Risk Management in British Airways: Types of Risks, Mitigation Strategies and Risk Register

This report discusses the different risk models and frameworks to understand the business operations of British Airways. It assesses the types of risks and hazards associated with the current strategy, commercialism environment and enterprise operations of British Airways and suggests mitigation strategies to prepare a risk register.

RISK MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
Risk models.................................................................................................................................1
Robson risk management model.................................................................................................2
TASK 2............................................................................................................................................3
(a) Assessment of types of risks and hazards associated with the current strategy,
commercialism environment and enterprise operations of British Airways...............................3
(b) Suggestions to mitigate those risks and preparation of risk register.....................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Risk management is the process of evaluating and identifying the threats and risk which
can be previously controlled and managed by the organization and a management of the business
enterprise which will support the company to obtain the productivity and reduce the losses
(Smith and Merritt, 2020). The report will illustrate the understanding of the business operations
of a company British airways and brief about the different risk matrix and models to understand
it in better manner.
TASK 1
Risk models
Risk term simply refers as a threat of different purposes and elements where it can harm
the organisation and a business to have the negative impact on the company where it becomes
essential to understand and adopt the relevant or appropriate risk model and framework to
control and manage it effectively. Here, mentioning the two risk frameworks which will help an
individual or an organisation to identify the risk and manage them appropriately.
The COSO ERM Integrated Framework.
COSO ERM integrated framework is a tool which helps the individual and organisation
to manage the risk and reduces the risk by identifying, assessing, and managing to enterprises.
This model has an aim to help and support the organisation to understand and prioritise the risk
and create a strong connection between the risk and strategy of the business as it operates in the
particular market field. It is consisted of five main components which helps the company to
achieve the mission and vision in definite manner (CONFLICT, 2019).
 Control Environment: The first factor leads the company to understand the
environment of their business or their workplace and put their efforts in controlling the
negative environment by adopting the different activities. It may include exercise
integrity and ethical values. Also, by making a commitment to competence will also
ensure the organisation to not get impacted by the risk widely.
 Risk assessment: The second step refers to identify the risk and a risk assessment where
by creating the company wide objective swill help and support them to do so. Also the
1

analysis and risk identification areas will allow the company to get the definite amount of
result and outcome.
 Control activities: Third step refers to control the activities which can be done by
following the policies and procedures and by improving the security like applications and
network which will allow the company to reduce the risk areas. Also, the company
always should have the backup plan for the betterment of the organisation where it will
help the company to overcome and manage the risk (Chang and et.al, 2018).
 Information and communication: In an organisation, the management should have
implemented the proper communication with each other and in overall department along
with sharing the relevant and important information among the company will help the
company.
 Monitoring activities: Implementing the different measures of risk assessment, the
company now required monitoring the ongoing performance.
Robson risk management model
 Personal risk Perception: The first factor refers where the people subjective judgement
about the likelihood provides the negative results where it is important in health and risk
communication.
 Risk identification: In order to demonstrate the risk it is important and essential to find
out the risk which can help the enterprise to overcome the risk effectively.
 Risk assessment: Resources are the important part for the risk assessment where the
different tools and resource are required for the risk assessment process.
 Risk strategies: It is required to focus on the policies and strategies for dealing with risk
which will help the company in definite and maximum manner (Giuffrida, Jiang, and
Mangiaracina, 2021).
 Risk evaluation: At last, it’s time to evaluate the risk areas and the planning and
procedure so that the company can renew them accordingly and can manage the risk
efficiently.
2

TASK 2
(a) Assessment of types of risks and hazards associated with the current strategy, commercialism
environment and enterprise operations of British Airways
Risk management is all about identification of risks, assessment of their impacts over the
business and making appropriate financial decisions in order to deal with the final results in
favourable manner. It involves the implementation of program in order to constantly measure
and assess the effectiveness of existing strategies in order to protect the critical assessments.
Before effectively building the risk management, the safety hazards into the operations of the
business needs to be identified. In aviation operations such as in British Airways safety
management system generally known as SMS should be based upon risk. For instance, the risks
involved into the operations of aircraft regularly over the ground are quite different for those
who are in flying operations (Adelusi, 2020). Moreover, safety management system is a careful
investigation of what might cause harm at the work place. From various researches, it has been
identified that aircraft accidents not only ruin the lives of the people but also affects the
company's business as well. It is because when the business impacted, the output is lost along
with damage assets as well as equipments. Thus, in order to avoid such conditions, the British
Airways need to assess the risks to safe operations at their office premises and hence implement
plan to control those risks.
The current strategy that has been adopted by British Airways are related to upgrade
consumer experiences with the help of introducing text and mobile services for business class
customers. In order to deal with this, British Airways conduct programs like CUTOMER FIRST
in order to achieve their desired target or goal. British Airways is a premium segment airline and
hence generate the strategy that is being specified into service differentiation. The major aim of
the airline is to generate a return over capital which is around minimum of 15 percent with
having an operating profit margin of 12 to 15 percent (Kshetri and Voas, 2019). Thus, their
costing strategy is highly differentiated as the airline charged higher prices for their services as
compared to the budget airlines as their services are perceived to be associated with offering
higher quality of services to their users. The revenue that is being generated with the help of this
specific strategy is around 3.8 billion pounds. It is diminishes because of the pandemic situation
from last two years that is being appropriately shown in below diagram.
3

(Statista, 2021)
In context of elaborating about the competitors of British Airways, it has been evaluated
that Virgin group, easy Jet, Singapore airlines and Cathay Pacific Airways Ltd. Are the major
contenders of the company. The company also highlights that they have the largest market share
with the amount of 53 percent (Olaganathan and et.al., 2021). It is the largest carrier and by
passengers numbers airline all across the country. But with the involvement of various strategies
in order to sustain within the competitive market space, the British Airways needs to deal with
lots of risks and hazards. The risks that are identified after considering the British Airways the
latest strategy, the strategic risks, Operation risks, Financial and commercial risks, health and
safety risks, personal risks as well as the technological risks are the most prominent hazards that
might be faced by the company which may lead towards business losses. In detailed manner, it
has been discussed with the help of risk matrix below:
4

With the help of risk matrix, the importance of identification of risk based over the
likelihood of the risk materializing and the impact if it does. The risk log clarifies the risk
management over four key steps that are based upon the identification of risk, evaluation over
the severity of risk, application of possible solutions to those risks and monitoring and analysing
the effectiveness of any subsequent steps taken by the British Airways. As per the above
5
Risk matrix of British Airways
Risk colour coding

diagram, it has been identified that the operational risk is at the maximum, personal risks,
strategic risks, financial risks and technical risks are moderate in nature, and at last the health
and safety and another risks ate constitute of low risk factor. However, it has also been identified
that there are no negligible risk within the company, and they highly require to address all the
risks into most successful manner.
(b) Suggestions to mitigate those risks and preparation of risk register
Risk mitigation is the procedure of appropriate planning for disasters and having a path
to lessen the negative impacts over the company or business. The principles of risk mitigation
has been prepared for all potential risks and a proper risk mitigation plan will weigh the impacts
of each risk and prioritize the planning around that impact. In general there are four ways to
mitigate risks such as risk acceptance, risk avoidance, risk limitation and risk transference. Thus,
it is the accountability of the action owner to make sure that these risks are appropriately
monitored and that the corresponding actions are carried out by the British Airways in a timely
manner (Christopher, 2018). The risk action owner must should keep the risk owner aware about
the current status of the response action so that the risk owner can decide when the risk have
been appropriately dealt with or whether additional actions are required to be planned and
implemented effectively or not. If the company did major organizational changes, then proper
risk management planning might need to be revisited on priority basis to do reassessment of
risks. As per the risk matrix, the low risks are situated at the yellow column having numerical
value of 4-8 and can be manageable by the company, high risks into the red column having
number from 13-16 and avoided by the British Airways, moderate risk into the orange column
shown between 9-12 number and can be reduced or even transfer in order to mitigate and at last
the green colour goes for the risk that are acceptable, negligible and thus consists of number 1-3
(Sharov, Vorobyov and Zatuchny, 2021).
6

Risk Description Risk
occurrin
g
Impact if
the risk
occurs
Owner Mitigating
action
Strategic: This risk
includes the internal and
external activities which
may make it difficult and
can risk the business to be
failure.
Medium High Senior
management
The risk can be
mitigated by
assuming and
accepting it and
consulting the
entire team
members.
Operational: This risk
caused by failing of the
policies.
Low High Operational
Management
Prioritise the task
and use
appropriate key
performance
indicator to
monitor and
assess.
Financial/commercial: It
may possibility of losing
the economy on an
investment of business
venture.
High High Finance
department
manager
Creation of
strong foundation
of the team and
using the metrics
and a valid
backup plan.
Health and safety: This
risk can lead to harm and
injury at workplace.
Low Medium Human resource
management
Clearly
communicate and
aware the people
in regard to
health and safety.
And always deal
with the hazards
quickly. Along
7

with this,
enabling the
health and safety
polices and using
the sign boards
for indicating the
risk will help the
employee to not
get harm
(Panjehfouladgar
and Lim, 2020).
Personal risk: Anything
that occur the risk of
losing something of
value.
Low Medium Risk
management
department
A proper
planning is the
best way to
overcome or
mitigate with the
risk efficiently.
Technological risk: Risk
related to technology
failure.
Medium High IT-risk
management
Technological
risk can be
mitigated by the
following
strategies where
the company has
to secure their
servers, networks
and computers
and should
secure their
passwords and
codes with them.
8

CONCLUSION
The report has concluded the importance and detailed about the risk management in a
business or an organization where it plays a crucial role. The report has included the risk
management models, types of risk hazards which can affect the business operations of the
mentioned company and also recommended the areas to mitigate the risk. Along with this, the
report has also mentioned the risk register which includes the strategies to mitigate the risk in
effective manner which can help the company to understand it in better manner and can obtain
the beneficial results and outcome.
9

REFERENCES
Books and Journals
Adelusi, B.A., 2020. Risk management in the implementation of foreign economic activities of
the state enterprise International airport" Boryspil".
Chang, T. and et.al., 2018. Identifying political risk management strategies in international
construction projects. Advances in Civil Engineering, 2018.
Christopher, M., 2018. The mitigation of risk in resilient supply chains.
CONFLICT, A.C., 2019. ABSTRACT AND REFERENCES INFORMATION AND
CONTROLLING SYSTEM. Eastern-European Journal of Enterprise
Technologies. 4(9). p.100.
Giuffrida, M., Jiang, H. and Mangiaracina, R., 2021. Investigating the relationships between
uncertainty types and risk management strategies in cross-border e-commerce
logistics. The International Journal of Logistics Management.
Kshetri, N. and Voas, J., 2019. Supply chain trust. IT Professional. 21(2). pp.6-10.
Olaganathan, R. and et.al., 2021. Fatigue and Its Management in the Aviation Industry, with
Special Reference to Pilots. Journal of Aviation Technology and Engineering. 10(1).
p.45.
Panjehfouladgaran, H. and Lim, S.F.W., 2020. Reverse logistics risk management:
identification, clustering and risk mitigation strategies. Management Decision.
Sharov, V.D., Vorobyov, V.V. and Zatuchny, D.A., 2021. Risk Assessment Methods for the
Aviation Enterprise. In Probabilistic-Statistical Methods for Risk Assessment in Civil
Aviation (pp. 69-113). Springer, Singapore.
Smith, P.G. and Merritt, G.M., 2020. Proactive risk management. productivity press.
Online
Statista, 2021. [Online]. Available Through: <https://www.statista.com/statistics/264296/british-
airways-worldwide-revenues-since-2006/>.
10