Risk Assessment and Management

Student Name - Isuru RanaweeraStudent No - 22231719

What is a risk? • A risk can be defined as the effect of uncertainty on

objectives –potential of events and their consequences or a

combination of these (airsafe.com, 2014).

• According to Netjasov and Janic (2008), when there is known

probability of failure, the chance of being exposed to the

hazard of losing business opportunities is known as risk.

What is Risk Assessment?• This involves the identification, analysis and

elimination of the hazards, as well as subsequent

risks that threaten the feasibility of an organization.

This is followed by actions to minimize, monitor and

control the effects (airsafe.com, 2014).

• In the aviation industry, it is a careful examination

of what could cause harm to people and aircraft so

that you can decide if enough precautions are

made or should more be done.

Steps in assessing risks1. Identify the hazards – First, the potential

hazards to the workplace must be identified.

Passengers with special needs will need more

help in accessing the aircraft and gate crew

must be able to handle these situations.

Aircraft refueling operations pose a carbon

monoxide hazard and solutions must be found

to minimize the risks (hse.gov.uk, n.d.)

2. Decide who might be harmed and how –

this could be passengers boarding the aircraft

or ground personnel performing their duties

(hse.gov.uk, n.d.)

3. Evaluate the risks and decide on precautions –

Steps must be taken after spotting the hazards to do

anything reasonable to eliminate the risk of the hazard

occurring. Precautions should be used if there is no way

of eliminating the hazard happening (hse.gov.uk, n.d.)

4. Recording the findings and implementing them –

The results of the risk assessment should be written

down and shared with other employees. The

assessment needs to show that an inspection has been

carried out correctly and risks are kept to a minimum

(hse.gov.uk, n.d.).

5. Review the risk assessment and update if

necessary – This step is there to make sure

that the risk assessment is correct, and that all

hazards have been covered and included.

A risk assessment is usually carried out annually

and any risks that happen after the assessment

should be added to the assessment (hse.gov.uk,

n.d.).

Risk Management

• Airsafe (2014) states that when you combine a risk

assessment with decisions on how to address that

risk, it is called risk management. The technical

and social aspects of the risk situation are

considered in this large decision making process.

• Sage and White (1980, cited in Janic, 2000, p. 44)

says that investigating the causes of accidents and

assessing their risks was the usual method of

managing risk and safety in the airline industry.

Steps in risk management

Source: http://www.mitre.org

• There are several methods of managing risks and reducing

them to a minimum.

1. Assume/accept – the presence of a risk should be

acknowledged without acting to control it (mitre.org, n.d.).

According to Underwood and Ingram (2013), a risk accepting

strategy is often applied on a transaction-by-transaction

basis.

2. Avoid – Changing constraints and certain requirements to

eliminate or reduce the risk (mitre.org, n.d.).

3. Control – this calls for certain actions to minimize the

impact of the risks (mitre.org, n.d.).

4. Transfer – the risks can be transferred to another

organization willing to accept them. Outsourcing services

falls under this category (mitre.org, n.d.).

5. Watch/monitor – this involves monitoring the environment

for changes that affect the impact of the risk (mitre.org,

n.d.).

Type of Risks• Risk to an individual

• Statistical risk of the occurrence of an accident

• Predicted risks

• Perceived risks

All four of these risks are present in civil aviation (Janic,

2000). Statistical risks are involved when companies provide

insurance for airlines. Perceived risks remain when

passengers purchase their insurance while on ground.

Predictive risks are involved in ATC with expected changed in

traffic patterns and equipment.

Risks in the airline industry Acts of terrorism – the airline industry is a favorable

target for terrorists because of the international presence

and the media attention on the incident (Sweet, 2009).

Volatile price of fuel and currency fluctuation – This

changing price of fuel affects the operating results of

many airlines. There could be currency risk on revenue

when dealing with foreign currencies for purchases

(britishairways.com, 2009).

Global economic slowdown – Financial positions of

airlines are at stake as most are sensitive to the changes

in the environment they operate (britishairways.com,

2009).

For example, the SARS epidemic caused lower

demand for air travel and consequently airlines

experienced decreased revenue during that

period.

• Risks involving ground handling –

Refueling and passenger boarding are critical

phases of ground handling operations and

should be carefully done to prevent accidents

and injuries to personnel.

Notes• Goals of a risk assessment include:1. Identifying potentially hazardous situations.2. Using appropriate methods to estimate the likelihood of

a hazard occurring.3. Eliminating a hazard to reduce the probability of a

hazard occurring.4. Negative consequences of the hazard is being limited.5. Estimating uncertainty associated with the analysis.

(airsafe.com, 2014)

• Airlines around the world employ jet fuel derivatives, interest rate swaps and forward foreign exchange contracts to stabilize risk exposure to fuel price, interest rate and foreign exchange risks

• Some casual models of risk and safety assessment are given below:

1. Common Cause Analysis (CCA) – identifies the sequence of events leading to an aircraft accident (Netjasov and Janic, 2008)

2. Event Tree Analysis (ETA) - model used to map the sequence of events from a single hazard and the gravity of the outcome from these events (Netjasov and Janic, 2008)

3. Fault Tree Analysis (FTA) – used to analyse events or combination of events that might lead to a hazard (Netjasov and Janic, 2008)

4. Bow-Tie Analysis – this is a combination of ETA and FTA and uses other model to estimate probabilities of related accidents (Netjasov and Janic, 2008).

5. Bayesian Belief Networks (BBN) – developed to understand the impacts of different causes of the risk (Netjasov and Janic, 2008).

For example Ryanair, Europe’s first low cost carrier hedges between 70% -90% of its anticipated fuel consumption to prevent any large fluctuations in the fuel prices in the short term.

References• airsafe.com (2014) Risk Assessment Basics [online]. airsafe.com. Available

from: http://www.airsafe.com/risk/basics.htm [Accessed: 17 June 2014].

• britishairways.com (2009) Principal risks and uncertainties [online]. britishairways.com. Available from: http://www.britishairways.com/cms/global/microsites/ba_reports0809/pdfs/Risks.pdf [Accessed: 18 June 2014].

• hse.gov.uk (n.d.) Five steps to risk assessment [online]. hse.gov.uk. Available from: http://www.hse.gov.uk/pubns/indg163.pdf [Accessed: 18 June 2014].

• mitre.org (n.d.) Risk Mitigation Planning, Implementation, and Progress Monitoring [online]. mitre.org. Available from: http://www.mitre.org/publications/systems-engineering-guide/acquisition-systems-engineering/risk-management/risk-mitigation-planning-implementation-and-progress-monitoring [Accessed: 18 June 2014].

• Netjasov, F. and Janic, M. (2008) A review of research on risk and safety modelling in civil aviation. Journal of Air Transport Management. 14 (4), pp.213-20. Available from: http://ac.els-cdn.com/S0969699708000537/1-s2.0-S0969699708000537-main.pdf?_tid=dcd241b4-f7af-11e3-bff2-00000aacb35e&acdnat=1403182224_deac6f3915d3ab416f2ed88096a94e0f [Accessed: 18 June 2014].

• Sweet, K.M. (2009) Aviation and Airport Security. 2nd ed. Boca Raton: CRC Press.

• Janic, M. (2000) An assessment of risk and safety in civil aviation. Journal of Air Transport Management. 6 (1), pp.43-50. Available from: http://ac.els-cdn.com/S0969699799000216/1-s2.0-S0969699799000216-main.pdf?_tid=a44dafbc-f7b0-11e3-a091-00000aab0f02&acdnat=1403182559_ba2637edfb6806ef0d68ba700ec68974 [Accessed: 18 June 2014]

• Sage, A.P., White, E.B., (1980 Methodologies for risk and hazard assessment: a survey and status report. IEEE Transaction on System, Man, and Cybernetics SMC-10, 425}441 Cited in Janic, M. (2000) An assessment of risk and safety in civil aviation. Journal of Air Transport Management. 6 (1), pp.43-50. Available from: http://ac.els-cdn.com/S0969699799000216/1-s2.0-S0969699799000216-main.pdf?_tid=a44dafbc-f7b0-11e3-a091-00000aab0f02&acdnat=1403182559_ba2637edfb6806ef0d68ba700ec68974 [Accessed: 18 June 2014]

Bibliography• Adler, N. and Gellman, (2012) Strategies for managing risk in a

changing aviation environment. Journal of Air Transport Management. 21, pp.24-35. Available from: http://ac.els-cdn.com/S0969699711001360/1-s2.0-S0969699711001360-main.pdf?_tid=8c50f67e-f7b2-11e3-a417-00000aacb35f&acdnat=1403183378_77c4786197d37250bcb5188eccdc5488 [Accessed:18 June 2014].

• airsafe.com (2014) Risk Assessment Basics [online]. airsafe.com. Available from: http://www.airsafe.com/risk/basics.htm [Accessed: 17 June 2014].

• bia.ca (n.d.) Risk Management.the What, Why, and How [online]. bia.ca. Available from: http://www.bia.ca/articles/rm-risk-management.htm [Accessed: 17 June 2014].

• britishairways.com (2009) Principal risks and uncertainties [online]. britishairways.com. Available from: http://www.britishairways.com/cms/global/microsites/ba_reports0809/pdfs/Risks.pdf [Accessed: 18 June 2014].

• business.vic.gov.au (n.d.) Evaluate business risk [online]. business.vic.gov.au. Available from: http://www.business.vic.gov.au/disputes-disasters-and-succession-planning/how-to-manage-risk-in-your-business/types-of-business-risks [Accessed: 17 June 2014].

• Crouhy, M., Galai, D. and Mark, R. (2006) The Essentials of Risk Management [online]. New York: McGraw-Hill. Available from: www.dawsonera.com [Accessed: 18 June 2014]

• Janic, M. (2000) An assessment of risk and safety in civil aviation. Journal of Air Transport Management. 6 (1), pp.43-50. Available from: http://ac.els-cdn.com/S0969699799000216/1-s2.0-S0969699799000216-main.pdf?_tid=a44dafbc-f7b0-11e3-a091-00000aab0f02&acdnat=1403182559_ba2637edfb6806ef0d68ba700ec68974 [Accessed: 18 June 2014]

• Lee, W.-K. (2006) Risk assessment modeling in aviation safety management. Journal of Air Transport Management. 12 (5), pp.267-73. Available from: http://ac.els-cdn.com/S0969699706000597/1-s2.0-S0969699706000597-main.pdf?_tid=7ba8fcbc-f7b3-11e3-9821-00000aab0f6c&acdnat=1403183779_6fa5e3c7dbb6b5545abc234436dbd023 [Accessed: 18 June 2014]

• mitre.org (n.d.) Risk Mitigation Planning, Implementation, and Progress Monitoring [online]. mitre.org. Available from: http://www.mitre.org/publications/systems-engineering-guide/acquisition-systems-engineering/risk-management/risk-mitigation-planning-implementation-and-progress-monitoring [Accessed: 18 June 2014].

• Netjasov, F. and Janic, M. (2008) A review of research on risk and safety modelling in civil aviation. Journal of Air Transport Management. 14 (4), pp.213-20. Available from: http://ac.els-cdn.com/S0969699708000537/1-s2.0-S0969699708000537-main.pdf?_tid=dcd241b4-f7af-11e3-bff2-00000aacb35e&acdnat=1403182224_deac6f3915d3ab416f2ed88096a94e0f [Accessed: 18 June 2014].

• osha.gov (n.d.) Hazards and Solutions [online]. osha.gov. Available from: https://www.osha.gov/SLTC/airline_industry/hazards.html [Accessed: 17 June 2014].

• Sage, A.P., White, E.B., (1980) Methodologies for risk and hazard assessment: a survey and status report. IEEE Transaction on System, Man, and Cybernetics SMC-10, pp.425-441. Cited in Janic, M. (2000) An assessment of risk and safety in civil aviation. Journal of Air Transport Management. 6 (1), pp.43-50. Available from: http://ac.els-cdn.com/S0969699799000216/1-s2.0-S0969699799000216-main.pdf?_tid=a44dafbc-f7b0-11e3-a091-00000aab0f02&acdnat=1403182559_ba2637edfb6806ef0d68ba700ec68974 [Accessed: 18 June 2014]

• skybrary.aero (n.d.) ICAO Annex 19, Safety Management [online]. skybrary.aero. Available from: http://www.skybrary.aero/index.php/ICAO_Annex_19,_Safety_Management [Accessed: 17 June 2014].

• Sweet, K.M. (2009) Aviation and Airport Security. 2nd ed. Boca Raton: CRC Press.

• Underwood, A. and Ingram, D. (2013) How Do You See Risk? – Risk Management Is All About Your Perception [online]. rmmagazine.com. Available from: http://www.rmmagazine.com/2013/06/24/how-do-you-see-risk-risk-management-is-all-about-your-perception/ [Accessed: 18 June 2014].