During recent years there has been increased attention in organisations throughout the world to identify and manage risks and opportunities. In its most basic form, risk is about awareness of, and
reaction to, potential circumstances that could impede an entity’s ability to achieve its goals and objectives. When viewed from this perspective, it makes good sense for managers to formalise ways
of identifying those circumstances, and develop steps to reduce or avoid the risks.

In New Zealand, the Local Government Act 2002 (LGA 2002) requirements have led to organisations placing greater emphasis on approaching risk management holistically. However, it is widely
considered that in the transportation arena, there has not yet been sufficient progress regarding risk management’s practical application. As an indication of the breadth of the issue, the NZ Transport Agency’s 2007 review of the asset management plans (AMPs) of all 74 road-controlling authorities (RCAs) in New Zealand noted:

• Risk had generally been poorly carried out
• Those RCAs that scored above-average results had made reference to AS/NZS 4360, and most had completed a risk register
• In general, transportation risks had not been integrated into corporate risk policies. From an organisational perspective, however, these transportation risks should link with corporate risk
  policies and be incorporated into transportation risk registers.

In general terms, poor risk management processes can lead to a number of negative consequences.

This can reduce RCAs’ overall resilience and also have a more day-to-day impact, including:

• Poor decision making because not all options (and the risk profiles of options) are considered – this can result in both inefficiencies (economic and financial considerations) and ineffectiveness (eg decisions are made that could reduce the life of network assets)
• Top management or the governing board being unaware of potential road network issues that deserve their attention
• Failure of critical assets, which reasonably could have been foreseen if a robust risk management process had been in place
• Risk registers showing costs (and any specific consultation required) inadequately translated into specific programmes or projects to be implemented.

It is recognised that risk management related to transportation covers a wide range of activities. For example, there is a complete risk management process involved with activities such as construction project management and safety management.