2006 – From Portfolio Risk Assessment to Portfolio Risk Management

David S. Bowles

Portfolio Risk Management is a risk-informed approach for improved management of dam safety for a portfolio of dams in the context of the owner’s business. It can be used to identify ways to strengthen technical and organisational aspects of a dam safety program, and to provide valuable inputs to various business processes. Portfolio Risk Assessment is a decision-support tool, which is incorporated in Portfolio Risk Management. It can combine engineering standards and risk assessment approaches to provide a systematic means for identifying, estimating and evaluating dam safety risks, including comparisons with other industries. It should be periodically updated to provide a basis for managing prioritised queues of investigations and risk-reduction measures to achieve more rapid and cost-effective reduction of both knowledge uncertainty and risk.

Portfolio Risk Assessment is a standard of practice in Australia and is being applied by the US Army Corps of Engineers and others. When properly conducted and used within its limitations, the Portfolio Risk Assessment process is generally considered to be robust, adaptive, defensible for corporate governance, and to justify its cost through such benefits as increased dam safety funding, identification of failure modes that were not previously recognised, identification of opportunities for improved risk management, and more rapid “knowledge uncertainty” and risk reduction.