Formal risk management is the systematic effort to control uncertainty and variability to an organization’s objectives by addressing both threats and opportunities. When this process is proactively integrated into organizational decision-making, with risks clearly documented and considered, it leads to better management of resources and the creation of a culture of preparedness.
The advantages of formal risk management have led to widespread adoption of the practice in private sector organizations. Many federal agencies also have functional risk-management programs. Some state departments of transportation (DOTs) have effective formal risk-management programs in one or more areas of their business; a few have implemented risk management agencywide. Other state DOTs have piloted risk management but have yet to fully implement and sustain it. Many other agencies have not yet attempted formal risk management.
State DOTs face new and increasing uncertainties and disruptions that highlight the need for integrating formal risk management into transportation decision-making. For example, the disruption to transportation system operations due to the COVID-19 pandemic and the resulting decreases in revenues for transportation point to a need for risk management to identify response strategies and manage risks to overall strategic objectives. Emerging technologies, economic uncertainty, a changing workforce, and the ongoing requirement to develop and maintain risk-based Transportation Asset Management Plans (TAMPs) also drive the relevance and requirement of adoption of formal risk management by state DOTs. In response, a number of risk-management tools and resources for state DOTs have been developed. However, these are not in common use and formal risk management has not been widely adopted. Additional resources are needed to support those working to overcome barriers and initiate, build momentum for, and/or sustain formal risk-management practices.
The objective of this research is to develop content on how to implement and sustain the use of formal risk management at state DOTs. The content will be suitable for the AASHTO Transportation Management Hub (found at https://www.transportationmanagement.us) and will include but not be limited to the following topics:
- Value proposition: how to establish and communicate the value of risk management for decision-making across state DOTs;
- Organizational change: how to initiate organizational changes at all levels that enable and strengthen the use of formal risk management;
- Promotion: guidelines and examples on how leadership, mid-management, and others can champion risk management within the organization;
- Mindset and culture: how to develop and sustain a risk-management mindset and agency culture that integrates risk management across programs and into key decision-making processes; and
- Other topics relevant for implementation as identified though the research.
The content will be based on an in-depth review and evaluation of experience at state DOTs and other public and private sector organizations, with a particular focus on organizational traits and change management strategies needed to overcome barriers to implementing and sustaining formal risk management.