Risk Audit on British Airways: Analysis for Enterprise Risk Management

This report presents a risk audit of British Airways, examining its risk management processes, internal and external risks, and mitigation strategies. The executive summary provides a concise overview, followed by an introduction that highlights the importance of risk audits for organizations. The main body details the organization's overview, risk management processes, and a critical evaluation of internal and external risks. The report identifies key risks such as financial constraints and digital disruption, and categorizes them using a likelihood and impact grid. Risk mitigating strategies, including decisions from the management committee and integrated platforms, are discussed. The conclusion summarizes the findings and offers recommendations for improving risk management within British Airways, particularly in the context of the COVID-19 pandemic and its impact on the airline industry. The report emphasizes the importance of adapting to market conditions and prioritizing key performance indicators (KPIs) and benchmarks.

Risk Audit on British
Airways

EXECUTIVE SUMMARY
Risk audit plays an important role for all organisation and it is leading management to
earn similar profits through managing operating cost for organisation. Most of the current
business houses are performing their work which leads to complete work and objectives
according to international standard. Moreover, the most imperative study of airline market show
that organisation are facing challenges to manage its business and operations. With overview of
overall industry and a specific organisation it is understand that various functions leads company
to work by overcoming from risk factors that is important to deal with various barrier and
challenges in organisation. Micro and macro factors also play an important role to analyse
different risk that is impacting on operations and functions of organisation. In last, risk
mitigating strategy and girds are also included for providing essential recommendations for
organisation.
Contents

EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
Overview of organisation.......................................................................................................3
Risk management process that is undertaken by British Airways.........................................4
Critical evaluation of internal and external risk.....................................................................5
Risk mitigating strategy..........................................................................................................6
CONCLUSION................................................................................................................................7
RECOMMENDATION...................................................................................................................8
REFERENCES................................................................................................................................9
INTRODUCTION
Risk audit is defined as the financial statements that are materially incorrect provided by
an organisation intentionally or unintentionally. Financial audit leads individuals to provide
material statements through understanding all risk aspects on appropriate basis. The main
purpose of an effective risk audit is to check essential aspects as per adequate basis as
stakeholder such as investor, creditor and other essential stakeholders rely on financial
statements to understand efficiency of an organisation (Hillson, 2016). This report is written
from perspective of British Airways which is a huge airline company that is offering and
delivering its services among various countries. Moreover, net income as per year 2018 is more
than 1,900 million and its headquarter is situated in London, UK. The report highlights on

different aspects that are risk management process and internal as well as external risk. In last,
risk audit as per there category along with impacts will be included in this report.
MAIN BODY
TASK 1
Overview of organisation
British Airways is a flag carrier airline organisation that is managing their business within
United Kingdom. It was founded in the year 1974 and from month of May organisation start to
deliver airline services for all individuals. International airline group is Parent company of
British Airways that is leading management to operate its airline services among 18 different
destinations. Along with this audit of British Airways demonstrate that organisation also
provides right statement to all of its stakeholders for providing accurate statements that leads to
manage interest of stakeholder in the organisation (Jafferji, Morris and Levy, 2019). The net
profits which is earned by British Airways brand of International airlines group was 1,921
million (https://www.iairgroup.com/en/our-brands/british-airways) which also attract investor for
invest and keep interest in respective organisation. But, due to pandemic global conditions there

are various risk aspects are faced by management because of which uncertainties such as loss of
job opportunities and decrease in profits are faced by management.
Risk management process that is undertaken by British Airways
Risk management process can be defined as those steps such as analysing and understanding
which are undertaken by management of British Airways to reduce negative impact of potential
risk within organisation. Moreover, IGA and its respective brand regulate and commercialise
their action and activities in a competitive market so various operations are designed in
systematic manner for exposing different risk phase in organisation (Mehra and Ball, 2015).
Some major risk aspects which are current faced by organisation are as follow:
 Financial Constraints- British Airways earn its operating income through convey of
individuals, products and other essential items from one destination to another. But due
to government regulations and rules as per current international market make stop flight
carrier services for ensuring safety of employees from aspects of Covid-19. It also
creates challenges because to store such large airline inventory in warehouse directly
increases fixed cost of business.
 Digital disruption- In travel industry visitor and tourist are increasing as per
international market conditions. Moreover, almost all operations of British Airways and
also of other global organisation are completed through use of digital technology and
software. In context of risk process British Airways implement data protection methods
for ensuring interest and safety of all stakeholders.
 Critical supplier- The performance of British Airways organisation depends on
industry supply chain which is complex and with implement of outsourcing to perform
work with new aircraft also impact on operational efficiency. So to overcome from this
management implement process of ATC (Air Traffic Control) that ensure safety of
flights are schedule and deliver as per decided time basis (Nørskov and et. al., 2016).
Further, the overall risk aspects which is currently faced by management of British Airways
relates with COVID- 19 and to deal with various test which are pulse, blood pressure and
pulmonary function that demonstrate overall health of individuals is accurate. So it show all
shows that all individuals are safe which are engage in operations of British Airways that also
used to improve goodwill of organisation.

Critical evaluation of internal and external risk
Micro and Macro environment both plays an essential role for an organisation because all
operations are performed by management in this particular environment. So evaluation of British
Airways environment is mention as follow:
Internal sources of risk and its impact- In present scenario, all tasks includes some risk
aspects that are generated from internal sources. It refers that internal department of respective
organisation impact on management. Example- Operation department analyse that all task and
operations must complete all task as per efficiency in order to reduce risk impacts (Reason,
2016). So, similar profits for business are earned by management on critical situation through
performing all task in organised manner. Risk register and internal annual reports generates
major internal risk aspects which demonstrate low profits for organisation.
External source of risk- Most of the challenging situation faced by management relates
with organisation challenges that is beyond control of management. Social, environmental,
economic and many more are present in market by which management of business is impacted.
From perspective of British airways major challenge is raised from society that is due pandemic
economic crisis because individuals are not able to work in such complex and unhealthy
environment.
Therefore, to overcome from all this challenges management focuses that all risk aspects are
managed by management through performing and managing all task in an appropriate manner
through utilising risk management grids (Saito and et. al., 2015).
Risk management Grids
Risk management work as a process that is used to identify, assess and control various
threats which impact on organisational capital and earnings. British Airways formulates risk
management grid to deal with challenges through which operations and functions of business are
impacted.
Financial crisis Health and safety of individuals
Increase in uncertain cost Loss of jobs
Financial crisis- It is one of the major challenge that is faced and it’s probability is high due to
which profits of organisation are decreased. Along with this existing market conditions show that

challenges are remain for management for an upcoming year because market takes time to cover
from such bad crisis. Therefore, risk management grid show that it is a high crisis for market.
Health and safety- With press report and news it is identified Health safety for person is major
challenge for management that reduces all market action and activities. Covid-19 is a disease that
leads an individual towards death and also there is no vaccine exists for patients which reduce its
impact. So its impacts are also high on functions of British airways (Srinivasan, AlAsaadi and
Brennan, 2019).
Increase in operational cost- Fixed and variable cost are two different aspects by which market
and its operations are operated. But due to sudden and certain changes in market conditions there
are various cost that is uncertain are faced by management of British Airways which is operating
its cost. Example- Inventory management cost is increased and it is also not in use due to which
return on investment is not earned properly.
Loss of job- British Airways declares that 1200 individuals or employees are not able to perform
their work because management decided to cut all of their jobs. This also refers that due to half
loss that is declared by financial department creates long term barrier. As compare to crisis of
2008 this year loss about 13.7% due to which revenue for firm is decreases
(http://news.bbc.co.uk/2/hi/business/8345912.stm).
Risk mitigating strategy
This refers to the term that is used for describing different ways for dealing with risk aspects
and all of these include risk avoidance, transfer, elimination and reducing of risk to an acceptable
level. British airways operate all of its functions with approach of accomplishing longer results
through designing them as per current market conditions. So all profits which are earned by
management are high and it also ensures that management is able to gain sustainability in market
through managing all of its functions in an organised manner (Velte, 2019)(Шипуліна and
Ващенко, 2015). So first strategy that is implement by management is to formulate an effective
decisions for its products, Moreover, some effective strategy utilised by British Airways are
mention as follow:
 Decisions from management committee- British Airways cover most of the UK market
in airline industry through help of developing an effective management committee.
Moreover, management committee consists CEO and top authorities of all departments
which contact with IAG senior management to submit report on daily basis. Along with

this management also perform all task and activities through which desired and specific
results gained by maintaining and submitting report on daily basis. Thus, management
are update from current information and ready to deal with risk mitigating strategy.
 Integrated platform- Top authorities and management of British Airways define that all
of its work is managed through operating business activities on a common platform. This
refers that all persons which are engage in management integrate similar platform that
drive efficiency and simplicity through allowing all organisation to work with individual
performance. So management is able to complete its work with an unique and creative
way.
 To work with priority- British airways perform all of its task and operations with
making and implement priorities in all of its work capabilities (Saito and et. al., 2015).
Along with this it is also identified that CEO and all employees follow three key
principles, First is to achieve higher network growth, invest more in customers and
employees and to sustain financial performance. With all this aspects British Airways
sustain long term performance through reducing risk by performing task with ethical and
priority values.
With above mention risk strategy it is identified that growth of business is increased through
15.6% business aspects and with company KPI standards adjusted profits for business is
increased with rate of 13.3% that enhance average growth of organisation for per annum basis.
Further, target of company is to increase its size with 6% but global crisis due to Covid-19
impacts on growth and targets are not achieved which reduce capital expenditure for business
(https://www.iairgroup.com/~/media/Files/I/IAG/documents/iandr-featured-publications-
english/annual-reportandaccounts2018-en.pdf).
CONCLUSION
From the above report it is concluded that risk audit perform an essential role for
organisation that leads management to understand all of organisational profits. The present
market conditions and international market shows that management is facing various risk aspects
which generate risk and reduces organisational profits. Risk management process work as an
effective tool which is increasing its size by controlling all business phase that maintain business
profits for regular basis. In last, some recommendations to manage business are provided to
overcome from global challenges of airline industry.

RECOMMENDATION
Some recommendations are provided by analysis of all above report that is leading
business to ensure a better position in market.
 British Airways claim that with practicing on KPI and Benchmark techniques at time of
initial start of all operations it is easy for management to complete all work in proper
manner.
 With approach of stakeholders engagement through utilising techniques of financial
software it is analysed that business are completing their work by motivating individuals
through demonstrating them upcoming strategies which leads to complete all work in an
organised manner.
 On other side, training and development should leads to perform all work by delivering
right and effective training programs which makes changes in departments and make
delivery process more systematic for satisfying customer needs and wants properly.

REFERENCES
Books and Journals
Hillson, D. ed., 2016. The Risk Management Handbook: A practical guide to managing the
multiple dimensions of risk. Kogan Page Publishers.
Jafferji, D., Morris, R. and Levy, N., 2019. Reducing the risk of confirmation bias in
unrecognised oesophageal intubation. British journal of anaesthesia, 122(4), pp.e66-
e68.
Mehra, R. and Ball, C., 2015. Risk factors. Perioperative Medicine for the Junior Clinician,
p.476.
Nørskov, A.K and et. al., 2016. Effects of using the simplified airway risk index vs usual airway
assessment on unanticipated difficult tracheal intubation-a cluster randomized trial with
64,273 participants. BJA: British Journal of Anaesthesia, 116(5), pp.680-689.
Reason, J., 2016. Managing the risks of organizational accidents. Routledge.
Saito, T and et. al., 2015. Incidence of and risk factors for difficult ventilation via a supraglottic
airway device in a population of 14 480 patients from South‐East
Asia. Anaesthesia, 70(9), pp.1079-1083.
Srinivasan, B., AlAsaadi, Z. and Brennan, P., 2019. Safety and culture at workplace-Out of the
box approach. British Journal of Oral and Maxillofacial Surgery, 57(10), pp.e92-e93.
Velte, P., 2019. Associations between the financial and industry expertise of audit committee
members and key audit matters within related audit reports. Journal of Applied
Accounting Research.
Шипуліна, Ю.С. and Ващенко, Т.В., 2015. Justification the choice of import substitution
strategy direction on maching building enterprises. Technology audit and production
reserves, 1(6 (21)), pp.37-42.