Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports (2019)

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64 Evaluating climate resilience at airports can best be thought of as part of the overall risk man- agement processes that most airports already have. This appendix describes a generic manage- ment structure for assembling a team to analyze the potential impacts and responses to climate change and discusses specific risk management activities that such a team might undertake. A discussion of enterprise risk management (ERM) is also provided. Who Should Be Involved One of the first things to consider in the resilience analysis process is who should be involved; these participants would make up a resilience team that could be tasked with oversight, analy- sis, and other related activities. It is essential early on to determine key internal and external contributors to the process. The list of internal participants shown in Exhibit A-1 is taken from ACRP Report 147 (Dewberry et al. 2015). Participants should be selected based on their ability to contribute to the planning process and their role either in making decisions or driving consensus toward decisions. Note that larger airports are more likely to have individuals or even whole departments devoted to the areas of expertise listed under the internal group in the exhibit. For example, many large airports have environmental sustainability departments and undertake sophisticated risk management analyses. Smaller airports may not have this expertise internally, and in many cases they may not have the financial resources to hire outside expertise. By necessity, their team of contributors may be smaller and more limited than what is listed here. It is likely that the people participating in a BCA or FFA would be a mix of the internal and external constituents listed in the exhibit. In addition to selecting specific individuals, it is important to decide on specific roles and responsibilities. One way of handling this is to segre- gate personnel into a core team and an oversight team. The core team is the group that would be tasked with developing and presenting work products and would likely include a risk assess- ment group charged with identifying an airport’s vulnerability to climate change problems and how critical that vulnerability is to the continued operation of the airport. The oversight team would be responsible for reviewing outputs and would be part of the process for communicating with outside stakeholders and building consensus for resilience adaptation strategies recom- mended by the core team; the strategies could include operational changes and investments in new infrastructure. With respect to dialog and outreach (both internally and externally), there are a wide variety of communication channels that may be used. Exhibit A-2 provides a good starting point for airports looking to expand these types of activities. If a solid resilience team has been assembled and specific communication and aware- ness goals have been identified, then internal and external stakeholders will be in a position A P P E N D I X A Institutional Background: Existing Airport Resources and Plans

Institutional Background: Existing Airport Resources and Plans 65 to receive the results and react to them in a timely and orderly fashion. In many cases, the ability to successfully communicate with external stakeholders (such as airport users, local government, and the public) is often the most critical determinant of whether an airport can actually follow through with recommended investments in resilient infrastructure. It will be important that appropriate documents and work products be accessible, particularly to non-expert stakeholders. While this suggested structure is straightforward, primary decision makers at a given air- port must decide how best to address infrastructure needs in the context of climate resilience. Many airports, even large ones, may choose to select climate experts to help them assess the risk and uncertainties related to climate change and the airports’ exposure to them. Some air- ports will also choose to involve financial consultants or benefit–cost consultants, depending on how sophisticated the analysis is likely to become. Finally, it is always important to include Internal Departments/Personnel External Stakeholders/Personnel Executive management Planning Environmental sustainability/resilience Risk management/legal Finance Engineering O&M Emergency operations Airlines and general aviation airport operators Airport tenants FAA representatives Local government and media Academic and research institutions Nearby residents Business partners and suppliers Climate experts BCA/finance consultants Source: Derived from ACRP Report 147 (Dewberry et al. 2015). Exhibit A-1. Who should be involved in the resilience team. • Public relations and online presence: − Annual publications − Press events and releases − Marketing partnerships − Airport website, including an updated news section − Airport-specific apps − Social media, including live chat • Internal and external communications: − Conferences, trade fairs − Expert talks and discussions − Work meetings, employee surveys, performance reviews − Passenger surveys − Terminal services − Community outreach, including noise commissions and regional partnerships Source: Adapted from Munich Airport: Integrated Report 2015. Exhibit A-2. Communicating with stakeholders.

66 Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports participants from the FAA and members of the public as well as airlines, other operators, and airport tenants as part of an oversight group. Resilience Team Activities After consideration of who should be involved, the next issue to address is what tasks these participants should be undertaking. Exhibit A-3 lists 10 representative categories of activities, the first seven of which are drawn from ACRP Report 147. The airport will need to set resilience goals; this means identifying some overarching objec- tives for assessing how to deal with climate change. From an operational standpoint, such objectives may include items such as: • Avoiding flight delays and schedule disruptions, • Avoiding disruptions or failures to airport emergency systems and processes, • Avoiding partial or complete closure of the airport, and • Limiting revenue loss. Reaching some of these objectives may require investments, while reaching others may require changes in operating procedures or airport design standards. The resilience team also should set some goals related to communication and awareness. This is relevant both internally (across departments) and externally. By involving team mem- bers from different departments or groups, the team can identify and address potential climate risks on an airport-wide system basis. In addition, the ability to successfully communicate with external stakeholders is often the most critical determinant of whether an airport can actually follow through with recommended investments in resilient infrastructure. Part of the communication process will involve creating appropriate documents and work products and ensuring that they are disseminated to the relevant parties. It will be important that these outputs be accessible to non-experts, despite the complexities of dealing with climate change in a quantitative way. It is likely that the resilience team will need to coordinate across different airport organiza- tions. For example, if the resilience team recommends changes in operations (including emer- gency operations), it will be important that the suggested adaptations be accurately incorporated into existing safety management systems, emergency preparedness documents, snow and ice control plans, and other airport operations systems, so that the benefits of these suggested changes can be realized. 1 Set resilience goals 2 Communicate goals 3 Identify audience 4 Identify vulnerable and critical infrastructure 5 Quantify risk and assess uncertainty 6 Identify potential adaptations 7 Prioritize options: qualitative and quantitative methods 8 Perform FFA or BCA 9 Communicate results to stakeholders 10 Monitor, review, and update Source: Adapted from ACRP Report 147 (Dewberry et al. 2015). Exhibit A-3. Proposed activities of the core and oversight teams.

Institutional Background: Existing Airport Resources and Plans 67 Once the structure and goals of the resilience team are set up, attention can turn to the main information presented in this handbook: • How to define and measure aspects of climate change that may be relevant to the airport, • How to assess potential airport impacts, including identifying and targeting airport assets and infrastructure and assessing vulnerability and criticality, and • How an FFA or a BCA is used to identify and quantitatively assess possible responses or adap- tations to accomplish the operational goals identified by the team. In carrying out these activities, there should be a process for monitoring, reviewing, and updating information as it becomes available to be incorporated into either an FFA or BCA. For example, CIPs often take years to implement, and as new information becomes available on the exposure of airports to climate change risk, this information should be incorporated into the CIP analysis and communicated to relevant stakeholders. Incorporating Existing Plans and Systems Most airports already have well-developed processes for meeting FAA requirements, including master planning, AIP requirements, and emergency planning. In addition, numerous existing publications from the FAA, ACRP, and specific airport entities that have already undertaken resiliency efforts offer valuable information so that airports are not start- ing from scratch when developing new plans or projects related to climate resilience. The following builds on information developed and presented in ACRP Report 147 (Dewberry et al. 2015). Exhibit A-4 summarizes existing planning initiatives to comply with FAA requirements and identifies how they are or could be used by airports to address climate resiliency projects. A detailed description of each initiative is in the following sections. National Plan of Integrated Airport Systems The National Plan of Integrated Airport Systems (NPIAS) is a report issued to Congress identifying the national airport system and the projects that are eligible for AIP funding over 5 years. The most recent report, which was issued in 2015, covers 3,340 existing and proposed airports across the nation and estimates a need of $32.4 billion in infrastructure development projects for 2017–2021. The report notes that the FAA is working to address the potential effects of climate change and the resources required to enable the airport system to withstand its effects, but the costs of climate change resilience are not included in the current cost esti- mates (FAA 2015b). Airport Emergency Plans All certified airports (CFR Part 139) should develop and implement an airport emer- gency plan (AEP) following AC 150-2500-31c guidance (FAA 2009) to ensure the safety of and emergency services for the airport and the community in which the airport is located. An airport emergency is defined as any occasion or instance, natural or man-made, that warrants action to save lives and protect property and public health; this includes natural disasters such as hurricanes, tornados, and flooding, all of which are predicted to occur as a result of climate change. The guidance presents the process to prepare for a natural event as well as the steps to assess the damage and to clean and repair key airport facilities. Also, it establishes the need for offering sheltering facilities capable of withstanding strong winds and rain.

68 Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports Having an AEP in place with detailed cost estimates in case of an emergency is useful when highlighting the costs incurred and avoided in a BCA. Additionally, the AEP may help to develop a budget system to track actual expenses for preparedness and recovery after the natural disaster. Airports Capital Improvement Plan The process for a capital project to be approved, funded, and constructed begins with the project sponsor referring to the FAA guidance (FAA 2000) on Airports Capital Improvement Plans (ACIPs). The ACIP formula process is briefly described here and is represented by the flowchart in Exhibit A-5. Considering the NPIAS, all potential funding sources, and state and sponsor input, each FAA Regional Airports Office17 compiles and submits a 3-year ACIP to the Airports Pro- gram Implementation Branch (APP-520). The regional ACIP is then reviewed, including any required BCA. Based on previous guidance (from 1999), BCAs were required for air- port capacity projects that sought $5 million or more in AIP discretionary funds, but this Current Management Structure Purpose Currently, Is Climate Resiliency Addressed? If Yes, How? If Not, How Could It Be Adapted? Airport Emergency Plans (AEPs) Present process for natural disaster preparedness and steps to assess damage There is no mechanism to track expenses related to natural disaster preparedness or to assess the efficacy of disaster response/mitigation. AEPs could be adapted to formulate formal budget codes/mechanisms to track expenses and compare the preparation for natural disaster events to the severity of outcomes. Airports Capital Improvement Plan (ACIP) Presents process through which capital projects are approved, funded, and implemented The national priority rating (NPR) system provides an opportunity for climate resiliency projects to be incorporated formally in infrastructure project prioritization. NPR formula coefficients could be adapted to accommodate climate resiliency projects. Airport master plans Provide guidance to achieve short-, mid-, and long-term needs Climate resiliency aspects may be considered but are not required under multiple sections in an airport master plan. National Environmental Policy Act (NEPA) compliance Establishes policies and regulations for environmental analyses Discussion about how a proposed project could be affected by climate conditions needs to be included under the environmental consequences section. No thresholds for climate impacts have been confirmed. FAA recognizes guidance will change. National Plan of Integrated Airport Systems (NPIAS) Identifies projects that are eligible for AIP funding over 5 years Resilience project costs are not included in the latest NPIAS. The FAA could calculate climate change project costs to be added into NPIAS. Sustainability plans Guide development to meet environmental, social, and economic goals Within sustainability plans, most airports have undertaken initiatives to reduce their own carbon emissions. Some projects may directly address climate resiliency (e.g., pavement maintenance, stormwater management, and equipment purchases geared toward improving airport operations’ response to extreme events). Safety Management Systems (SMS) Determines risk management practices and procedures Material on applicability and scaling of risk analysis is relevant to climate change aspects, and the list of purchases to support resiliency for climate change could be revisited to incorporate more of them. Exhibit A-4. How climate resiliency is addressed in current airport planning processes.

Institutional Background: Existing Airport Resources and Plans 69 minimum threshold has since been increased to $10 million (2015). However, the FAA’s AIP BCA policy has been modified, and certain exemptions have been made. Based on modified policy, rehabilitation and reconstruction projects with no increase to an airport’s original functionality do not require a BCA, even if the sponsor is seeking funds above the minimum threshold (FAA 1999a). The FAA’s APP-520 implementation branch creates national priority rating (NPR) thresh- olds, and a list of candidate projects is assembled. The NPR thresholds aid in categorizing airport projects, consistent with FAA goals and development needs. Regions may then adjust their sub- mitted lists, and APP-520 then creates budgets for the regional offices. Based on the budget from the APP-520 implementation branch, the region develops its recommendations for funding. The Office of the Associate Administrator for Airports (ARP-1) selects and approves the projects for implementation from the regional recommendations, and projects that are not recommended are considered if there is carryover funding. Finally, the ARP-1 office evaluates the national system and submits an annual report. Source: Adapted from FAA Order 5100.39A, Appendix 1 (FAA 2000). Exhibit A-5. The ACIP process.

70 Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports The NPR system provides an opportunity for climate resiliency projects to be incorporated formally into the prioritization process. The NPR formula is: NPR 0.25P A 1.4P C 1.2T ( )= + + + where A = Airport code, P = Purpose, C = Component, and T = Type. The equation measures how closely the proposed project aligns with agency goals and objectives; the NPR values closest to 100 represent projects that are the most consistent with FAA goals. Points are given for each of the variables A, P, C, and T, ranging from 1 to 10. Appendix 5 of FAA Order 5100.39A summarizes assigned point values for the various ACIP work codes as applicable to the formula (FAA 2000). Although the NPR formula does not specifically name climate resiliency projects as eligible, many of the key categories would accommodate investments addressing climate change. The airport code (A) would not be affected by a project type because it refers to the size of the airport. By contrast, climate resiliency projects may fall under the following existing codes: • Purpose (P): Reconstruction (RE, 8 pts), safety/security (SA, 10 pts), and environment (EN, 8 pts); • Component (C): Land (LA, 7 pts), and other (OT, 7 pts); and • Type (T): Construction (CO, 10 pts), improvements (IM, 8 pts), miscellaneous (MS, 5 pts), and mitigation (MT, 6 pts). Projects geared toward addressing accelerated depreciation of infrastructure due to climate change events could fall under the aforementioned codes. Overall, the equation coefficients and individual point values currently assigned favor climate resiliency projects, enabling prioritiza- tion of such projects in the planning process. Furthermore, the guidance notes that “it is anticipated that, based on future experience, the individual point values and equation coefficients (k1-k5) may be adjusted slightly to reflect modified national goals” (FAA 2000). Consequently, adjusting the “k” coefficients affecting the project purpose (P), component (C), or type (T) or creating new codes and associated point values within P, C, and T categories could further prioritize climate resiliency projects. ACRP Report 120: Airport Capital Improvements: A Business Planning and Decision-Making Approach (Karlsson et al. 2014) addresses the challenge of obtaining reliable cost estimates for planning airport capital improvements. Future capital program costs often are defined during planning processes that lack the project details that only become available as designs progress and reliable construction cost estimates can be made. The quality of a BCA or FFA is limited by the quality of cost estimates available at the time the analysis is prepared. The report provides a thorough discussion of the factors affecting reliable cost estimates for capital planning when uncertainty is high. It reviews the basic principles of cost estimating for airport projects, sum- marizes best practices, and develops a parametric cost estimating technique based on historic costs for eight types of airport construction projects that are correlated through multiple regres- sion analysis. The resulting cost model is implemented as an Excel spreadsheet tool, called the Airport Capital Cost Estimation (ACCE) tool. ACCE is offered to develop initial cost estimates for planning purposes. It provides user customizable inputs and geographic adjustments for regional construction cost differences, and it produces low, high, and best cost estimates. The tool allows what-if analysis and produces a printed report of all the input data and assumptions.

Institutional Background: Existing Airport Resources and Plans 71 Airport Master Plans An airport master plan is intended to serve as a guide for development to meet future demand in the near-, mid-, and long-term. The scale of such a plan varies depending on the size of the airport, its function, and its challenges. AC 150/5070-6B lists and describes the elements that should be included in an airport master plan (FAA 2015a). Currently, climate resiliency projects may be considered, but are not required, in the following sections of an airport master plan: • Environmental considerations: It is noted that planners should try to achieve a balance between the man-made and natural environments. • Existing conditions: Planners should identify historical weather conditions and areas that are potential hazards to aircraft such as flood control zones. • Aviation forecasts: Under “other factors,” changing attitudes toward the environmental impacts of aviation are noted as potentially affecting demand. In addition, it may be expected that extreme weather events and changing climates can also affect forecasted demand. • Facility requirements: The emerging trends section includes a greater focus on sustainability, under which climate resiliency infrastructure projects may be included. A BCA should be conducted as part of the master plan, if possible, for projects enhancing airport capacity and seeking $10 million or more in discretionary AIP funds or applying for a Letter of Intent (FAA 2015a). Therefore, the effects and planned mitigation for climate change may fall under multiple sec- tions in an airport master plan. This demonstrates the wide-ranging impact that climate change will have on airports and the importance of considering the effects over the near-, mid-, and long-term. FAA Policy for National Environmental Policy Act Compliance To be considered for AIP/federal funding, a project must complete various environmen- tal analyses to satisfy the requirements of the National Environmental Policy Act (NEPA). FAA Order 1050.1F (FAA 2015c) outlines policies and procedures for compliance with NEPA and implementing regulations issued by the President’s Council of Environmen- tal Quality. FAA Order 1050.1F includes 16 environmental impact categories, and climate change is one of them. The FAA’s 1050.1F Desk Reference (FAA 2015d) complements FAA Order 1050.1F by sum- marizing all applicable special purpose laws in one location for quick reference. The 1050.1F Desk Reference provides the most up-to-date methodology for examining impacts associated with climate change. In regard to the NEPA review process, “discussion of a proposed project’s potential climate impacts” is to be included in a separate section of the NEPA document, distinct from air quality (FAA 2015d). Currently, no significance thresholds for climate impacts have been established. Evaluation is tied to assessment of a proposed project’s GHG emissions. For FAA NEPA reviews, discussion on climate impacts could be qualitative but may also include quantitative data (based on estimated project emissions). Per FAA NEPA guidance, discussion of “the extent to which a proposed project could be affected by future climate conditions” (FAA 2015d) is to be included under the environmental consequences section. An example could include a description of a project area’s ability to sus- tain impacts caused by climate change. Considerations to adapt to forecasted climate change conditions are to be described as part of the NEPA document.

72 Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports Given the complexity of climate change factors and impacts, no direct linkage of a particular project to climatological changes is given in the current guidance. The FAA acknowledges that the guidance will evolve as research on climate change matures. Sustainability Plans ACRP Synthesis 10: Airport Sustainability Practices discussed the newly emerging topic of sus- tainability for airports (Berry et al. 2008). The report used a literature review and several surveys of U.S. and non-U.S. airports to identify practices that would ensure: • Protection of the environment, including conservation of natural resources, • Social progress that recognizes the needs of all stakeholders, and • Maintenance of stable and high levels of economic growth and employment. The findings led to the currently accepted definition of sustainability as supporting future growth that considers the goals of the triple-bottom line of environmental, social, and economic progress. Regarding overall sustainability performance, respondents from non-U.S. airports and large U.S. airports rated their airports’ performance higher than those from small and medium-sized U.S. airports. Respondents identified regulation and airport policy as key drivers for the imple- mentation of sustainability practices. For the future, they cited stakeholder concerns and global concerns such as climate change. A review of the airport sustainability plans in ACRP Synthesis 66: Lessons Learned from Airport Sustainability Plans, which includes a number of airports that received funding under the Sustain- able Master Plan Program, shows that many airports acknowledge the potential effects of climate change but are only actively monitoring the projections of sea level rise, temperature increases, and increased precipitation (Martin-Nagle and Klauber 2015). Within sustainability plans, most airports have undertaken initiatives to reduce carbon emissions, both at the airport and for pas- sengers accessing the airport, through encouraging recycling, planting trees, moving toward using renewable fuel, and exploring ways to reduce emissions from airplanes. A few projects may con- tribute more directly to the effects of climate change on infrastructure, such as aggressive pave- ment maintenance that extends its useful life, development of a strategy for managing stormwater runoff, and purchases of equipment to improve airport operations’ response to extreme events. For example, the Massachusetts Port Authority (Massport) developed a sustainability plan where Logan Airport set a goal of enhancing 25% of its critical assets or resources with resiliency measures over the following 5 years and achieving 100% within a decade. This would allow for the airport to better withstand the effects of climate change. In addition, Massport devel- oped a list of 34 short-term initiatives across six categories for implementation that would help with achieving its sustainability goals. Of the six categories, the category of resiliency had the most actionable initiatives that would result in airport capital projects to protect against climate change, including purchasing and maintaining flood-proofing measures (Massport 2015). While important efforts toward a more sustainable airport and global environment are being made, these efforts largely fall short of capital improvements to the airport infrastructure that would mitigate the effects of climate change. Safety Management Systems A safety management system (SMS) is a set of risk management practices and procedures used to ensure a formal approach to system safety. FAA Order 5200.11 spells out SMS stan- dards used by the FAA to enable adaptation to changes and continuously improve airport safety

Institutional Background: Existing Airport Resources and Plans 73 (FAA 2014d). There are four components to an SMS: safety policy, safety risk management (SRM), safety assurance, and safety promotion. SRM is a formalized approach to making sound safety decisions. Based on well-documented data, SRM identifies and examines hazards early on and helps with developing effective risk- mitigation strategies. SRM applies to ARP-produced airport standards and project-specific approvals that could affect aviation safety. Chapter 4 of FAA Order 5200.11 outlines standards and approvals that are applicable by SRM (FAA 2014d). Appendix C of FAA Order 5200.11 summarizes safety assessment tables by hazard severity classification, likelihood definitions, and a risk matrix. Appendix B of FAA Order 5200.11 sum- marizes airport project approvals that typically do not require safety assessments. Item 2 in this list includes “purchase of mobile vehicles and equipment,” both of which may be necessary pur- chases for preparing for and recovering from weather events (FAA 2014d). This list may need to be revisited to include other purchases to support resiliency for climate change. While FAA regulations on SMSs had not yet been finalized at the time of its publication, ACRP Report 131: A Guidebook for Safety Risk Management at Airports (Neubauer et al. 2015) is a good primer on the treatment of safety risk. While the risks associated with BCAs and FFAs are programmatic and financial in nature, this guidebook on the treatment of physical risk provides an excellent introduction. Conclusions Airports do not have to start with a blank slate when beginning to plan and assess adaptations to climate change. Several key points to be drawn from the previous discussion are: • The needs identified for 2017–2021 in the NPIAS do not currently reflect climate change, but it is acknowledged that the cost of climate change resilience is under development. • Current guidance does not address climate change directly, but it can be modified or adapted to include capital investment projects for resiliency within the current framework. • The NPR system could accommodate airport projects with a resilience component. • Estimates for rehabilitation costs incurred and avoided could be calculated using the guidance listed in an airport emergency plan; these are important components of a BCA. • A budget tracking system could be developed to help understand past emergency costs incurred; this would be helpful in the event of a future emergency. • Per FAA NEPA guidance, climate change is one of the environmental impact categories. However, no thresholds for climate impacts have been confirmed. FAA recognizes guidance will change. • Most initiatives within sustainability plans are geared toward reducing infrastructure’s impact on the environment, such as through carbon emissions, with a few projects contributing more directly to the effects of climate change on infrastructure. Enterprise Risk Management Larger airports may already take a structured approach to managing risk exposures. ERM is a formal, coordinated approach to identifying and evaluating risks across an entire organization. ACRP Report 74: Application of Enterprise Risk Management at Airports discusses the implementa- tion of ERM processes relevant for airports, including the development and ongoing use of a “risk register” that captures and describes risks and opportunities as they are identified together with risk accountabilities, actions, and review and completion dates (Marsh Risk Consulting 2012). A central feature of the risk register is identifying the probability of adverse events and their potential financial consequences for the airport. ERM may be a logical approach to evaluate climate risks.

74 Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports ACRP Report 116: Guidebook for Successfully Assessing and Managing Risks for Airport Capi- tal and Maintenance Projects provides details on the creation and consistent updating of a risk register, the qualitative evaluation of risk (probability and impact), the quantification of risk probabilities, and appropriate responses (Price 2014). One of the main features of this report is a discussion of how airport personnel, including risk managers, may develop estimates of the costs of risky outcomes, which has direct application here in the context of financial feasibility and benefit–cost analyses. Finally, the report provides suggestions on scaling risk management efforts to the size of the project, with detailed quantification reserved for very large projects and lesser efforts for smaller ones. An overview of these topics is presented here, but interested readers should refer to these ACRP reports for more detailed information. By analyzing potential risks and developing proactive response plans, an airport can use ERM to reduce volatility and protect its balance sheet from unexpected losses. While different airports will have different operating environments, governance structures, and organizational cultures, an ERM framework will contain certain common fundamental elements. First, there should be clear guidance on governance and infrastructure. ERM policies should describe concisely why and how risk management will be implemented across the entire airport organization, and the ERM framework should include explicit consideration of the following items: • Goals—for example, minimizing the likelihood and impact of risks occurring. (In the context of climate change, airports obviously cannot control the weather, but they may be able to mitigate the impacts.) • Statement of how much risk the airport is willing to accept in different areas—for example, enable main passenger terminal to remain open in the event of a Category X hurricane, or enable the stormwater management system to withstand a 100-year flood event. • Step-by-step description of the ERM process. • Outline of roles and responsibilities. • Description of performance monitoring—how the ERM framework will be monitored and evaluated. Second, the ERM system should identify and prioritize risks and opportunities. The first step here should be to create and categorize a risk register, which is an inventory or list of all identi- fied risks to the organization. For example, ACRP Report 74 suggests the register might include the following categories: • Strategic, • Operational, • Financial, • Human capital, • Safety, • Legal/regulatory, • Technology, and • Hazards (Marsh Risk Consulting 2012). Using this sample structure, climate change risks would likely fit into the hazards category (along with, for example, pandemics, terrorism, and fires/explosions) A good ERM system should be able to handle climate change risks within an existing framework. Once the risks have been identified, each item should be assessed in terms of impact (often referred to in terms of “criticality”) and likelihood (often referred to in terms of “vulnerability”). Exhibits A-6 and A-7 are reprinted from ACRP Report 74 and show examples of risk assessment criteria for both impact and likelihood.

Institutional Background: Existing Airport Resources and Plans 75 Impact and likelihood assessments can then be combined to generate a heat map, such as shown in Exhibit A-8, which visualizes the relative risks due to impact and likelihood and allows decision makers to prioritize them. This is a well-known method that the FAA has in many cases accepted for use—for example, in the SRM practices delineated in FAA Order 5200.11 (FAA 2014d). For each identified risk, the ERM system should indicate how current measures are assessed to determine whether they effectively mitigate the risk to the required level. Focus then would be given to those risks that require additional controls or responses. As noted in ACRP Report 74, it is likely that not every risk can or should be mitigated (Marsh Risk Consulting 2012). Instead, Level Description Financial Impact Reputation 1 Nominal impact <1% of budget Public concern limited to a few complaints to the airport 2 Low 1% to 5% of budget Minor adverse local/public/media attention and complaints 3 Moderate 5% to 10% of budget Adverse long-term regional/short-term national media/public attention 4 High 10% to 15% of budget Adverse long-term national media/public attention 5 Very high >15% of budget Prolonged internal, regional, and national condemnation Source: ACRP Report 74 (Marsh Risk Consulting 2012). Exhibit A-6. Example impact assessment criteria. Level Description Frequency 1 Rare < Once in 10 years 2 Unlikely Once in 10 years 3 Possible Once every 5 years 4 Likely Once a year 5 Highly likely > Once a month Source: ACRP Report 74 (Marsh Risk Consulting 2012). Exhibit A-7. Example likelihood assessment criteria. Source: ACRP Report 74 (Marsh Risk Consulting 2012). Very High 5 High 4 Moderate 3 Low 2 1 Rare 3 Possible 2 Unlikely 4 Likely 5 Highly Likely Nominal Impact 1 Im pa ct Likelihood Exhibit A-8. Heat map example.

76 Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports the benefits of mitigation (in the form of reduced impact or reduced likelihood) should be assessed against the costs, which may be substantial if, for example, a major upgrade or replace- ment of infrastructure is involved. Other sections of this handbook provide further discussion of this question, including how to assess costs and (in the case of a formal BCA) benefits and what other adaptation responses may be relevant for a given identified risk. The ERM framework should also have a monitoring and reporting system in place, and a plan should be in place to guide implementation. Where possible, the framework should be aligned with existing airport processes, including strategic planning, budgeting, and safety management systems, to avoid duplication and maximize efficiency. Finally, the ERM framework should be reviewed periodically against defined performance metrics to ensure that current best practices are being followed and to update and improve as opportunities occur.