STOCKHOLM—There are many risk management lessons to be learned from large projects, a leading project risk manager and academic told delegates during a session at the Federation of European Risk Management Assns. forum in Stockholm on Monday.

David Hancock, head of risk and value at Transport for London, was risk manager for the project to build a fifth terminal at Heathrow Airport in London.

That project, first proposed in 1995 and approved in 2001 was completed—on budget and a few days ahead of schedule—in March 2008.

The new terminal was intended to increase the number of passengers traveling through Heathrow to 80 million per day from 50 million per day, and the terminal is the size of terminals 1, 2 and 3 combined, said Mr. Hancock.

Risks included the requirement to re-route a river running through the site without altering the flow of water and the need to accommodate train lines within the site, he said.

Mr. Hancock said it was important to understand that “risks only exist in the future,” which makes them ambiguous because it depends on what your view of the future is.

In addition, he said, it is important to remember that “all models are wrong, some are useful.”

After a tunnel collapse in 1994 during construction of the Heathrow Express train line, BAA Ltd., which owns Heathrow Airport, changed its behavior toward risk, Mr. Hancock said. And the main conclusion was that “BAA holds all of the risk all of the time.”

It is important to recognize, he said, that people behave differently when a risk is insured from when a risk is uninsured. Often, he said, people believe insured risks to be less important because it is believed that any losses will be covered by insurance.

Risk managers and the insurance industry need to understand that behavior, he said.

For the building of Terminal 5, “we insured the project, not the individual companies” involved, Mr. Hancock said, and worked with Marsh Inc. and Swiss Reinsurance Co. Ltd.

For the project, he said, several contractors' all-risks losses fell within BAA's retention; but the retention suffered no overall erosion, and insurers saw no losses.

The airport suffered delays during the first few days after opening because of problems with the baggage-handling system. These problems, Mr. Hancock said, centered on people and a lack of appropriate training. It is, he said, important in projects to remember that people and their behavior can be a huge risk.

It is key to consider that projects are about change management, said Mr. Hancock.

Legislation tends to lead to minimum compliance, Mr. Hancock said, and “we need buy-in heart and soul for risk management to work.”

The session was moderated by Julia Graham, chief risk officer for London-based law firm DLA Piper U.K. L.L.P. and vp of FERMA.