As project design and development progresses, it should become possible to explicitly quantify and value risk factors. Practitioners are required to present a Quantified Risk Assessment (QRA) for all transport options. These reviews will seek evidence that risks have been properly considered before the project is approved to move to the next stage. The Gateway Review process was introduced by the Office of Government Commerce (OGC) as a means of providing independent assurance to a wide variety of procurement projects at up to six key decision points in their lifetime. If uncertain, further advice on the level of detail required should be sought from Transport Scotland. The amount of time and resources applied to the quantification of risks should be dependent on the number of risks to be analysed, the difficulty of doing so and the materiality of these risks. The depth of the risk assessment should be proportional to the size and stage of the development of the option being appraised. The risk management process is continuous through the appraisal process, with the assumptions included in the risk assessment and decisions relating to responses being kept under review. Following this initial process, practitioners should consider how best to respond to the identified risks. The aim of risk management is not necessarily to completely eliminate risks, but to reduce them wherever the cost of mitigation is less than the cost of the risk.Ĭost risk management should commence at the initial stages of a project with an initial identification and assessment of risks in terms of their likelihood and associated cost implications. Decision making processes supported by a framework of risk analysis and evaluation.Īt the level of individual transport projects, risk management strategies should be adopted in a way that is appropriate to their scale.The right balance of control in place to mitigate the adverse consequences of the risks, if they should materialise and.Having processes in place to monitor risks, and access to reliable, up-to-date information about risks.Identifying possible risks in advance and putting mechanisms in place to minimise the likelihood of their materialising with adverse effects.This supports better decision making by developing a more thorough understanding of the risks inherent within an option and their likely impact. Risk management is a structured approach to identifying, assessing and controlling risks that emerge during the course of the option lifecycle. The current recommendation is that risks associated with patronage or benefits should be accounted for by applying sensitivity or scenario testing around the central case. However, Transport Scotland recognises that economic appraisal should also account for risk adjusted benefits. Guidance is only available for cost risk adjustment. Risk management strategies should be adopted for the appraisal and implementation of large transport options although these principles can also be applied to smaller options. In addition, before and during implementation, steps should be taken to prevent and mitigate both risks and uncertainties. Practitioners should calculate an expected value of all risks for each option and consider how exposed each option is to future uncertainty. The aim of taking account of risks, uncertainties, and Optimism Bias is to obtain the best possible estimates of the costs and benefits of each option. As a result, it is important to identify and mitigate risks, and make allowances for Optimism Bias. This is the consequence of biases unwittingly inherent in the appraisal process, and risks and uncertainties that materialise. As stated in the HM Treasury Green Book (2003) 1, in appraisals it is always likely there is some difference between what is expected and what actually happens. For the current version refer to the Scot-TAG section of the Transport Scotland website.Ĭhanges since STAG Refresh, May 2008 Change numberġ3.2.4 Further Guidance on Managing and Assessing Risk - reference material updatedġ3.6 Uncertainty Analysis (Sensitivity and Scenario Testing) ġ3.2.4 Further Guidance on Managing and Assessing Riskġ3.3.2 Relationship between Optimism Bias and Risk Assessmentġ3.6 Uncertainty Analysis (Sensitivity and Scenario Testing)Īll risks and uncertainties associated with an option need to be fully identified and accounted for in the appraisal process. Once printed or downloaded this document is considered to be uncontrolled.
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