Did you know? The Federal Highway Administration has mandated the development of a risk-based asset risk management plan for State DOTs.
Every municipality manages, monitors, and maintains various infrastructure equipment and assets that are spread across locations and have a limited service life. Ensuring optimum utilization of these assets till they reach their full-service life and preparing for their replacement requires a road map that efficiently integrates risk mitigation and ensures satisfactory levels of service.
What is Asset Risk Management?
Asset risk management is the process of identifying, assessing, and mitigating risks associated with an organization’s assets. These assets can be physical, such as buildings and equipment, or intangible, such as intellectual property and data. The goal of asset risk management is to protect the value of these assets and ensure that they are used effectively to achieve the organization’s objectives.
Here are some key steps involved in risk-based asset management:
- Identify assets: The first step is to identify all of the organization’s assets. This includes both physical and intangible assets.
- Assess risks: Once the assets have been identified, the next step is to assess the risks associated with each asset. This includes identifying the threats that could damage or destroy the asset, as well as the likelihood of these threats occurring and the potential impact they could have.
- Mitigate risks: Once the risks have been assessed, the organization can develop and implement strategies to mitigate them. This could include things like insurance, security measures, and maintenance programs.
- Monitor and review: Asset risk management is an ongoing process. The organization should regularly monitor and review its risk management strategies to ensure that they are still effective. Risk-based asset management is important for all organizations, regardless of size or industry. By effectively managing asset risks, organizations can protect their assets, reduce costs, and improve their overall performance.
Here are 6 strategies to integrate Asset Risk Management into Asset Planning:
1. Get Key Decision Makers Onboard
When it comes to risk-based asset planning, gaining support from senior leadership is necessary. Top management holds the power to take key decisions so it is important to educate them on the significance of risk mitigation for effective management of systems that make it possible to provide satisfactory service to the community. When top-down support is achieved, it becomes easier to identify and mitigate potential risks.
2. Evaluate the Probability of Risk by Looking at Past Records
While it is not possible to predict disasters and anticipate risks accurately, there are certain surefire ways to develop a disaster recovery plan that addresses lock-down situations and unexpected failures efficiently. EAM software offers valuable insights for identifying risks that your organization can face in future based on records of problems, fixes, failures and upkeep. Data collection is essential to identifying and assessing risk and EAM software quantifies the probability of risk and its consequences accurately to facilitate effective risk
mitigation.
3. Anticipate Long-Term Consequences
To anticipate long-term consequences, it is essential to identify the assets that are at the maximum risk of failure and their highest impact in case of failure. This facilitates the accurate allocation of budgets and helps maintain the most critical assets first. Having EAM software makes it easy to prioritize asset investments and also provides accurate performance reports.
4. Prioritize Based on Performance Reports
Once the probability of risk occurrence is estimated and its cost to the project is predicted, organizations can prioritize areas of concern and communicate the risk to stakeholders. Sharing the risk management plans with key stakeholders and community members creates a sense of confidence that the organization is doing everything possible to mitigate risk.
5. Implement a Risk Management Strategy
The risk management strategy must outline the steps that need to be taken to manage major risks with minimal probability of failure. The plan must include a combination of strategies that focus on ways to avoid risk, if the risk occurs then modify activities to minimize the impact of potential harm and stay prepared for the consequences. Key stakeholders, employees and volunteers should be trained and educated on risk management activities to meet responsibilities efficiently.
6. Review and Revise for Sustainable Success
The implementation phase is the right time to review work status, progress, and project activities and identify impending risks and existing threats. From analyzing client needs and funding constraints to service delivery challenges and external risks, the risk management team must evaluate risk management strategies to ensure their consistency, efficiency, appropriateness and effectiveness.
Enterprise asset management software helps project and prioritize asset maintenance and risk management based on asset lifecycle plans and criticality. When an organization can identify the assets that are at the highest risk of failure and can cause a massive impact, it becomes easier to allocate budget and mobilize resources. NEXGEN EAM software helps organizations achieve just that, empowering them to deliver the results that communities demand on time, every time.
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