Risk Management

I came across an article from the Committee on Claims Reduction Management dated April 2025 today. 

Claim Reduction: Fundamentals of establishing a company risk-mitigation program

While the article focuses on mitigating claims risk, the questions posed have broader applicability. 

What do others think?

The article is written from the perspective of the consultant engineer, but the same process should also be conducted by the owner and constructor.  In addition, the same process can be applied on a broader enterprise level for the organization.

------------------------------
Eric Ho M.ASCE
Principal Consultant
NY

Original Message:
Sent: 09-04-2025 02:32 PM
From: Mitchell Winkler
Subject: Good Article on Claims Reduction Having General Applicability

I came across an article from the Committee on Claims Reduction Management dated April 2025 today. 

Claim Reduction: Fundamentals of establishing a company risk-mitigation program

While the article focuses on mitigating claims risk, the questions posed have broader applicability. 

What do others think?

------------------------------
Mitch Winkler P.E.(inactive), M.ASCE
Houston, TX
------------------------------

Eric, I agree with your point that the same risk-mitigation principles apply not only to consultants but also to owners and constructors. Extending this framework to the enterprise level is essential for creating a consistent culture of risk awareness and accountability. Performing engineering services inherently involves risk, which is why risk factors exist and often prove higher than expected when decisions are made with limited knowledge.

For example, I recall working on a project in Tajikistan for the European Space Agency, where the safety factor on steel was set extremely high. The owner required significant additional steel because of concerns over cheap imported materials and the possibility of failure. This decision underscores a key truth: risks must always be evaluated. Familiarity with "the way we've always done it" does not guarantee correctness, even when large safety factors are applied.

As the article notes, "these decisions are rarely formally decided or discussed; they just happen." That observation resonates with me. It reminded me of another paper I once wrote concerning the importance of a CEO's quality management statement being visible in all offices. When leadership clearly communicates quality objectives, organizational performance improves. The same applies to safety, and I would argue that safety statements should explicitly include risk. If leadership links risk directly to safety, it helps the entire organization understand why risk management is essential. They correctly stated, "Leadership is required to proactively implement an actionable risk-mitigation culture".

Equally important, when a company claims it "manages risk," there must be an owned and managed risk process and procedure, clearly outlined and understood across the organization. Assigning responsibility to a dedicated individual or group ensures accountability and consistency.

The article also mentioned experience as a factor. While past experience is critical, I have found that clients sometimes overlook several important questions.:

1.    If the experience is old or the records cannot be retrieved, the practical value is close to zero.

2.    If the key people are no longer with the company, the risk increases substantially. 

3.    If there is no functioning knowledge management system to capture and transfer lessons learned, the past or experience adds little to reducing risk. 

I have seen many situations where clients take comfort in a company's long list of past projects, only to discover that the firm cannot substantiate that experience in practice.

Finally, the article suggested that risks to the owner should be acknowledged. In reality, I struggle to see how most companies could fully acknowledge all risks. Doing so might create unnecessary concern for the client. Instead, I believe the better path lies in building long-term relationships and trust. A well-integrated project team, aligned closely with the owner's team, is one of the most effective ways to manage risks over the life of a complex project. Continuity, trust, and collaboration are indispensable for risk reduction.

In sum: risk is unavoidable, but it can be systematically managed. Success requires leadership commitment, a formal risk management process, a realistic assessment of past experience, and above all, long-term continuity and strong long-term relationships with clients.

------------------------------
Bill Bersing Ph.D., P.E., M.ASCE
President/ CEO
Virginia Beach VA

Original Message:
Sent: 09-08-2025 10:56 AM
From: Eric Ho
Subject: Good Article on Claims Reduction Having General Applicability

The article is written from the perspective of the consultant engineer, but the same process should also be conducted by the owner and constructor.  In addition, the same process can be applied on a broader enterprise level for the organization.

------------------------------
Eric Ho M.ASCE
Principal Consultant
NY

Original Message:
Sent: 09-04-2025 02:32 PM
From: Mitchell Winkler
Subject: Good Article on Claims Reduction Having General Applicability

I came across an article from the Committee on Claims Reduction Management dated April 2025 today. 

Claim Reduction: Fundamentals of establishing a company risk-mitigation program

While the article focuses on mitigating claims risk, the questions posed have broader applicability. 

What do others think?

------------------------------
Mitch Winkler P.E.(inactive), M.ASCE
Houston, TX
------------------------------

Eric, I agree with your point that the same risk-mitigation principles apply not only to consultants but also to owners and constructors. Extending this framework to the enterprise level is essential for creating a consistent culture of risk awareness and accountability. Performing engineering services inherently involves risk, which is why risk factors exist and often prove higher than expected when decisions are made with limited knowledge.

For example, I recall working on a project in Tajikistan for the European Space Agency, where the safety factor on steel was set extremely high. The owner required significant additional steel because of concerns over cheap imported materials and the possibility of failure. This decision underscores a key truth: risks must always be evaluated. Familiarity with "the way we've always done it" does not guarantee correctness, even when large safety factors are applied.

As the article notes, "these decisions are rarely formally decided or discussed; they just happen." That observation resonates with me. It reminded me of another paper I once wrote concerning the importance of a CEO's quality management statement being visible in all offices. When leadership clearly communicates quality objectives, organizational performance improves. The same applies to safety, and I would argue that safety statements should explicitly include risk. If leadership links risk directly to safety, it helps the entire organization understand why risk management is essential. They correctly stated, "Leadership is required to proactively implement an actionable risk-mitigation culture".

Equally important, when a company claims it "manages risk," there must be an owned and managed risk process and procedure, clearly outlined and understood across the organization. Assigning responsibility to a dedicated individual or group ensures accountability and consistency.

The article also mentioned experience as a factor. While past experience is critical, I have found that clients sometimes overlook several important questions.:

1.    If the experience is old or the records cannot be retrieved, the practical value is close to zero.

2.    If the key people are no longer with the company, the risk increases substantially. 

3.    If there is no functioning knowledge management system to capture and transfer lessons learned, the past or experience adds little to reducing risk. 

I have seen many situations where clients take comfort in a company's long list of past projects, only to discover that the firm cannot substantiate that experience in practice.

Finally, the article suggested that risks to the owner should be acknowledged. In reality, I struggle to see how most companies could fully acknowledge all risks. Doing so might create unnecessary concern for the client. Instead, I believe the better path lies in building long-term relationships and trust. A well-integrated project team, aligned closely with the owner's team, is one of the most effective ways to manage risks over the life of a complex project. Continuity, trust, and collaboration are indispensable for risk reduction.

In sum: risk is unavoidable, but it can be systematically managed. Success requires leadership commitment, a formal risk management process, a realistic assessment of past experience, and above all, long-term continuity and strong long-term relationships with clients.

------------------------------
Bill Bersing Ph.D., P.E., M.ASCE
President/ CEO
Virginia Beach VA

Original Message:
Sent: 09-08-2025 10:56 AM
From: Eric Ho
Subject: Good Article on Claims Reduction Having General Applicability

The article is written from the perspective of the consultant engineer, but the same process should also be conducted by the owner and constructor.  In addition, the same process can be applied on a broader enterprise level for the organization.

------------------------------
Eric Ho M.ASCE
Principal Consultant
NY

Original Message:
Sent: 09-04-2025 02:32 PM
From: Mitchell Winkler
Subject: Good Article on Claims Reduction Having General Applicability

I came across an article from the Committee on Claims Reduction Management dated April 2025 today. 

Claim Reduction: Fundamentals of establishing a company risk-mitigation program

While the article focuses on mitigating claims risk, the questions posed have broader applicability. 

What do others think?

------------------------------
Mitch Winkler P.E.(inactive), M.ASCE
Houston, TX
------------------------------

Bill, thanks for sharing your experience. Many of your points resonate with my own experience from working in a hazardous industry. While I understand your point about being cautious with sharing risks with the client, I do think clients need to know what they are getting into and their potential exposure to delays, cost overruns, or loss of quality or functionality. 

Eric, I agree with your point that the same risk-mitigation principles apply not only to consultants but also to owners and constructors. Extending this framework to the enterprise level is essential for creating a consistent culture of risk awareness and accountability. Performing engineering services inherently involves risk, which is why risk factors exist and often prove higher than expected when decisions are made with limited knowledge.

For example, I recall working on a project in Tajikistan for the European Space Agency, where the safety factor on steel was set extremely high. The owner required significant additional steel because of concerns over cheap imported materials and the possibility of failure. This decision underscores a key truth: risks must always be evaluated. Familiarity with "the way we've always done it" does not guarantee correctness, even when large safety factors are applied.

As the article notes, "these decisions are rarely formally decided or discussed; they just happen." That observation resonates with me. It reminded me of another paper I once wrote concerning the importance of a CEO's quality management statement being visible in all offices. When leadership clearly communicates quality objectives, organizational performance improves. The same applies to safety, and I would argue that safety statements should explicitly include risk. If leadership links risk directly to safety, it helps the entire organization understand why risk management is essential. They correctly stated, "Leadership is required to proactively implement an actionable risk-mitigation culture".

Equally important, when a company claims it "manages risk," there must be an owned and managed risk process and procedure, clearly outlined and understood across the organization. Assigning responsibility to a dedicated individual or group ensures accountability and consistency.

The article also mentioned experience as a factor. While past experience is critical, I have found that clients sometimes overlook several important questions.:

1.    If the experience is old or the records cannot be retrieved, the practical value is close to zero.

2.    If the key people are no longer with the company, the risk increases substantially. 

3.    If there is no functioning knowledge management system to capture and transfer lessons learned, the past or experience adds little to reducing risk. 

I have seen many situations where clients take comfort in a company's long list of past projects, only to discover that the firm cannot substantiate that experience in practice.

Finally, the article suggested that risks to the owner should be acknowledged. In reality, I struggle to see how most companies could fully acknowledge all risks. Doing so might create unnecessary concern for the client. Instead, I believe the better path lies in building long-term relationships and trust. A well-integrated project team, aligned closely with the owner's team, is one of the most effective ways to manage risks over the life of a complex project. Continuity, trust, and collaboration are indispensable for risk reduction.

In sum: risk is unavoidable, but it can be systematically managed. Success requires leadership commitment, a formal risk management process, a realistic assessment of past experience, and above all, long-term continuity and strong long-term relationships with clients.

------------------------------
Bill Bersing Ph.D., P.E., M.ASCE
President/ CEO
Virginia Beach VA

Original Message:
Sent: 09-08-2025 10:56 AM
From: Eric Ho
Subject: Good Article on Claims Reduction Having General Applicability

The article is written from the perspective of the consultant engineer, but the same process should also be conducted by the owner and constructor.  In addition, the same process can be applied on a broader enterprise level for the organization.

------------------------------
Eric Ho M.ASCE
Principal Consultant
NY

Original Message:
Sent: 09-04-2025 02:32 PM
From: Mitchell Winkler
Subject: Good Article on Claims Reduction Having General Applicability

I came across an article from the Committee on Claims Reduction Management dated April 2025 today. 

Claim Reduction: Fundamentals of establishing a company risk-mitigation program

While the article focuses on mitigating claims risk, the questions posed have broader applicability. 

What do others think?

------------------------------
Mitch Winkler P.E.(inactive), M.ASCE
Houston, TX
------------------------------

Hello Mitch,

thanks for reading through my Long post and picking up on this valid point. When I stated , " I struggle to see how most companies could fully acknowledge all risks…" this was in the context of companies exaggerating their past performance and capabilities with existing staff to manage the project or program in order to win the work . Good write up's and marketing is how they win contracts.

It doesn't happen all the time but enough to consider evaluating the proposed team, companies knowledge management and connections with key stakeholders (trust / continuity ) rather than putting all the emphasis (most) on "paste performance".  

I do agree with you that our clients need to know all the risks and am sure this comes out eventually. My concern has always with putting together the high performance team but somehow this is overshadowed by good marketing and irrelevant past performance of others.

Your thoughts?

Bill, thanks for sharing your experience. Many of your points resonate with my own experience from working in a hazardous industry. While I understand your point about being cautious with sharing risks with the client, I do think clients need to know what they are getting into and their potential exposure to delays, cost overruns, or loss of quality or functionality. 

Eric, I agree with your point that the same risk-mitigation principles apply not only to consultants but also to owners and constructors. Extending this framework to the enterprise level is essential for creating a consistent culture of risk awareness and accountability. Performing engineering services inherently involves risk, which is why risk factors exist and often prove higher than expected when decisions are made with limited knowledge.

For example, I recall working on a project in Tajikistan for the European Space Agency, where the safety factor on steel was set extremely high. The owner required significant additional steel because of concerns over cheap imported materials and the possibility of failure. This decision underscores a key truth: risks must always be evaluated. Familiarity with "the way we've always done it" does not guarantee correctness, even when large safety factors are applied.

As the article notes, "these decisions are rarely formally decided or discussed; they just happen." That observation resonates with me. It reminded me of another paper I once wrote concerning the importance of a CEO's quality management statement being visible in all offices. When leadership clearly communicates quality objectives, organizational performance improves. The same applies to safety, and I would argue that safety statements should explicitly include risk. If leadership links risk directly to safety, it helps the entire organization understand why risk management is essential. They correctly stated, "Leadership is required to proactively implement an actionable risk-mitigation culture".

Equally important, when a company claims it "manages risk," there must be an owned and managed risk process and procedure, clearly outlined and understood across the organization. Assigning responsibility to a dedicated individual or group ensures accountability and consistency.

The article also mentioned experience as a factor. While past experience is critical, I have found that clients sometimes overlook several important questions.:

1.    If the experience is old or the records cannot be retrieved, the practical value is close to zero.

2.    If the key people are no longer with the company, the risk increases substantially. 

3.    If there is no functioning knowledge management system to capture and transfer lessons learned, the past or experience adds little to reducing risk. 

I have seen many situations where clients take comfort in a company's long list of past projects, only to discover that the firm cannot substantiate that experience in practice.

Finally, the article suggested that risks to the owner should be acknowledged. In reality, I struggle to see how most companies could fully acknowledge all risks. Doing so might create unnecessary concern for the client. Instead, I believe the better path lies in building long-term relationships and trust. A well-integrated project team, aligned closely with the owner's team, is one of the most effective ways to manage risks over the life of a complex project. Continuity, trust, and collaboration are indispensable for risk reduction.

In sum: risk is unavoidable, but it can be systematically managed. Success requires leadership commitment, a formal risk management process, a realistic assessment of past experience, and above all, long-term continuity and strong long-term relationships with clients.

------------------------------
Bill Bersing Ph.D., P.E., M.ASCE
President/ CEO
Virginia Beach VA

Original Message:
Sent: 09-08-2025 10:56 AM
From: Eric Ho
Subject: Good Article on Claims Reduction Having General Applicability

The article is written from the perspective of the consultant engineer, but the same process should also be conducted by the owner and constructor.  In addition, the same process can be applied on a broader enterprise level for the organization.

------------------------------
Eric Ho M.ASCE
Principal Consultant
NY

Original Message:
Sent: 09-04-2025 02:32 PM
From: Mitchell Winkler
Subject: Good Article on Claims Reduction Having General Applicability

I came across an article from the Committee on Claims Reduction Management dated April 2025 today. 

Claim Reduction: Fundamentals of establishing a company risk-mitigation program

While the article focuses on mitigating claims risk, the questions posed have broader applicability. 

What do others think?

------------------------------
Mitch Winkler P.E.(inactive), M.ASCE
Houston, TX
------------------------------

I came across an article from the Committee on Claims Reduction Management dated April 2025 today. 

Claim Reduction: Fundamentals of establishing a company risk-mitigation program

While the article focuses on mitigating claims risk, the questions posed have broader applicability. 

What do others think?