Risk Audit Analysis and Mitigation Strategies for British Airways

This report presents a comprehensive risk audit of British Airways, a major UK airline, analyzing its risk management processes. It begins with an introduction to risk and the need for audits in a dynamic business environment. The main body details the risk management process employed by British Airways, including risk assessment, evaluation, and treatment. The report identifies and examines both internal risks, such as technological advancements, and external risks, including competition and economic conditions, assessing their nature and impact. It categorizes risks based on likelihood and impact, providing a risk matrix. Furthermore, the report evaluates the appropriateness of various risk mitigating strategies, such as expert hiring, marketing strategies and market research, to address the identified risks and minimize their impact on the company's profitability and operational efficiency. The conclusion summarizes the findings and emphasizes the importance of proactive risk management in the aviation industry.

RISK AUDIT

TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Risk management process...........................................................................................................3
Nature and impact of one internal and external risk...................................................................4
Risk categorisation......................................................................................................................5
Appropriateness of risk mitigating strategies for dealing with internal and external risk..........6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Risk is referred to as some of the uncertain situation which may occur in the future and
may not occur in the future (Allaham, Nassar and Reesh, 2017). Hence, it is very essential for the
company to have an audit of risk which may be encountered with the company and this helps the
company in analysing the business situation. This risk audit is necessary because the business
exists in the environment which is dynamic and ever changing and because of this there are
many risks which the company may face in managing the business.
The present report is based on company British Airways and this is a company which is a
flag carrier airline of UK and is headquartered in London. This is the second largest airline in
UK on the basis of passenger carried and the fleet size. The current report will discuss about the
risk management process which is used by British Airways. Also, it will discuss about the impact
of the internal and external risk over the working of the company. Further the risk categorisation
that is the likelihood and its impact. In the end appropriateness of risk mitigating strategies for
dealing with internal and external risk.
MAIN BODY
Risk management process
For the success of the business the most important thing is the management of the risk in proper
and effective manner. This is very essential for the fact that f the risk will not be managed in
effective manner then company will be in profitable condition and the productivity of the
company will also be high. Thus, for this British Airways need to conduct a risk management
process which will assist British Airways in managing the business and operation in proper and
effective manner. Hence, the risk management process being used by British Airways is as
follows-
The first step is the risk assessment and analysis under which company assess the risk which is
being faced by the company. This risk assessment will help the company in analysing the fact
that what are the possible risks which can be faced by the company (Martinis and Houghton,
2019). Thus, this will help British Airways in identifying in advance that what the risk can be
faced by the company in the near future. With the assessment the British Airways came to know
that because the business exist in dynamic environment thus, this has a involvement of very more

risk like brand reputation, competition, economic risk, financial, technical, employee conflicts
and relation, key supplier risk and many other different types of risk.
Risk evaluation is the second stage of the risk management process through which the company
evaluates the degree of the risk (Principal risk and uncertainties, 2016). This is also referred to
as the fact that the degree up to which this risk will impact the working and operating efficiency
of the company. This is also necessary for British Airways to assess the fact that up to how much
extent the operations of the company will be affected. This is the level to which the operations
and working capability of the company will be affected. With risk evaluation it was known that
the internal risk can be handled easily but the company has no control over the external risk.
The last stage is the risk treatment and the response and this includes making of the strategies
and model which will the company in reducing the impact of the risk over the operation of the
company. This is the most important stage of risk management as this help the company in
identifying the methods of dealing with the risk and mitigating the influence of the risk over the
profitability of the company.
This is the process of managing the risk which is being used by the company in more effective
manner. Also, this whole process will help the company in knowing about all the risk which the
company can face and what actions or steps the company can take in mitigating the effect of the
risk. Also, this will help British Airways in planning in advance that if any of the analysed risk
will occur then how the company will deal with it and in what ways.
Nature and impact of one internal and external risk
It is very essential for the company British Airways to analyse the nature and impact of the risk
which may have a greater impact on the profitability of the company. It is very essential for the
company to analyse the risk in proper and effective manner because of the fact that if the risk
will not be managed in effective manner then the company will not operate in proper manner.
Thus, with the above process it was very helpful for British Airways to manage the risk in proper
manner. Thus, with the help of above process it was outlined that the risk are of two different
types that is internal and external.
The major type of internal risk which is faced by the British Airways is the technological risk.
The nature of this risk is internal because of the fact that this technology is being installed within
the company and this will affect the internal working and efficiency of the company (Li and Liu,
2018). This is majorly pertaining to the fact that the business operates in the dynamic

environment and there are changes taking place in the globalised business environment. Thus,
this will help the company in managing the risk and issue which might be faced by the company
in managing the risk of technology. In the aviation industry there is much different technological
advancement and this will affect the working capability of the company (Sivabalan, 2018). Thus,
if British Airways will not take into consideration these technological changes then this will be a
risk for the company. The major reason underlying the fact that the use of technology will
increase the working efficiency of the company and if not adopted then this will also increase the
risk of company getting obsolete. Hence, the impact of this risk is very high and this will have a
great impact over the profitability of company. It is so because of the fact that if the company
will not adapt to the latest technology then this will have a great impact over the company and
company may suffer loss. Also, another major impact of this risk is that this will also increase
the cost of the company as they will have to implant the technology within the company.
Another major risk which is external to the company is the competitors and the economic
condition of the business environment. The nature of this risk is that this is external to the
business because the business has no control over such type of business risk. The impact of this
risk is not in the hand of the company as it is operated or emerged because of some changes in
the external environment in which the company exist. The major impact of this risk over British
Airways is that the competition is very high and this will have a major impact over the
performance of the company to a great extent. This is because the competition will decrease the
market share of the company as the competitors will increase the market share of the company.
Risk categorisation
In the audit the major step is to categorise the risk in accordance with the likelihood of
the risk and the impact of this risk over the company (Songhua and Bureau, 2016). This is very
essential for British Airways to manage the risk and categorise the risk as this will help the
company in assessing the risk and try to mitigate the impact of the risk over the profitability of
the company. This risk categorisation help British Airways in grouping some similar risk
together so that they can be solved in same or similar manner.
Risk Likelihood Impact
Technical risk 4 The impact is negative if the
risk is over the profitability
and productivity of the

company. This is majorly
because of the reason that if
the technology will not be
implemented in the company
then the company will not be
effective in its operation.
Competitors 3 The major impact of this risk
is that this decreases the
market share of the company.
This is because of the reason
that if the competitors will be
high then the market share of
the company will decrease and
this will decrease the
profitability and productivity
of the company.
Economic risk 4 This risk also has a great
impact over the working of
British Airways. This is
majorly because of the reason
that the company operates in
economy of the country. Thus,
if there is any change in the
economic condition of the
country then this will be
impacted by the company and
this will affect the working
capacity of the company.

Appropriateness of risk mitigating strategies for dealing with internal and external risk
Thus, after the assessment of the risk the most important thing is to find solution of
mitigating the risk so that the negative impact of the risk will not impact the working of the
company (Pittman, Stein and Valentine, 2019). Hence, after the risk management process and
analysing the impact of the risk the last step for British Airways is to make some strategies for
the removal of the risk and trying to mitigate the risk.
The major step of the company in mitigating the technological risk is to hire some of the
professional who is expert and train in the knowledge of the technical sector. This is because of
the fact that if the company will have some expert or professional then the working capability of
the company will increase. This is due to the reason that if the company will face any of the
technical problems then this professional person will help company in solving this (Cohen,
Krishnamoorthy and Wright, 2017).
Another major strategy for the British Airways is to use effective marketing strategy for
promoting the goods and services of the company in the highly competitive market. This is
majorly because of the reason that if the company will not use the good and effective marketing
strategies then British Airways will decrease its market share. Hence, for this it is essential for
the company to make use of all latest marketing techniques like social media marketing, digital
marketing and others.
Also, another major mitigating strategy which will help British Airways in mitigating the
risk and other economic risk is to have and use effective method of market research. This is
majorly because of the reason that there are many different changes taking place in the economic
environment and condition. Thus, it is very essential for the British Airways to have in account
all the changes taking place in economic environment. This will help company in knowing that
which changes in the economic environment will impact the working of the company. Thus, if
these changes will impact the working of the company then this will adapted by the company and
if not then they will not adapt to these changes (Zamboni and Litschig, 2018).
CONCLUSION
In the end it is concluded that when the business operate in the dynamic and changing
world then there are many risk which they face. Thus, it is very essential for the company to have
a risk audit as this will help the company in analysing all the possible risk which might impact

the working of the company. Thus, this risk audit will help British Airways in analysing all the
possible risk and their impact and influence over the working of company.
The report stated that the risk management process involves three stages that is risk
assessment, risk evaluation and risk treatment. Also, two risks were identified that is
technological risk and competitor and economic risk as external risk. Also, the major risk
mitigating strategy was like hiring of some technical expert and using effective and latest
marketing strategies to promote the goods and services in the highly competitive market.

REFERENCES
Books and Journals
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risk audit methodology in Jordanian commercial banks. International Journal of
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Cohen, J., Krishnamoorthy, G. and Wright, A., 2017. Enterprise risk management and the
financial reporting process: The experiences of audit committee members, CFO s, and
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Martinis, M.D. and Houghton, K., 2019. The Business Risk Audit Approach and Audit
Production Efficiency. Abacus. 55(4). pp.734-782.
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Sivabalan, P., 2018. Book review: the politics of financial risk, audit and regulation: a case study
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Songhua, C. and Bureau, Y.D.A., 2016. Several Measures to Optimize Anti-Corruption Risk
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Zamboni, Y. and Litschig, S., 2018. Audit risk and rent extraction: Evidence from a randomized
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Online
Principal risk and uncertainties. 2016. [Online]. Available through:
<https://www.britishairways.com/cms/global/microsites/ba_reports0910/pdfs/
Risks.pdf>