The Facility Risk Index – An Actionable Metric
Many organizations want to do more than identify their facility risk – they want to be able to measure the risk of failure as well. While the data from a risk assessment can be used in a basic prioritization scenario, the Risk Index is an asset metric that can take into account multiple considerations and combines system criticality and facility condition to present a more accurate measurement of risk.
The first step is to create building models, known as risk templates, for all building types and then break them into major systems. Each system is rated on criticality and impact on operation. The models look at criticality today, five and 10 years forward. The models then are applied to the organization’s buildings. The risk profile of individual buildings can be tailored to the organization’s unique situation while the model can be adjusted by the purpose of the building and other variables.
Once risk templates have been created, a Risk Index can then be calculated. uses condition (deferred maintenance requirements linked to the area of risk, generally identified during a facility condition assessment) and system criticality/risk factor. The cost of project requirements is multiplied by the risk factor and then divided by the estimated replacement value for that system or facility. The RI is calculated for each system as well as the whole facility. Three risk indices are calculated for current, five years out and 10 years out.
Once risk is identified, proactive maintenance to address critical issues prior to failure is vitally important. With projects prioritized and the Risk Index in place, facility managers can justify both short- and long- term budget requirements by demonstrating the impact of different funding levels on the risk of an individual facility or the entire portfolio. Using “what if” funding scenarios, organizations can pinpoint the risks and highlight the financial consequences if the work is not completed.
The Risk Index provides an objective view into facility risk and builds a solid case for funding. Facility managers that can pinpoint areas of risk within the organization’s portfolio, today and in the future, and systematically prioritize projects to address that risk, will be better able to sleep at night.