White Paper
T
r
ansforming the Corp
s into a Risk Managing Organization
1
Abstract
The Corps' reliance on engineering design standa
rds, a hierarchical decision structure and
strong link to Congressional budget priorities
may have been appropriate for the past but not
for the futur
e
. The incr
easing reco
gnition b
y
the agency and by the pub
lic o
f
the lim
its of
prediction ( uncertainty)
and in
the limits of what protecti
on the Corps and the nation can
provide aga
inst extreme events, led to the Ac
tion
s for Change and the C
o
rps interest in
adopting a risk analysis approach to decision maki
ng. Risk analysis comprises three related
and iterative tasks: 1)
risk assessment, to include
the data and analytical ac
tivities that define the
likelihood and future consequences
of different alternatives havi
ng different costs, (2)
risk
management, to include what hazards and opport
unities will receive agency attentio
n and what
risk vs. b
e
nefit, vs. cos
t
choices will b
e
made
and by whom and what would be the imp
a
ct of
current decisions on future
options, and 3)
risk communi
cation among policy makers, budget
authorities and the public who must
collectively make inves
tment or
reg
u
latory d
ecisions (risk
management) with the knowledge provided by the
risk assessm
ent. An example is provided to
illus
t
ra
te ho
w the Corps might function as a risk
management agency. So
me of the wa
ys in
which a risk management approach advances the
Corps' mission and service to the nation are
identified an
d several ch
anges to th
e Corp
s organization, p
l
an
ning, budgeting and sharing of
decision authority are described. T
h
e paper conc
ludes with a number of recommendations for
immediate action to begin the transition
to becoming a risk m
anagement agency.
Introduction
Hurrican
es Katrina and Rita and
the subsequent criticism
s
of
the nation’s and the Corps of
Engineers approaches to proj
ects design, budgeting and communica
tion of risk have been a
wakeup call for the U.S. Ar
m
y
Corps of Engineers.
The evalu
a
tions that w
e
re m
a
de after the
storm
s
revea
l
ed the lim
itations of
the
trad
ition
a
l
e
ngineer
ing a
pproaches to
design of
pr
ojects in
the face of natural and man-m
a
de hazards and th
e ways in which risk was evaluated, recognized
and communicated. The
trad
ition
a
la
pproach pr
e
s
um
es
that risk assessm
ent and r
i
sk m
a
nagem
e
nt
are technical decis
i
ons th
at are solely the respon
sibility of the professional engineer. However,
absent perfect knowledge and unlim
ited financia
l resources perform
a
nce and design can never
yield “fail safe” projects. As noted
in the book “to Engin
eer is Hum
a
n,”
All designs f
o
r use are arbitrary. The de
signer or his client has to choose in
what degree and where there shall be failu
re. Thus, the shape of all things is
1
Contributin
g Authors: David Moser, USACE,
I
n
stitu
te for Water Reso
urces; Todd.
Bridges,
USACE, Engineer Res
e
arch and De
velopm
ent Cent
er; S
t
ev
en Cone, USACE, Institu
te f
o
rW
a
ter
Resources; Yacov Haimes, Univers
i
ty of
Virgin
ia; Brian K. Harper, USACE, Institu
te f
o
r
Water Resources; L
e
onard Shabm
a
n, Resources fo
r the Future; and, Charles Yoe, College of
Notre Dam
e
1
the product of arbitrary choi
ce. If you vary the term
s of your
com
p
rom
i
s
e
--say
more speed, more heat, less safety, more
discomfort, lower first cost--then you
vary the shape of the thing designed. It
is quite impossible for any design to be
the log
i
cal o
u
tcom
e of the requirem
e
nts sim
p
ly because, the requirem
e
nts
being in con
f
lict, th
eir lo
gical
outcom
e is an i
m
possibility.
There are always “residual risks” defined as th
e likelihood and consequences
of occurrences that
exceed th
es
t
ress
es that can be m
e
t by the pro
j
ect.
Furtherm
ore, routine ap
plications of
specific
factors of safety, freeboard requirem
e
nts, a
nd other uniform
s
t
andards without understanding
whether th
es
e design ad
justm
e
nts actually add
r
es
s vulnerabilities that m
a
y com
p
rom
i
s
e
project
reliability m
a
y do little to reduce failure risk
Addition
a
lly, th
em
e
thods for comm
uni
cation of
residual risk
s and project reliability to the
affected public, Co
rps, and gov
ernm
ent decision
m
a
kers has been revealed ineffective.
These issues
are not confined to flood
hazards
. T
h
e nation
’
s water resource problem
s and their
potential solutions all involve
risk and require decision m
a
king
under uncertainty. T
h
e problem
s
are com
p
lex and m
u
ltifaceted and in need of a
decision m
a
king paradigm
that acknowledges this
com
p
lexity and im
precision.
The Actions for Change represent a new direction
for the Corps of Engineers in term
s of how it
plans, decides upon and then im
plements, solutions
to the nation’s water resources problem
s
.
The Actions
em
phasize the need for risk assessm
e
n
t and risk m
a
nage
m
e
nt
within a system
s
context, the need to effectively communicate
ris
k
and the need to increas
e public serv
ice
professionalism
within the Corps. The actions ca
ll f
o
rm
o
re atten
tion to quantif
ying the r
i
sks and
acknowledging uncertainties in term
s
of hum
a
n life, health and sa
fety, econom
i
cs, environm
ent,
finances and other values that are im
portant to
people. The actions call for better communication
of the risks of choosing different alternatives
for the nation and for individual citizens. If the
Corps is going to be part of a new national effort
to better recognize and
then m
a
nage risks, it
must be competent at characterizing them
(risk
assessm
ent) and communicating the nature of
these risks to a wide variety of
stakeholders and decision m
a
kers.
The system
s under consideration within the Corps
portfolio of projects in
clude: locks, dam
s
and
channels form
ing a navigation system
; a com
b
ina
tion of structural, non-st
ructural, and restored
natural featu
r
es operatin
g
to reduce flood risk
s; b
each and du
ne com
p
lexes; series of structures
and operatin
g procedures at a reserv
oir to m
eet
multiple pu
rposes; and, s
y
stem
s of ecosystem
features comprising a restorati
on project. These system
s incl
ude m
a
ny interacting com
ponents
whose relationships and dependencies can give
rise to com
p
lex system
behaviors. The
perform
a
nces of these system
s are affected by
any num
b
er of natural
and anthropogenic factors
(e.g., weather patterns, econom
ic trends) that
vary both tem
porally and spatially.
The discuss
i
on that f
o
llo
ws will requ
ire s
i
gnif
i
ca
nt changes in the way th
e Corps is or
ganized f
o
r
planning, decision m
a
king and budgeting. Allowing the Corps to becom
e
a risk m
a
naging
organization is a non-increm
ental step for the na
tion and for the organization itself. This paper
outlin
es the e scope and depth of
cha
nge, as ca
lle
df
o
r by the 12 action
s
, in order to f
a
cilita
te th
e
discuss
i
ons that m
u
st take place if
change is to be realized.