Risk Management Framework_CaseStudy - Risk Management Risk...

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1Risk ManagementRisk ManagementFrameworkAASHTO Standing Committee onQualityApril 6, 2006Chris AllenOffice of InfrastructureFederal Highway Administration
2Risk Management“. . . innovative managementpractices and the catalysts fororganizational excellence.”
3Risk ManagementAre you getting everythingdone?
4Risk ManagementRisk Management Framework(RMF)• Why?• Focus limited resources• Ability to take things off the plate• Communication / Transparent Leadership
5Risk ManagementRisk Management Framework(RMF)Deliberate Process Since 2001Much Learning & RefiningPhase Two CompleteOneItem of Management InformationOthers: PDAT, Strategic Initiatives, MCA,Consistent National Roll-UpFuture Potential versus Current Problem
6Risk ManagementCurrentInterim Users GuideIS NOTThe Framework
7Risk ManagementInterim – User Guide Process1.Information Gathering2.Risk Identification3.Risk Event / Core Element Analysis(Likelihood +Impact)4.Prioritize Core Elements(PDAT set + Non-Prescribed)5.Prioritize Top 20 Risks6.Identify Risk Response Strategies7.Incorporate Risk Strategies into Office Work Plan8.Monitor, Evaluate, and Adjust Strategies
8Risk ManagementInterim – User Guide Process1.Information Gathering1.PR/PE Review2. PDAT3.SWOT Analysis4.General Program Knowledge5.Understanding of Current Environment6.Specific Program Knowledge7. Stakeholders8.Core Element Set (What Else?)
9Risk ManagementRisk ManagementFramework - Some Details– Risk DefinitionRisk: A future phenomenon that may occurwith a direct impact to the project orprogram’s benefit or detriment
10Risk ManagementRisk ManagementFramework - Some Details– Risk Statement FormatThe program could be put at risk by (RISKEVENT), which would have a negative orpositive impact on the programEvent and effect type of statement
11Risk Management“Event” then Effect FormatRisk A:A nearly non-existent relationship with the SHAdirectly impact all project delivery mechanism.(Overarching Threat)Risk B:Tons of inactive projects are tying up neededfunds directly impacting the SHA ability to advanceprojects.(Debt Opportunity)Risk C:The Financial tracking responsibility rest withone guy with one laptop and the potential loss of thisdata impacts financial tracking.(Threat)Risk D:ROW appraisals are not well documented,appraiser are suspected of working side jobs, andpayments cannot be supported this impacts the effectiveuse of limited funds.(Threat)
12Risk ManagementExample:Risk F:Loss of internal control over Fed-aid funds impacts the ability to insure theaccuracy and integrity of financialtransactions resulting in the halting of Fed-aid.– Likelihood:60%– Impact:4– Expected value:2.40
13Risk ManagementExample:Risk E:Cutting of bridge inspection scope tosave cost, causes inaccurate data with thenegative impact on project programming.– Likelihood:30%– Impact:3– Expected value:0.90
14Risk ManagementExample:Risk G:Lack of money to pay changeorders causes contractors to put more costinto estimates to mitigate their risk withthe negative impact being bid pricesescalation.– Likelihood:100%– Impact:4– Expected Value:4.00
15Risk ManagementExample:Priority listing:– Risk A: Eval=5– Risk G: Eval=4– Risk C:Eval =3.92– Risk D:Eval =3.1– Risk B:Eval =2.9– Risk F:Eval=2.4– Risk E:Eval=0.9
16Risk ManagementRisk Management

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