quantifiable performances; • Treats capabilities, capacities, and performances as time variant with appropriate and justifiable projections and degradations within a planning horizon; • Considers potential hazards and disturbances as sources of harm with occurrence rates and intensity treated probabilistically; • Permits the characterization of performance in multidimensions with the associated things at risk, such as people, physical infrastructure, economy, key government services, social networks and systems, and environment; • Accounts for systems changes over time, in some cases being improved, in other cases growing more fragile or aging; • Accounts for full or partial recovery and times to recovery for enhancing functional and operational resilience; • Accounts for potential enhancements to system performance after recov ery from an adverse event or in response to other needs; • Provides for the use of real options and associated economics in order to meet projected needs with deep uncertainty, such as hazards associated with a changing climate; • Relates outcomes to other familiar notions such as reliability and risk; • Incorporates uncertainty analysis probabilistically; and • Requires input with meaningful units, is unit-consistent, and produces results with meaningful units.
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From page 221... ...
In practice, formulaic risk methodologies are generally not robust enough for federal facility asset management systems covering whole portfolios. Therefore, it is best to approach implementation of risk management techniques through frameworks, principles, and processes, as represented in Figure G-3, and as detailed in the discussion on facility asset management principles in Appendix F
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From page 222... ...
SOURCE: © ISO. This material is reproduced from ISO 31000:2018 with permission from the American National Standards Institute (ANSI)
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