Risk is defined as the possibility of suffering loss (or harm) and the impact that loss would have on the affected party. Edmonton's Risk Assessment Methodology helps determine the level of risk associated with infrastructure failure.
By using data derived from the Standardized Rating System, the Office of Infrastructure and Funding Strategy can forecast future condition and risk of an asset in relation to various renewal (rehabilitation and replacement) actions. It is a balanced approach that integrates the municipality's social (for example, health and safety of citizens), environmental (for example, impact on the environment), and economic (for example, cost of failure) objectives into the decision-making process. Edmonton's risk methodology addresses only the controllable factors of failure, (those closely related to the funding of infrastructure rehabilitation projects), rather than the uncontrollable factors (failures caused by external random factors, such as a tornado).
Risks are determined using a method known as the Markov Chain. Assets are firstly grouped according to similarities in performance and deterioration characteristics and then the controllable deterioration of each asset type over time (depending on a given rehabilitation strategy) is determined. Each asset group has its own deterioration curve based on the asset’s properties, as different conditions and materials deteriorate at different rates.
The deterioration curve analyzes current conditions, the natural aging process, actual use, performance history, and rehabilitation scenarios.
Level of risk is measured using numerous indicators, for example:
- Portion of an asset deemed to be critical (expected to fail) − is represented by those assets that have deteriorated past the expected service life and are considered unacceptable.
- Impact of failure of an asset − impacts of assessed failure are measured according to the social (health and safety of citizens), environmental (impact on the environment), and economic (cost of failure) indicators, factoring the City’s objectives into the decision-making process.
- Overall condition – categorized by either A (very good), B (good), C (fair), D (poor) or E (very poor) using the standardized rating system.
- Severity – reflects the overall likelihood of asset failure, the expected amount of failure and the impact of the failure on the city. An analytical combination of expected assets in critical condition and the impacts of failure of those assets help to analyze infrastructure deterioration levels at a large-scale level.
Risk assessment provides a uniform approach for dealing with different types of assets and has the ability to compare one type against another type. This model helps predict the impact of different funding scenarios in the context of the needs of other infrastructure, which enables the City to determine where available funding can provide the most benefit. The result is an unbiased and objective measure of the seriousness of the asset and the ability to prioritize funding to deal with the most critical assets first.