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Research Paper Risk Management for Airport Managers

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Introduction

´╗┐RISK MANAGEMENT FOR AIRPORT MANAGERS Risk Management for Airport Managers Research Paper Fabian Fritschi Embry Riddle Aeronautical University Abstract This research paper introduces the importance of risk management for air carrier managers and aviation in general. Examples from real aviation mishaps will be used to emphasize the importance of risk management. Furthermore this paper will explain how risk management can be assessed with the help of a risk management plan. The plan includes three main goals; the evaluation of potential loss, the utilization of risk management techniques and the actual establishment of a risk management plan. There are four risk management techniques used, which are elimination, reduction, transfer and retention. This paper explains in detail on how the risk is being evaluated and divided between the airline and the insurance carrier using these techniques. In conclusion, the paper will show in form of examples from air carriers such as Continental airlines or Finnair, how good risk management works and how the airlines implement their risk management plan into their overall business strategy. ________________ Introduction Any business enterprise is exposed to some sort of risk. The attack happened at 9/11 was a wake-up call for the aviation industry to improve the security measures and improve their risk management. Yet it was inevitable to stop the 2002 Tampa plane crash where a youngster stole an airplane and crashed it into a building. The incident that killed the teen was inspired by the 9/11 attack. ...read more.

Middle

Utilization of Risk Management Techniques Elimination The first risk management technique is elimination. An airline is able to eliminate loss potential by not engaging in risk activities. For most air carrier however, this method is out of question. Like driving a car, airplanes have a high potential for risk and the air carrier would not be in business if it would back out of any potential risk. Yet any airline is able to limit the amount of potential risk that it is involved. For example, by replacing an older fleet of aircraft and maintaining its fleet and equipment to a high standard, the risk can be reduced to a fraction. Also due to the availability of risk bearing insurance, many insurance companies do not want to eliminate the possibility of risk but quantify the risk potential and maintain a sufficient amount of clientele. Without risk the insurance companies would have no use of doing business. That is why the decision of avoiding risk is mainly economical. The main determinant for the term avoidance in the aviation industry is to minimize the amount of operational or revenue interruptions. (Wittmer, Bieger & Mueller, 2011) Reduction Another risk management technique is reduction and is closely related to the first technique of elimination. By using the technique in the airline industry, risk managers rather reduce the risk involved with the industry than eliminating it. Southwest Airlines has a good example of reduction. By eliminating the risk of long flights, it created short flight plans for its commuter flight routes and its proof is its good standing in flying safely without incidents. ...read more.

Conclusion

The same happens when we purchase a car insurance to protect us legally from potential risk. Air carriers are no difference and risk management plays an even more important role. The general term for risk management is the process of identifying, evaluating, reducing, and accepting risk. Risk management also involves the conservation of assets and the minimization of losses or the detection of hazard before they occur. For enterprises in general, threats exposed due to risk are company assets, income or legal liability. While flying airplanes form one location to another is the daily business for airlines, the potential for risk is inevitable. Especially in the aviation industry it is important to follow Federal Aviation Administration guidelines. Therefore positive risk management is an important asset to the aviation industry. If risk can be reduced or eliminated, the potential for accidents or mishaps occurring will drastically be reduced. Increasing the potential for risk will have many negative aspects. It will reduce the trust of customer or passenger, loss in revenue and potential law suit due to accidents and increased premiums or higher deductibles with the associated insurance carrier. Positive risk management can be seen by air carriers such as Continental airlines or Finnair. Both companies use distinctive risk management techniques to avoid future confrontations and so secure their companies financially. Many air carriers feel the threat and pressure that is exposed due the high risk factor. For those not willing to comply with their companies? policy regarding risk, they willfully endanger their surrounding environment and the life?s of innocent citizens. Therefore the job of a risk manager must be taken critical, not just in aviation but in our society as a whole. ...read more.

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