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16 External `Nonprogrammatic' Risks Planning and Programming System Project Monitoring Internal Development `Programmatic' Risks Operations Project and Delivery Maintenance Figure 3.1. Existing transportation agency risk environment. projects. The CEVP is designed to identify the areas of a with "out-of-the-norm" threats/hazards. At the same time, it project that could be sources of increased costs, assess the must be recognized that the resources required to manage likelihood of key risks materializing, and ultimately results in these risks will no doubt compete with those needed to revital- the specification of project cost range as opposed to a point ize and renew the aging IHS infrastructure to ensure safe and estimate to account for the risks identified. Chapter 4 describes reliable operations for the coming generations. existing management systems and other analytical tools that can be used for managing programmatic risks. 3.2 Risk Management for the By contrast, the history approaches for addressing external Interstate Asset Management nonprogrammatic risk is considerably shorter. Activity in this Framework area was propelled by the terrorist attacks of September 11, 2001, and again more recently by a number of significant nat- This section outlines a proposed approach to augmenting ural disasters. Despite recent focus, development of external transportation agencies' existing risk management activities risk management activities today lags behind that for internal with a process that helps assess risks of system failure for IHS risks. Appendix A summarizes the literature review conducted assets. IHS owners could perform the risk assessment approach as part of this research. The review describes several promis- described here for their IHS assets and any other assets on what ing concepts and approaches that have been incorporated into they define to be on their highest priority network. The result of the proposed methodology. Two particularly important re- this approach is a set of priorities for risk mitigation. A descrip- sources include the AASHTO Guide to Highway Vulnerability tion of the assessment and its results should be included in the Assessment (5) and the report for NCHRP Project 20-59(17) Interstate Asset Management Plan described in Section 2.0. currently in draft format (6). In developing the proposed approach the research team In the context of the aging IHS, where the consequences of has adhered to the following guiding principles: the failure of a system link are potentially enormous, it is im- portant that the Interstate Asset Management Framework · The entire IHS (or highest priority network) represents a provides for a robust analysis of risk of system failure. Such collection of assets of vital importance to maintaining socio- an analysis must produce more comprehensive mitigation economic growth and prosperity. A transportation agency schemes that take into account the asset/operations interde- should have an approach to managing programmatic risks pendencies, and significantly increase agencies' ability to deal for all of its assets. Particularly for the IHS assets it owns, an
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17 agency also should consider external, nonprogrammatic risks to these assets that could result in system failure and determine what mitigation actions could best minimize risk. · In evaluating risk, ideally one would use consequence mod- Moderate Risk Greatest Risk eling approaches which compute/impute risk (both materi- Increasing Probability of Event alized and avoided) in financial terms. If possible, one should try to explicitly calculate the likelihood of a risk occurring, the impact of the risk in terms of mobility and safety measures, and the costs of mitigation. When quantitative modeling is not feasible, the most reasonable, but still performance- based, subjective method should be used for assessing risk and prioritizing risk mitigation. Subjective approaches are Low Risk Significant Risk often required given the lack of necessary data for quantify- ing costs of a risk in financial terms. For instance, for struc- tures there are many well-known but poorly quantified risks, and there are few models available for calculating the relative likelihood of different risks to structures. Increasing Consequence of Event · Ideally risk management should be pursued at the pro- Source: Adapted from the draft NCHRP 20-59(17 ) Report (6 ). grammatic level within a transportation agency. It is an ac- Figure 3.2. Universe of risk for HIS. tive function and its membership is drawn from all the stakeholders of interest within the governing agency and its intersecting stakeholder groups. This is not to suggest that threats/hazards that fall into the · Implementing risk management requires involvement of other two quadrants are unimportant. However, it is the ex- all levels of an organization. A basic requirement is that an perience of the industry that risks with high probability of oc- organization has an organizational structure for identify- currence (e.g., minor incidents, winter operations, etc.) but ing what risks should be managed. Section 3.3 discusses in- that do not reach the threshold for any of the three conse- stitutional roles and responsibilities further. quence categories identified above are usually dealt with pro- grammatically. The following subsections describe how to determine what Consistent with the draft NCHRP 20-59(17) report (6), the risks should be addressed in an Interstate Asset Management following taxonomy of threat/hazard types focuses in higher- Plan, and present a step-by-step approach to risk assessment. consequence risks: · Unintentional hazards. Unintentional hazards are usually Risks Addressed in the Interstate Asset created by human-induced traffic incidents, due to insuf- Management Framework ficient skills or experience in design, operation, or enforce- ment of vehicles. To help identify the categories of risk that should be ad- · Natural hazards. Natural hazards include major weather dressed, one should consider the universe of risk illustrated or geological events that might cause significant loss of life, in Figure 3.2, and derived from the oft-used risk formula: destruction of assets, or long-term interruption of agency Risk = ( Probability of the occurrence of an event ) mission. × ( Consequence of an event ) · Intentional threats. Intentional hazards include terrorist attacks, crimes, and war. They are less frequent and less The vertical axis of Figure 3.2 represents the probability predictable and involve active countermeasure evasion by (from low to high) of a particular threat/hazard materializing criminals and terrorists. and the horizontal axis represents the consequence (from low · Performance risks. Risk or underperformance of an asset to high) of the materialized threat/hazard. Any threat/hazard due to design, materials, and construction defects coupled can be located in this risk universe. with lack of accurate condition inspection or forecasting The proposed approach focuses on the right hand quad- capabilities cause more-than-expected wear and tear on rants shaded red and gold. Threats/hazards in these two assets or hindrances to operations. They could also be re- quadrants have the greatest consequences in terms of: curring events with reasonable predictability (such as heavy snow fall accumulations, minor traffic incidents, etc.). · Human safety (injury and/or loss of life); · Property damage; and Note that performance risks are treated as programmatic · System/mission disruption. risks described previously, and therefore handled in routine
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18 asset management and operations planning. Several examples The core elements of the philosophy are: of these lower-consequence risks are listed in Table 3.1. These are grouped into a single category, as the focus of the present · It uses scenario-based methods for risk identification; study is on risks of system failure. However, this category can · It considers IHS and related overall transportation system be further expanded into a wide variety of different risks that disruption for consequence analysis where feasible; fall within this category. · It supports and encourages the use of direct and indirect economic losses resulting from realized threats/hazards as Risk Assessment Process key focal points to drive investment decisions. However, it also provides a well established alternative that can be used The fundamental objective of the proposed risk mitiga- in situations where there is insufficient data to perform the tion process is to provide IHS owners with a practical ap- calculations, which is quite often the case; proach to augmenting their programmatic risk management · It considers mitigation measures and their effectiveness as activities with an approach for addressing risks of system avoided losses in the cost stream; and failure for their IHS and any other critical assets. The result · It allows for the consideration of benefit/cost analysis of the process is a set of risk mitigation priorities included in where practical and return on investment metrics to help the Interstate Asset Management Plan, supplement other identify risk mitigation priorities. types of asset needs, and can be used as an input to the re- source allocation process. Figure 3.3 illustrates the risk man- Figure 3.4 presents the proposed step-by-step process for agement philosophy that forms the basis for the proposed performing the risk assessment. The following paragraphs de- approach. tail the steps in the process. Table 3.1. Risk types and examples. Relative Influential Risk Type Example Likely Impact/Consequence Frequency Characteristics Unintentional Vehicular crashes Short-term road closure High Skill, experience, Hazard enforcement , Hazardous materials Loss of life operation, etc. spill Potential isolated structural Oil spill failure Intentional Threat Terrorist attack Short- or long-term road Very low Access, security, closure exposure, design Crime features, etc. Loss of life War attack Potential isolated structural failure Natural Hazards Heavy rain Short- or long-term road Low Structure type, closure location, etc. Strong wind Loss of life Heavy snow and ice Potential structural failure Earthquake isolated or corridor-wide Hurricanes Flood Mud/landslide Performance Substandard design Increased agency and user High Skill, experience, costs design, etc. Construction defects Increased work zone delay Materials defects Reduced asset life Unexpected heavy traffic Incorrect performance models
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19 Mitigation Measures Threat/Hazard Scenarios Drives · Maintenance · Natural Hazards Strengthening · Unintentional Hazards · Security · Intentional Hazards · Move or Add Routes · Other Creates Increases Interstate Highway System (IHS) Disruption Transportation System Capacities Creates Reduces · Impacted IHS Route Overall Transportation · Alternative IHS Routes System Disruption · Alternative Non-IHS Routes Creates Cost Estimate · Rail · Marine Economic Losses · Air Regional Economic Model · Direct Repair or Replacement Costs · Economic Sectors · Indirect Lost · Inputs/Outputs Production, Sales, Other · Response to Disruption Figure 3.3. Overall risk management philosophy. Step 1.a. Identify Hazards/Threats. The process begins Step 3. Estimate Scenario Consequences. The scenario- with the identification of threats and hazards of relevance, as based analysis considers each asset or asset grouping (i.e., well as their respective magnitudes, probabilities, and spatial groups of assets with similar characteristics) and determines distribution across the jurisdictional area based on actuarial the consequences of exposing them to each of the threats or data, experience, or judgment. Hazards/threats identified in hazards identified. Consequences are measured in terms of this step should include, at a minimum, any natural or man- safety and mobility metrics, e.g., human safety, property made disasters for which mitigation is feasible that have been damage, and system/mission disruption. encountered on IHS assets in an IHS owner's geographic re- There are two approaches to performing the consequence gion. For instance, it is important to consider the potential analysis. The first, consequence modeling, is more objective for hurricane/flood damage in coastal regions prone to and results in the computation/imputation of a financial cost flooding. IHS owners on the Pacific Coast and in other seis- that will result from each scenario under consideration. The mically active regions should consider potential for damage consequence modeling approach requires a larger input data from earthquakes. IHS owners nationwide should consider set to support the analysis and is more rigorous. In return, it potential risks to bridges, particularly bridges that have no provides a more quantified estimate of consequences for ma- reasonable detour available, are fracture critical and/or sus- terialized threats/hazards. This provides an economic benefit ceptible to scour. value, which in conjunction with estimates of countermea- sure costs, makes the option of establishing risk mitigation Step 1.b. Identify Critical Infrastructure Elements. Con- priorities (Step 5) on a benefit/cost basis possible. Moreover, currently with Step 1.a, an IHS owner must make a set of policy-level decisions to identify critical asset groups and in- consequence modeling can be used to study the impact of dividual assets for analysis. Bridges and tunnels should be materialized threats/hazards on the disruption of network ef- identified, at a minimum, but an IHS owner may wish to in- ficiencies cutting across transportation and other related eco- clude other asset types, depending on the types of risks identi- nomic sectors. fied and available data. The alternative, more subjective approach, uses the conse- quence threshold technique proposed in the draft NCHRP Step 2. Develop Threat/Hazard Scenarios. Combining 20-59(17) report. This approach involves identifying the lev- the results of Steps 1.a and 1.b, the IHS owner should next de- els of certain transportation asset characteristics, at and above velop a set of threat/hazard scenarios. Each scenario should which the agency should consider taking action specifically to have an associated magnitude, probability, and location. mitigate one or more catastrophic risks. Examples of the types
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20 Data Sources Step 1.a ID Hazards/Threats Step 1.b ID Critical · National/Regional Natural Hazard Infrastructure Elements Databases · Unintentional Hazards · Pavements · Natural Hazards · Infrastructure Management Systems · Bridges · Intentional Hazards · Tunnels Probability, Location, Duration · Agency Led Intergovernmental Expert Teams Step 2 Establish Threat/Hazard Scenarios · Magnitude/Severity · Probability · Location Step 3 Estimate Scenario Consequences · Human Safety · Property Damage · System/Mission Disruption Establish Consequence Modeling Consequence Thresholding Consequence Thresholds · Direct Economic Loss · Identify If Scenario Results in · Indirect Economic Loss Unacceptable Consequences Step 4 Identify Risk Mitigation Strategies and Countermeasures For each combination of initiating event and asset and asset groups analyzed. Step 5 Establish Risk Mitigation Priorities Figure 3.4. Risk Assessment Process for the Interstate Asset Management Framework. of characteristics that must be considered in each of the three Appendix A describes several example applications of the areas are: consequence modeling approach. An example of the conse- quence threshold approach (also referred to as "thresholding") · Human Safety--Numbers of people killed or injured by a is the New York State Department of Transportation's Bridge particular event; Vulnerability Rating described in Appendix B of NCHRP · Property Damage--Replacement cost of the asset(s) de- Report 590 (7). This process, developed during the 1990s, de- stroyed; and termines each structure's vulnerability by combining the like- · System/Mission Disruption--The product of ADT, per- lihood and consequences associated with different events, and cent trucks, detour distance and duration of outage. uses the vulnerability rating as the basis for prioritization. These values must be estimated or calculated for each of the Step 4. Identify Risk Mitigation Strategies and Counter- critical assets or groups of assets identified in Step 1.b to see measures. The next step in the process is the identification which ones should be the focus of Step 4, during which risk of effective risk mitigation strategies or countermeasures for mitigation strategies and countermeasures will be identified. each combination of initiating event (i.e., threat/hazard of a