The National Academies

NCHRP 20-24(074) [Completed]

Executive Strategies for Risk Management by State Departments of Transportation
[ NCHRP 20-24 (Administration of Highway and Transportation Agencies) ]

  Project Data
Funds: $50,000
Research Agency: ICF Incorporated, LLC
Principal Investigator: Keith Molenaar and Matthew Hallowell, U. of Colorado
Effective Date: 6/16/2010
Completion Date: 5/15/2011

The idea of risk typically entails the combination of uncertain events that may occur and the likely consequences, often undesirable, to be expected when they do occur. A shortage of construction steel, a series of particularly severe snow falls, or a traffic crash involving a fuel tank truck and a large overpass are examples of events many departments of transportation (DOTs) may experience; their consequences can include not simply the costs of dealing with the immediate problem, but also far-reaching and long-lasting disruptions of DOT programs and operations. The International Organization for Standardization has recently defined risk in very general terms as the “effect of uncertainty on objectives” and has undertaken to bring some order and common terminology to the often diverse efforts of private- and public-sector organizations that seek to manage risk on an enterprise-wide basis.
Effective strategic risk management involves identifying the various risks to an organization’s achievement of its objectives and then devising ways to mitigate, avoid, transfer, or accept and be prepared for these risks. An organization’s senior management will typically seek to manage risk throughout the enterprise, to deal effectively with the most serious threats and take advantage of the greatest opportunities. Anecdotal evidence shows that some DOT executives have begun to apply risk management in their agencies and that some private-sector practitioners are using strategies that might be adapted to serve the needs of DOTs. However, no comprehensive compendium of DOT practices has been assembled.
Leadership of the American Association of State Highway and Transportation Officials (AASHTO) feel that broader understanding of risk management strategies and greater adoption of enterprise-wide risk management would benefit DOTs and the public they serve. Research is needed to describe the current state of DOT practice and opportunities for enhancing organizational performance by applying risk management strategies.
The objectives of this project were to describe how DOT leadership use risk management currently in the conduct of their business and to identify executive strategies that may be useful to DOT leadership for enterprise-wide risk management.  The research team reviewed the literature on risk-management approaches applicable to state DOTs to describe the types of risks such agencies face and consider how such risks are managed by large organizations in the private and public sectors.  A survey of state DOTs was undertaken to (a) identify management’s perceptions of risk and risk-management approaches used in these agencies and (b) describe how these approaches influence the agency’s strategic management. The results of the research are presented in a final report and an executive summary of the report, each available by clicking on the item.  

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