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Risk Analysis

In: Business and Management

Submitted By akamyth
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CRM Assignment | Risk Profile & Risk Map | | | | |

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Corporate Risk Management Assignment
Risk Profile Significance | Likelihood of Occurrence | Risk Type | Risk Definition | Risk Description | 10 | 5 | Operational Risk | Aviation fuel price risk | ATF cost represents the largest category in airlines operating expenses and place the airline stability at long term risks. The prices of ATF have risen significantly in one & half year and constitute nearly 40% of ticket prices. | 9 | 5 | Market Risk | Hedging risk | Current high prices and the volatility in the prices of the fuel is making hedging strategy very difficult to implement | 9 | 5 | Personnel risk | Operational risk | Airline engineers strike recently and competitive offerings of the competitors is placing a strategy risk in front of the top management as the increase in the personnel cost can further increase the pressure on the operating margins of the airline. | 9 | 5 | Market Risk | Competition risk. | Airline industry is highly competitive in nature and with air travel becoming a commodity business, being competitive on price is key for the survival of any airline. | 8 | 5 | Exchange rate risk | Market risk | Airline has its payables in many currencies and with the volatility in the exchange rates airline is exposed to exchange rate risk | 7 | 4 | Economic risk | Market risk | Ongoing recession In US has cut deeply into profits of the airline and has raise questions over the future of the airline. | 6 | 3 | Operational risk | Fleet age | Ageing of the fleet is also a cause of concern as they have to be replaced in the near future which will create need of funds | 5 | 2 | Business Risk | Political risk | Any political instability in the middle east can cause energy prices to rise dramatically and which can place airlines profitability and survival under pressure | 5 | 3 | Business Risk | OPEC cartel risk | Any production cut by the oil producing nations can lead to increase in the prices of the fuel and which can affect the overall business at risk. | 4 | | Market risk | Cash flow risk | As the financial situation is growing bleaker cash flows of the airline are under pressure | 3 | | Technological risk | Operational risk | The airline has one of the best technologies to handle the operations efficiently but with the fast changes in the technology investments required in the up gradation of the technology may increase in the long term | 2 | | Reputational risk | Business risk | Any downgrading of the airlines can affect the reputation of the airlines in the public and can increase the financing costs of the company. | 1 | | Environmental risk | Business risk | At present some cases of environmental laws are pending with the regulators and any abrupt change in the environment laws can put some pressure on the airline. |

RISK MAP | FREQUENCY | Certain | | | G | B,D | A | | Likely | | | K | E,I,J | | | Moderate | | P | | | | | Unlikely | | O | C,F,H | | | | Rare | | L | | | | | | Simple | Minor | Major | Critical | Extreme | | IMPACT |

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