Strategic Activities

Risk Management Strategy

Risk is anything that could hinder the achievement of business goals or the delivery of stakeholder expectations. Risk can arise from failure to exploit opportunities as well as from threats materialising.

Risk Management is the culture, processes and structure aimed at managing potential opportunities and threats to an organisation.

The following diagram shows the Highways Agency strategic element of the Risk Management framework. It allows for senior management to be fully involved in:

                               

 Figure A.3 - Strategic element of the Risk Management framework

The practitioners should establish a risk register at the beginning of a pilot project and continually review and update it while the pilot is delivered.

Risk Management Objectives

The objectives of a Risk Management Framework are to ensure the rapid identification of risk and opportunity within a pilot, providing a clear assessment of potential impact and mitigation, so that effective and timely decision-making can be undertaken to ensure that:

The underlying principle is that all key risks to the HA strategy, programmes and projects are to be kept under regular review and reported through the various boards within the agency.

The Risk Management Process can be summarised as follows:

Risk Identification

Risk identification is critical to all decision making and problem solving, it is the foundation upon which all subsequent assessment and management is performed. HA Project Sponsors will need to be actively supported at all levels, from strategic down to supporting functions. They will be dependent on high quality processes in capturing and assessing risk and ensuring that a suitable management environment exists that supports rapid communication of risk up the line.

Risk Quantification

Where risks are likely to have a significant financial impact on objectives, such as a major pilot or undertaking, then the case should be made to examine the risks using a probabilistic technique such as QRA (Quantative Risk analysis). Such techniques will model the combined impact of risk and its probability against key objectives to deliver the result in terms of a range of confidence levels in achieving our objectives.

Risk Management

Sizeable pilots or undertakings commit the HA to a significant investment in terms of resources and cost. Under these circumstances a Risk Management Plan must be prepared to ensure that the management of risk is explicit and clearly understood by all parties.

The risk management plan should identify the following: all the significant risks to the project, the entity who 'owns' those risks, what mitigation strategy is being adopted, the risk management 'Actions' together with the 'Action Owners' and the timescales for action.

Mitigation strategies

Risk mitigation is the process by which the initial risk is reduced to an acceptable level. The first step is to agree an acceptable form of risk mitigation - the mitigation strategy. There are basically four options available to treat risks at this stage:

Benefits of the Risk Management Process

The benefits to a business from the proper management of risk are extensive:

Risk Management Guides and standards

In addition to the HA’s ‘Framework for Business Risk Management’ there are a number of recognised government and industry standards and guides that address the management of project, programme and business risk. The most relevant guide is the OGC Management of Risk, however other relevant guides include:

Suggestions as to the items to include within a risk register can be found in the OGCommence Resource Toolkit[OGC 2006C] The HA Ramp metering project risk register also provides an example of the areas for consideration[HA 2006H].

Health and Safety Risk Management should be carried out in accordance with the Agency’s Health and Safety Management System (HSMS).

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