Business Risk Management: Analysis of British Airways Operations

This report provides a comprehensive analysis of business risk management within British Airways. It begins with an overview of the airline and its organizational objectives, including the management of capital, increasing predictability of cash flows, and engaging with employees. The report...Read More

Business Risk Management
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Contents
PURPOSE OF REPORT.................................................................................................................3
TASKS.............................................................................................................................................3
2.1 Overview about British Airways...........................................................................................3
Organizational Objectives...............................................................................................................4
2.2.1 Define the organizational objective that intends to achieve and may impacts by risks......4
Regulatory Context..........................................................................................................................4
2.2.2 Describe about the regulatory context in which organization operates and manages its
risks..............................................................................................................................................4
Risk assessment Method..................................................................................................................5
2.2.3 Define the probable risk assessment method applicable within organization to assess
threats by representing an appropriate risk scoring matrix and also outline threshold...............5
2.2.4 Develop and Design risk register that identify risks could impact on organizational
objectives and identify risk form area of business.......................................................................9
REFERENCES..............................................................................................................................13
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PURPOSE OF REPORT
Business risk management is based on the subset of risk that will be used to evaluate overall
enterprise risk and involves any type of change occurs in operations, process and system. it
useful for identifying the addresses and priorities risk which automatically minimize risk with
penalties from happen unexpected incidents. The business and other type of non-profit
organizations face unexpected risk events which directly affects on entire enterprise operations
and functions. The purpose of report is to determine about potential risk that generated within
British airways. On the other hand, potential risk is affecting on the business operations in
realistic manner. It can be determined about the objective of airways for eliminating risk by
implementing risk management plan in business activities.
TASKS
2.1 Overview about British Airways
British Airways is one of largest airline which offers different types of flight services to
passenger more than 550 destinations. The airway has provided different types of classes which
influence passenger. It mainly involves economy class, first class and premium. It also offers the
food items, entertainment options including games, TV and other type of music even also shop in
the on-board highlife. It is based on global airline which maintain proper services and give offer
on occasion in price, fares. The airways were established in 1987 September, becomes privatize
and expand their business in global world (Amankwah-Amoah and Wang, 2019). The British
airways act for movement against the virgin airline because of their damage of company and
legal prices. British airline starts the first flight from Havilland to Johannesburg which must split
into different time zone. The change occurs within airline industry that start of mass package
holiday enterprises. British airway is becoming successful airline which holds dominant position
in terms of time-slots and thus, has unrivalled world wide route network from international
airport. The profit rate has increased from £400million to £600million in 1997. It can be falling
back to £225 Million because of unexpected share price down in marketplace.
In British airways, it can be identified the risk related operational complexities which
inherent in business together with highly commercial and regulated competitive level in airline
industry. It also exposed the various type of risk and always focus on mitigating risk, although
remain out of control.
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Organizational Objectives
2.2.1 Define the organizational objective that intends to achieve and may impacts by risks.
 To Manage the capital for continue safeguard to reduce cost which provide returns to
shareholders.
 To increase the predictability of cash flows and profitability in global marketplace.
 To engage with the employee for understanding need and requirement of customer to
deliver outstanding services.
Regulatory Context
2.2.2 Describe about the regulatory context in which organization operates and manages its risks.
The government regulation applicable within British airline which help for reducing level of
terrorism and availability for proper financial controls (Berry and Berry, 2018). It can be
analysed about the significant impact on long-term achievement of British airways.
 The Economic regulation: This type of legislation applicable for operating bases by UK
CAA. It mainly set up maximum level of charges in airport where organize investment
programme for maintaining service quality. A major for cutting cost of capital allowance
for airports and also reduces charges. On the other hand, it also increasing service quality
which are beneficial for customer service and business operations (Chapman, 2019).
 Safety and security: it is major concern about customer and staff members security
which are fundamental duties for British airways to maintain moral and values. In case
any type of failure occurs, it has needed to prevent major safety incident that could
adversely impact financial performance and business operation. For Example: - In
Boeing, 777 aircraft are mainly involved in landing accident in 2008, Investigation are
ongoing to identify stage of causes. It does not appear to be related wither business
operation and maintenance.
 Government intervention: The British airways is becoming increasing regulation due to
scope of regulation range from other issues related infrastructure. It is related to the
capacity of slot and applicable routing fly rights through security needs. The ability is to
comply with influence any change where regulations help for maintaining overall
business financial and operational performance. The British government is mainly
focused on the rule and regulation so as airline industry adopt in their operations and
functions.
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 General Data protection regulation: British airways initiatives to enhance the response
and deference plan. It follows the regulation for providing the facilities to secure sensitive
information of data for customer. This type of regulatory was implemented across group
in 2018 and consider as an ongoing privacy programme. It will help for reducing risk and
vulnerabilities in data loss.
Risk assessment Method
2.2.3 Define the probable risk assessment method applicable within organization to assess threats
by representing an appropriate risk scoring matrix and also outline threshold.
The probable risk assessment is a term that mainly used to describe about overall process
or method. it helps for identifying hazards and risk factors that have potential causes British
airline. By using assessment method, it is looking at the impacts in order to divide risk which
may server significant results and outcome. The organization is mainly involved the risk due to
uncertainty.
A risk assessment is a type of process that will identify the probability of losses which
easily analysis potential hazards and also evaluating existing condition through threats, people,
property harms, likelihoods and another environment (ChrIStoPhEr, 2018). it is mainly
depending on the method or technique for maintaining overall business activities. There are
different types of method in terms of risk assessment for identifying potential hazards.
Quantitative risk assessment
It is based on the assessment that uses for analysing the seriousness of risk. It mainly
defined the consequences, risk level and probability that may combine for controlling risk
against qualitative criteria. It is the most appropriate method for analysing risk and also
quantifying risk that associated with business operation. It is an essential method that applicable
in British Airline industry to identify exposure of risk in brand reputation, company assets and
employee or environment. it helps for making cost effective decision which beneficial for airline
to manage all type of risks in proper manner.
Risk Matrix approach
Risk assessments are becoming complex and do not allow to develop the numerical
approach. There are many aspects which not properly quantifiable or have large degree of
uncertainty. It mainly related to identify hazards which difficulties to overcome issues through
risk assessment. A risk matrix is basically made of frequency class that applicable in hazardous
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events and its major consequences. This type of approach useful for visualisation because it
easily analyses overall effects and their consequences at the time of risk reduction.
Event-tree analysis
This type of approach is mainly performing operation in the form of chain where it can be
identified risk within organization. It is considered the most problematic approach to analyse
multi-hazard risk that’s why, it is called Even-tree approach. This type of event tree is applied on
the system and analyse different combinational parameters that affects on entire analysis. The
event is mainly interrelated to each other from one node to another. it can possible to consider
each node as a state by defined probability of occurrence (Deininger, 2018).
Indicator-based approach
It is one of common method for risk assessment that help for measure risk and
vulnerability through indicator of qualitative. in this way, it can easily compare different
communities and areas. Indicator based process is mainly divided into different ways: exposure.
Capacity, hazard and vulnerability. In British airways, indicator-based approach will be used for
identifying the risk in both internally and externally as per specified the standards.
Risk Scoring Matrix
Risk rating
key
Low Medium High Extreme high
0- Acceptable 1- As low
practicable
2-generally
Acceptable
3-Intolerable
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Severity
Acceptable Tolerable Undesirable Intolerable
Likelihood Competition Conflict issues
between
employee
Environment
issue
Fluctuation in
price of fuel and
currency
Impossible Low
1
Medium
4
Medium
7
High
10
Possible Low
2
Medium
5
High
8
Extreme
11
Probable Medium
3
High
6
High
9
Extreme
12
Table:1
By using risk assessment Matrix in British airways that can identify the risk when arise within
business operations. In above scoring matrix, it may be analysed the risk and can be categorised
on the basis of ranking. To place the risk in matrix that assign a rating to its severity and
likelihood. It must be plotted in appropriate position in above chart.
Severity:
 Acceptable: The risk can be acceptable where there is no effect on event.
 Tolerable: It should be applied the event on risk but not generated any critical result or
outcome.
 Undesirable: It can be determined the serious cause of risk that directly impacts on
certain action and their outcome.
 Intolerable: it could not be generated any type of result due to serious causes through risk.
Likelihood
 Impossible: it is extremely rare for generating risk where it almost has no probability of
occurring.
 Possible: The risk is mainly uncommon but have chances for manifesting.
 Probable: The risks are almost certain which addressed risk initially.
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Likelihood Criteria
Likelihood
that risk
event will
occur in
organization.
Impossible Impossible Impossible Impossible
2- Acceptable 3- As low
practica
ble
2-generally
Acceptable
4- Acceptable
Table:2
Impact Criteria
Impact on the
programming if
risk event
happens
It is very limited
impact through
competition
level.
It is medium
level to impacts
on the business
due to conflict.
It is moderate
impact on
business
operations and
their specific
outcome.
It is very
significant
impact on the
entire process
management
which required to
make suitable
resources for
management.
Table:3
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2.2.4 Develop and Design risk register that identify risks could impact on organizational
objectives and identify risk form area of business.
a. Discuss an appropriate detailed risk description
In British airways, The First priority is safety and security that will provide the better
services to consumer. It also fully recognised the significant advantage for organization
which designed an appropriate program that help for avoid any type of trap and implement
mitigation plan to remove risks. There are different types of risk generated within British
airline. Relevant risk which can hamper the working of organization are:
Technical risk: Various threats and opportunities are being linked with technical risk. The
opportunity which can be given to organization that the technical risk could bring up the problem
and solution to it can be brought up as an opportunity to bring something new. It also has some
threat, like for example if solution is not being brought up then it can hamper performance of
employees.
Competition: In global market, it is highly operating the competitive level because
British airways face competition from other airline on routes and indirect flights. Most of
competitors have a cost-effective structure that will reduce price of flight through competition
advantage.
Deregulation and consolidation: The acquisitions and mergers are strongest competitors
which have affects on market position and its overall business revenue. For instances, it is
controlling the capacity and restricting market entry while creating growth opportunities but may
negatively effects on margin level (Kuklev and et.al., 2019).
Environmental issue: It has increased the issues of failure because of deterioration in
reputation and consequential loss of revenue. In this way, British airway focused on corporate
responsibility and improve the emission reduction target which will deliver the better services
otherwise, it can be generating the environmental issue.
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Risk description:
Risk Risk Description Impact Mitigation action
Technical risk The probability of
technical risk incurred
through execution of
process which
generate uncertain
outcome and result.
 Unrealized
benefits
 Limited user
Adoption.
 It also
performed the
action plan for
reducing level
of risk within
certain
aspects.
Competition The probability of
competition risk is
becoming higher
because of insufficient
revenue generation
and overrun budgets.
 Decrease level
of business
running
processes.
 It has
implemented
the mitigation
action to
control risk by
assuming risk
and reduce its
impacts.
Deregulation and
consolidation
The probability of
deregulation and
consolidation risk in
terms of financial
which encompass
crisis.
 Increased bank
capital
 Reduce moral
hazards.
 It has been
implemented
the action plan
for Risk
transfer.
Environmental issue The probability of
environmental issues
risk during operations
and functions.
 Decrease low
brand
reputation
 Risk transfer
Table:4
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Risk acceptance Threshold:
Risks are based on uncertain that happens, have both positive as well as negative effects
on the project objectives. it is mainly schedule, scope, cost and quality. These are important
factors which always influence the risk and its management of threshold. Sometimes, it can be
defined as project management tool that easily measure uncertainty and level of impacts.
The risk attitude of Airways defines that how much little risk willing to take on. In this way,
it can be identified that British Airways usually expressed the large number of risks related the
strategic, health and safety, external, internal, operational, regulatory and other type of employee
relations. As per evidence, it has found that contract will approximate 100,000USD that apply on
the process of business operations. On the other hand, there are some financial problem where it
could allow to go beyond 10,000 from 100,000USD.
b). List any type of existing controls/ action applicable and find out reasonable expected to
place.
It should be included the different types of Mitigation strategies that applicable in
British airways for reducing risk within organization. It will be performed actions to
control existing threat and risk where they are generated in business operations (Yilmaz
and Flouris, 2019).
 It will be finding the procedures that started at initially and handle entire process.
 It must be applied the formal procedures to maintain all type of legalise policies.
 It should be monitored and reviewed the overall performance of business, ensure
that they can properly maintain and acceptable.
 It will try to implement risk assumption for conducting program to analyse hazard
ad risk in proper manner.
a. Critically assess residual likelihood and impact of each threat while taking into account
of existing methods.
The residual risk is based on the large amount of danger associated with different events
and action that automatically reduced overall risk process. It is based on the property
right model where employee can hold the residual risk within organization. The residual
risk is calculating with the formula: “Residual risk = inherent risk- impact of risk
control”.
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Likelihood is directly impact on the different threat that arise within organization. this will
use in threat to expose probability of unfortunate event and also increased by potential impact
through events (Mars and Weir, 2019). It provides facilities to compare between one risk factor
to another. As per analysis of above likelihood, it can be determined that will categorise into
different format while accounting the possibilities of risks.
b. Understand the resultant residual risk rating on the basis of risk scoring matrix.
The residual risk rating is a type of process that will give rate of particular rate where
how they become dangerous for overall business organization. In above risk scoring
Matrix, it easily identifies about the threats which give a proper likelihood and its
severity. It also categorised on the basis of score rating.
Risk
rating
key
Low Medium High Extreme high
0- Acceptable 1- As low
practicable
2-generally
Acceptable
3-Intolerable
Table : 4
c. Propose the different threats which acceptance of risk threshold and implementation
mitigation action on the basis of market research, business.
The Mitigation action is key factors that can be used in risk management where it should
mainly focus on risk and perform action. It likely to reduce impact of threat in British
airline (Tan, 2019). It is also beneficial for reducing likelihood of triggering which being
used to reach on particular destination. British airway should be included SMART
Objective which possible to easily measure progress by implementing mitigation actions.
it can be applied the mitigation action plan for reducing risk of threats.
o Risk Avoidance
o Risk Reduction
o Risk transfer
o Risk Assumption
o Segregation of risk exposure
Risk Register table for threats
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Threat
No.
Risk
Description
Existing
Controls
Likelihood Impact Risk
Rating
Mitigation
actions
1). Competition By
implementing
a strategy.
Possible Affects on
another
competitor’s
airline
0-
Acceptable
Risk
Reduction
2). Conflict
issues
between
employee
Creating and
developing
an equal
policy.
Probable Increasing
overall
business
activities
2-
Generally
acceptable
Risk
Avoidance
3). Environment
issue
Identifying
essential
resources.
Possible Decrease
low brand
reputation
1-as low
predictable
Risk
transfer
4). Fluctuation in
price of fuel
and currency
By using
policies.
Impossible Decrease
revenue and
sales
3-
Intolerable
Segregation
of risk
exposure
5). Deregulation
and
consolidation
Control
overall
business
operations
and
functions.
Probable Increasing
overall
business
activities.
1-as low
predictable
Risk
Assumption
Table:5
d. Identify the opportunities that must propose new action to enhance opportunity on the
basis of current business and market research.
Risk Register table for Opportunities:
Opportunity No. Opportunity Description Action to enhance risk opportunity
1). Enhance business Interacting with the customer to
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popularity. provide accurate information about
business services.
2). Improve quality of
services.
It will provide better services, offers
in particular occasion.
3). Generate large revenue. Implementing strategies to improve
profitability in marketplace.
Table:2
s
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REFERENCES
Book and Journals
Amankwah-Amoah, J. and Wang, X., 2019. Opening editorial: contemporary business risks: an
overview and new research agenda.
Berry, C.T. and Berry, R.L., 2018. An initial assessment of small business risk management
approaches for cyber security threats. International Journal of Business Continuity and
Risk Management. 8(1). pp.1-10.
Chapman, R.J., 2019. Exploring the value of risk management for projects: improving capability
through the deployment of a maturity model. IEEE Engineering Management Review.
47(1). pp.126-143.
ChrIStoPhEr, M., 2018. Supply management chain risk 09. Leading Procurement Strategy:
Driving Value Through the Supply Chain. p.162.
Deininger, K., 2018. Why Managing 3rd Party Cybersecurity Risk is a Matter of National
Security.’ Vogel, R., 2018. Persuasion in business documents: strategies for reporting
positively on negative phenomena. Ostrava Journal of English Philology10(1).
Kuklev, E.A. and et.al., 2019. Structure and Principles of Constructing the SMSs to Provide and
Monitor System Safety Based on the RRS Risk Management Doctrine. In Aviation
System Risks and Safety (pp. 101-118). Springer, Singapore.’
Mars, G. and Weir, D.T., 2019. Risk Management: Volume II: Management and Control.
Routledge.
Tan, L., 2019. Corporate Metrics Methodology Application for the Market Risk Quantification in
British Airways Company.
Yilmaz, A.K. and Flouris, T.G., 2019. Introduction: Crises Management in Aviation Business
and Strategy. In Values, Ergonomics and Risk Management in Aviation Business
Strategy (pp. 187-212). Springer, Singapore.
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