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Business Risk Management

University: BPP University School of Business and technology

  • Unit No: 12
  • Level: High school
  • Pages: 18 / Words 4614
  • Paper Type: Essay
  • Course Code: PACC6009
  • Downloads: 100
Question :

This assessment will cover following questions:

  • Generate research in which data is gathered from a wide range ofsources.
  • British Airways is an airline company. Systematically assess the likelihood and severity of identified risks.
  • Provide the requirements for risk management inbusinesses, and the utilisation of risk registers to demonstrate activerisk management.
  • Demonstrate expertise required to produce a risk register to facilitaterisk management practice in British Airways.
Answer :
Organization Selected : BRITISH AIRWAYS

INTRODUCTION

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.

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.
  • 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. Worried for assignment help? Talk to our experts now!

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 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. Take essay help to get higher grades.

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

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

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.

Likelihood Criteria

Likelihood

that risk event will occur in organization.

Impossible

 

 

Impossible

Impossible

Impossible

 

Acceptable

As low practicable

generally

Acceptable

Acceptable

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.


2.2.4 Develop and Design risk register that identify risks could impact on organizational objectives and identify risk form area of business.

  1. 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

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.
  1. 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”.

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.

  1. 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

  1. 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.

  • Risk Avoidance
  • Risk Reduction
  • Risk transfer
  • Risk Assumption
  • Segregation of risk exposure

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Risk Register table for threats

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 a

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