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1-2-1 CHAPTER 2 Risk Management Process tion or reconstruction. This type of threshold provides a basis Building on research conducted for NCHRP 20-74, Devel- for identifying, evaluating, prioritizing, and managing risks oping an Asset Management Framework for the Interstate in subsequent steps of the risk management framework. To Highway System; NCHRP 20-24(74), Executive Strategies support the bridge programming risk assessment at Mn/DOT, for Risk Management by State Departments of Transportation; the agency sets performance targets for the percent of the NCHRP 20-59(17), Guide to Risk Management of Multi- system of bridges in good, satisfactory, fair, and poor condition. modal Transportation Infrastructure; and other recent work, These goals are based on the assumptions that bridges have Figure 1.2.1 illustrates a risk management process for trans- a 75-year life, all bridges have a similar deterioration curve, portation agencies. The process is applicable to a broad range of and Mn/DOT has funding available to replace approximately applications (across modes, assets, and other areas) as a means 2 percent of the system bridges each year. Funding targets are to inform resource allocation decisions. recommended for each Area Transportation Partnership The following sections are designed to guide practitioners (ATP)2 based on output of system needs for bridge rehabilita- step by step through the risk management process. They provide a definition of each step, a discussion of its general tion and replacement in order to meet the established bridge application, and examples, issues, and lessons learned from a condition targets. series of case studies. Similarly, GDOT has established the following service- level statements related to the condition of the state’s bridges: 2.1 Establish Risk Tolerances • Maintain interstate, U.S. route, state route, and off-system state-owned bridges such that they can carry all legal loads; Since risk management is largely consequence driven, • Maintain interstate bridges such that they, at a minimum, the first step in the process involves establishing an agency’s have decks that are in good condition; tolerance level (or consequence threshold) for a given risk. An • Maintain U.S. route bridges such that they, at a minimum, agency’s tolerance level is determined by establishing the level have decks that are in satisfactory condition; and of liability, or consequences, that it can absorb before additional • Maintain state route and off-system, state-owned bridges resources would be required. It is also in this step that an such that they, at a minimum, have decks that are in fair agency begins to assess the tradeoffs between its risk program condition. and its other capital, maintenance, and operations programs. Establishing risk tolerances is generally a policy decision, For pavements, GDOT developed an inspection protocol but should be transparent. As described in NCHRP Report 525: called the Computerized Pavement Condition Evaluation Surface Transportation Security, “Volume 15, Costing Asset System (COPACES) where pavements are assigned a condition Protection: An All Hazards Guide for Transportation Agencies rating (referred to as the PACES rating) based on a combi- (CAPTA),” this step is best suited to the strategic, high-level nation of distress type and severity. These ratings are used planning undertaken at the executive level. Using budgetary to define when a segment of pavement is a candidate for discretion, risk tolerances should also reflect the agency’s priorities and asset characteristics. For example, the risk tolerances in the Mn/DOT and 2 There are eight ATPs in Minnesota (one for each Mn/DOT district area). GDOT case studies are defined by an asset condition threshold Every year, the ATPs develop an Annual Transportation Improvement (for pavements and/or bridges) that triggers major rehabilita- Program (ATIP) that covers a minimum 4-year period.

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1-2-2 Last, risk tolerance was implicit in the goals developed Establish Risk Tolerances for the Caltrans Bridge Seismic Safety Retrofit Program, as follows: Identify Threats/Hazards • No collapse—The prevention of direct injury or death to individuals who are on or near a structure; and • No major damage—The prevention of indirect injury due Feedback Loop Assess Impacts or Consequences to the closure of a structure critical to a transportation system that supports emergency response to a large-scale civil disaster. Identify Potential Mitigation Strategies/Countermeasures Within the context of these goals, Caltrans developed a risk Prioritize Strategies and Develop algorithm to categorize and prioritize the state’s bridges. Mitigation/Management Plan 2.2 Identify Threats/Hazards Measure and Monitor Effectiveness The second step in the risk management framework involves Source: Adapted from NCHRP Report 632: An Asset Management identifying and categorizing the risks that could cause or Framework for the Interstate Highway System. contribute to unplanned or undesired circumstances. For a Figure 1.2.1. Risk management framework transportation agency, these risks range from small-scale for resource allocation. threats impacting the quality of service provided to the trav- eling public, to large-scale threats that can result in loss of life. The identification of relevant threats and hazards, and rehabilitation or replacement. In general, a roadway is recom- their respective magnitudes, probabilities, and spatial dis- mended for resurfacing when its PACES rating falls below 70. tribution, are typically based on historical data, experience, Interstates, however, have higher condition targets. The con- and judgment. dition target for interstates with greater than 50,000 average The risks faced by transportation agencies come from a daily traffic (ADT) is 80, while the target for the remaining variety of sources, and it is possible to categorize them in a interstates is 75. The developers of the PACES rating established number of different ways. As an example, Table 1.2.1 cate- these thresholds based on historical data that suggests they gorizes risks into internal and external threats. Internal are optimal triggers for resurfacing. risks are those within an agency’s control, often internalized in The risk tolerance in TxDOT’s Statewide Freight Mobility the day-to-day business practices of a transportation agency. Plan was defined as a moderate-to-major duration event External risks are those over which an agency has little or causing a change in freight travel patterns. This definition was no control. External risks can be the result of either the nat- developed in consultation with freight carriers, shippers, and ural environment or human actions. The five case studies other stakeholders in the state. Stakeholders indicated that described throughout this document focus on external risks. during short-term or minor disruptions lasting a few hours For more information on addressing internal risks, refer to to a few days, drivers would likely just “wait it out,” while NCHRP 20-24(74). a disruption lasting several weeks or more would change Mn/DOT’s risk management process provides an example how they operate. The Texas SFR Plan also characterizes risk of the types of specific risks that can be considered. The agency tolerance in the context of a spectrum of events: recurring, has identified the following threats and hazards: episodic, or catastrophic. Freight shippers and carriers are aware of, and prepare for, recurring events, such as routine • Risk of service loss, such as bridge posting or closing, due to traffic congestion or icy road conditions. At the other end of advanced deterioration of portions of structures, the spectrum, catastrophic events result in extraordinary loss • Risk of structure damage or destruction due to stream of life and property with national-level impacts that exceed erosion or storms, capabilities of normal resources. Episodic events, the focus of • Risk of damage or collapse of structures that are vulnerable the Texas SFR Plan, involve unpredictable occurrences that are to sudden fatigue cracking or other localized failure, manageable with available resources. The goal of the Texas • Risk of sudden damage to a bridge caused by passage of a SFR Plan is to prepare the freight transportation system that heavy vehicle that exceeds the safe load capacity of the keeps freight moving and minimizes potential economic loss during an episodic event of moderate-to-major magnitude. structure,

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1-2-3 Table 1.2.1. Transportation agency risk environment from broad (Level 1) to specific (Level 3). Level 1 Level 2 Level 3 Organizational management Agency goals and priorities Available revenues Project and service delivery Design development Internal Risks Schedule adjustments Cost of materials Program budgets Political Leadership change Laws and regulations Environmental Weather events Structural Advanced deterioration External Risks Fatigue cracking Social Terrorist attack Asset usage (e.g., traffic volumes, fleet composition, and driver error) Source: Adapted from NCHRP Report 632: An Asset-Management Framework for the Interstate Highway System and ICF International, Executive Strategies for Risk Management by State Departments of Transportation, May 2011. • Risk of sudden damage to a structure caused by attempted condition degrades, the probability of a service interruption passage underneath a bridge, of a vehicle whose height increases; therefore, the factors are scaled based on condition. exceeds the available vertical clearance, and For the Texas SFR Plan, TxDOT developed a hazard iden- • Risk of service interruption caused by a driver’s loss of tification and assessment methodology to identify state-level hazards to which the freight transportation system is most control of a vehicle, and the resultant crash. vulnerable. The purpose of the hazard assessment was to locate areas of vulnerability in each freight corridor to effectively These threats and hazards were developed and refined by an understand how to eliminate or reduce risk associated with a expert panel. Since they are condition based, Mn/DOT esti- hazard. As shown in Table 1.2.2, the Texas SFR Plan evalu- mates probability based on known occurrence of maintenance, ated potential external threats resulting from 10 different inspection, repair, or replacement service interruptions. As Table 1.2.2. Texas freight system hazard impact summary. Frequency of Potential Hazard Rating for Hazard Type Warning Time Occurrence Severity Freight in Texas Earthquake Unlikely None Substantial 2 Flood Highly Likely Minimal Substantial 3 Hurricane Likely Well in advance Major 3 Landslide Occasional Minimal Minor 2 Manmade Occasional Minimal Major 3 Tornado Likely Advance Major 1 Volcano Unlikely Well in advance Minor 0* Wildfire Occasional Advance Minor 1 Wind Likely Advance Limited 1 Winter Storm Occasional Advance Limited 1 Notes: Hazard rating is based on a 1–3 scale, with 1 being the lowest and 3 being the highest. *Since there are no volcanos in Texas, this is zero. Source: TranSystems.

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1-2-4 Source: California Geological Survey, April 2003. Note: The overall combined risk represents the overall vulnerability of the Figure 1.2.3. Probabilistic seismic hazards assessment freight transportation system to each of the hazards identified in Texas. in California. Source: TranSystems derived from Texas Hazard Mitigation Package and USGS. Figure 1.2.2. Overall combined risk of hazard locations in Texas. and short multiple-span bridges in low seismic risk areas (Figure 1.2.3) were eliminated from the program. natural and manmade threats. For each of these threats, 2.3 Assess Impacts or Consequences TxDOT developed hazard ratings by assessing the frequency of occurrence, warning time, and potential severity. To assess Risk assessment is a function of the likelihood of an event the potential threat of each hazard type, TxDOT used data (probability of occurrence, as estimated in the previous step) from the Texas Division of Emergency Management3 and the and the associated consequences (whether positive or negative) Texas Hazard Mitigation Package4 to map the locations of of the event’s occurrence. Consequences are determined by historic occurrences and potential vulnerability by county estimating the level, duration, and nature of an incident’s (Figure 1.2.2). Using this information, the Texas SFR Plan impact. In the risk matrix shown in Figure 1.2.4, the vertical axis evaluated the hazards from the perspective of potential impact represents the probability (from low to high) of a particular to the freight transportation system to assign a rating for each threat/hazard materializing, and the horizontal axis represents hazard type (summarized in Table 1.2.2). the consequence (from low to high) of the materialized threat/ The seismic retrofit program in California used a risk hazard. From a risk management standpoint, it is undesirable algorithm that included a weighted combination of bridge to be in a high-hazard, high-exposure situation as represented hazards, vulnerabilities, and impacts. Caltrans defined hazards by the upper right corner in Figure 1.2.4. The consequence to be the major factors that affect seismic performance: soil threshold, defined in the first step of the framework, allows conditions, peak rock acceleration, and duration. Vulnerabil- agencies to identify the most critical risks that require a higher ities pertained to physical attributes of each bridge, such as year degree of attention. constructed, abutment type, skew, and other design elements. Some agencies, such as GDOT and Mn/DOT, use asset Caltrans started the bridge prioritization process by looking condition as a surrogate for the probability of an event. For at the physical details of about 25,000 bridges. Bridges that were example, GDOT’s program for pavements focuses on pave- already current, simple spans that were not at risk, culverts, ment condition ratings. As a pavement’s condition worsens, the likelihood of its failure increases. GDOT has developed a pavement risk matrix for use in evaluating the consequences of 3 Texas Division of Emergency Management, State of Texas Hazard failure. This matrix considers functional class, annual average Mitigation Plan 2010–2013, ftp://ftp.txdps.state.tx.us/dem/mitigation/ daily traffic (AADT), truck percent, and county population txHazMitPlan.pdf served. Generally speaking, as the function of a road increases 4 Texas Hazard Mitigation Package, http://www.thmp.info/

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1-2-5 (e.g., interstates that carry high volumes of traffic and serve heavily populated areas) the risk of it going out of service increases. GDOT has rated each combination of these four variables on a scale of 0.00 to 1.00. Table 1.2.3 illustrates these risk factors. Each segment of roadway is assigned a base risk unit of 1.00. This value is then adjusted using the factors illustrated in the table. The existing pavement condition rating for each pavement segment is then divided by the resulting risk factor. These modified condition ratings (referred to as adjusted PACES ratings) are the basis for prioritizing roadways (as described in a later step). Following a similar approach for bridges, GDOT uses a com- bination of functional class, traffic volume, and detour length (the length of the alternative route) to assess the consequence of a bridge going out of service. In the example of Mn/DOT’s bridge programming risk assessment, the likelihood of risks occurring, and impacts and consequences of those risks, are combined into a single indicator of bridge resilience. To estimate the resilience of each Source: Adapted from NCHRP Report 632: An Asset-Management Framework for the Interstate Highway System. bridge, Mn/DOT develops a scaling table for each hazard based on the likelihood of the hazard occurring and the consequence Figure 1.2.4. Sample risk prioritization matrix. Table 1.2.3. GDOT pavement risk matrix. AADT Truck % County Population 50-100K 50-99K 35-50K 25-35K 15-25K > 100K > 600K Total < 50 K > 12% < 12% 7-15K 600K 300K 200K < 7K 300- 200- 100- Base Risk Adjusted Unit Factor PACES Functional Class Interstates Urban 1.00 0.60 0.50 0.40 0.30 0.20 0.10 0.00 0.50 0.30 0.50 0.40 0.40 0.30 0.20 0.10 Rural 1.00 0.40 0.30 0.20 0.10 0.00 0.00 0.00 0.50 0.30 0.30 0.20 0.15 0.10 0.00 0.00 Freeways Urban freeways and expressways 1.00 0.30 0.20 0.10 0.00 0.00 0.00 0.00 0.30 0.10 0.40 0.35 0.30 0.20 0.10 0.05 Arterials Urban principal arterials 1.00 0.30 0.20 0.10 0.00 0.00 0.00 0.00 0.30 0.20 0.40 0.35 0.30 0.20 0.20 0.10 Urban minor arterials 1.00 0.20 0.10 0.00 0.00 0.00 0.00 0.00 0.30 0.10 0.30 02.0 0.20 0.10 0.10 0.00 Rural principal arterials 1.00 0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.30 0.10 0.20 0.10 0.10 0.00 0.00 0.00 Rural minor arterials 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.30 0.10 0.10 0.00 0.00 0.00 0.00 0.00 Collectors Urban collector 1.00 0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.20 0.10 0.30 0.25 0.20 0.10 0.10 0.00 Rural major collector 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.20 0.10 0.20 0.15 0.10 0.00 0.00 0.00 Rural minor collector 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.20 0.10 0.10 0.05 0.00 0.00 0.00 0.00 Local Urban local road 1.00 Rural local road 1.00 Source: Georgia DOT

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1-2-7 natural disasters have underscored the importance of develop- of their relative risk to prioritize freight resiliency planning in ing potential risk mitigation strategies to address both internal the various corridors (additional discussion on corridor pri- and external threats. Examples from the risk management oritization is discussed in a later step). case studies are summarized below. For the bridge seismic retrofit program, Caltrans used the Since GDOT’s risk management approach focuses on following series of criteria to estimate the potential impact of system preservation, its strategies focus mainly on mitigation bridge failure: (e.g., conducting regular inspections and performing main- • tenance and rehabilitation work in a timely manner) and ADT on structure; • acceptance (e.g., focusing resources on assets with a higher ADT under/over structure; • consequence of risk and accepting risks in other locations). Leased airspace (residential, office); • Mn/DOT has identified a set of mitigation strategies for Leased airspace (parking, storage, etc.); • each of the bridge threats and hazards that are either in use or Facility crossed • could be deployed. Examples of mitigation strategies include Facility carried; • increased inspection frequency, load posting, scour monitoring Detour length; and • during high-water events, preventative maintenance strategies, Essential utilities. and reactionary maintenance strategies. Some of the scaling factors (developed in the previous step) are reduced due to the Caltrans assigned each criterion a weight to calculate a total mitigation strategies; other strategies are output recommen- “impact factor” used in the bridge prioritization algorithm dations from risk-based bridge programming suggestions (discussed in more detail in a later step). (e.g., bridge rehabilitation projects). For their bridge retrofit program, the mitigation strategies 2.4 Identify Potential Mitigation that Caltrans selected were site specific and structure depend- Strategies/Countermeasures ent, as determined by factors such as nearest active earthquake fault, type of geology beneath the bridge, and the original bridge Once the impacts of the risks are understood, transporta- design. Some retrofitting strategies involved placing steel tion agencies can begin to develop strategies to mitigate the shells around columns, strengthening footings and piles, impact of these risks. The NCHRP 20-24(74) literature review adding infill walls, extending bearing seat widths, and installing outlines four basic countermeasures to address risk as follows: isolation bearings. Caltrans utilized peer review panels of inde- • Avoid—Make adjustments to eliminate the possibility of pendent seismic and structural experts to review earthquake- strengthening strategies on major, complex retrofit projects. the risk occurring or causing impact; • Transfer—Shift the risk to another party more capable of The corridor-based analysis conducted for the Texas SFR Plan found the overall freight transportation system in the mitigating or managing the risk, thereby protecting the state to be robust and redundant. However, the plan identified organization from the financial impact of the risk; • Mitigate—Develop strategies to decrease either the likeli- several strategies that TxDOT can implement in a continued effort to improve freight resilience in Texas5 hood of the risk occurring, the impact of the risk, or both; and • Strategy 1: Support planning for a resilient, well- • Accept—Implement none of the three strategies above, maintained freight transportation network by incorporat- accepting the likelihood and consequences of the risk ing freight resiliency into traditional transportation planning as is. and programming and including other modes in planning efforts to increase awareness of systemwide needs; Given the distinction between the level of agency control • Strategy 2: Prioritize infrastructure enhancements to involved in mitigating internal and external risks, it is not improve the freight resilience of Texas highways by surprising that agencies have placed more focus on developing utilizing corridor assessments to identify operational bottle- internal risk management strategies. As an example, WSDOT necks and physical constraints, and investigating ways to incorporated risk management concepts into its Cost Estimate fund improvements needed for other modes; and Validation Process (CEVP) and Cost Risk Assessment • Strategy 3: Improve access to data, information, and (CRA) to reduce the risk associated with project schedule and people needed for effective resiliency planning by under- cost estimates for large and complex projects. Caltrans and the standing baseline data and continuing to build information FTA pioneered the use of formal risk assessment practice to minimize specific risk to project delivery due to cost overruns. Although the history of approaches for addressing external 5 TranSystems and RJ Rivera Associates, Statewide Freight Resiliency Plan, risks is considerably shorter, several recent manmade and prepared for the Texas Department of Transportation, February 2011.

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1-2-10 event, TxDOT recognizes the importance of evaluating re- For example, at Mn/DOT, continuous monitoring of silience regularly and incorporating feedback into SFR Plan effectiveness is accomplished through annual review of the updates. established bridge condition performance measures. Similarly, While many of the DOT case studies highlighted in this GDOT conducts regular inspections and periodically reviews primer are newly developing or refining their risk management its prioritization formulas to make changes and refinements programs to support resource allocation, Caltrans is nearing as necessary. completion of its retrofit program. As described in earlier steps The Texas SFR Plan recognizes that measuring and of the framework, Caltrans refined their bridge prioritization monitoring the system’s resiliency is an ongoing, internal algorithm over time such that it evolved into a highly complex function for TxDOT and that continuous feedback and system—a clear example of the iterative nature of the risk documenting lessons learned after real events will improve management process. the plan and ensure its relevance. In the absence of an