The National Academies

NCHRP 08-36/Task 121 [Final]

Successful Implementation of Enterprise Risk Management in State Transportation Agencies
[ NCHRP 08-36 (Research for the AASHTO Standing Committee on Planning) ]

  Project Data
Funds: $100,000
Research Agency: Parsons Brinckerhoff
Principal Investigator: David Rose
Effective Date: 10/8/2013
Completion Date: 4/27/2015

STATUS:  The contractor's final report is available HERE.

Research Objective
The objective of this research is to identify, analyze, and describe the qualities of successful implementation of ERM in DOTs through detailed case studies and a summary report that captures lessons learned, factors that influenced successful implementation of ERM, presents best practices, and develops a simple maturity model.This research builds directly upon NCHRP 20-24(74) Executive Strategies for Risk Management by State Departments of Transportationand identify the specific strategies that have been successfully employed by the transportation agencies with the most mature ERM programs to manage high priority risks.

To be successful, state transportation executives, administrators, and managers must coordinate a multitude of human, organizational, technical, and natural resources and manage a high number of diverse and complex risks.  The varied mix of agency operational responsibilities—for multi-modal facilities and programs, varied operations (maintenance, traffic management, snow and ice control), asset management, and project delivery—make enterprise (agency-level) risk management (ERM) critical to the efficient use of public resources (CAS 2003). As state departments of transportation (DOTs) move into an era of performance-based management, having an established process that accurately prioritizes risk exposure across the agency is critical. 
ERM can be defined as the consistent application of techniques to manage the uncertainties surrounding the achievement of an organization’s objectives (Berry and Phillips 1998). Organizations with mature ERM programs have noted that the use of ERM helps to avoid risks from being managed multiple times by different functions within the agency and reduces the volatility of an organization’s entire risk portfolio (Muelbroek 2002; Hoyt et al. 2008). Pockets of excellence in ERM exist throughout state transportation agencies but its use is not yet consistent or pervasive.
NCHRP 20-24(74) Executive Strategies for Risk Management by State Departments of Transportation2012 FHWA-AASHTO International Scan Report on ERM identified international ERM best practices that demonstrate value by using risk analysis tools with asset management practices and performance management.showed that only 13 of the 43 state DOTs surveyed have formalized ERM programs. The NCHRP study focused on benchmarking implementation, identifying key characteristics of mature organizations, and evaluating the role that ERM plays in the achievement of transportation agency objectives. It found that formal ERM tools exist and are adding value to those agencies that are using them.  


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