Risk Management

Name: University: Course: Tutor: Date: 18 February 2011. Risk Management Introduction British Airways is the largest UK based international scheduled airline. Together with scheduled services. British Airways has been engaging in the operations of both international as well as domestic carriage of both mail and freight, as well as the ancillary services. In the association with codeshare and franchise partners, British airways (BA) fly in even more than 350 destinations, and carry about 33 million passengers, which make them to earn over $ 10 billion in revenue, hence considered as one of the strongest network in the international market. The employee headcount stood at 42,377 people in March 2008. On the other hand, British Airways has experienced dramatic culture alterations over the past few decades, from nationalized airline to modern customer service airline. It used to incur substantial looses, poor reputation for reliability and its costs were higher compared to other airlines. After its privatization, it focused on an added-value business strategy, in which it concentrated more on customer service and in which it relayed partly on the human resource development management practices, like the employee development programs amongst others, (Arrowsmith, Tony, & Keith, 2000). As an effect, this essay critically identifies five significant risks and then applies them to British Airways. Competition One of the risks faced by British Airways is the increased completion. In itself, competition is a contest between different individuals for the allocation of resources. It usually occurs when parties strive for a certain goal that can’t be shared. Completion serves as a mechanism that has been used for determining the best suited business, though it can cause loss making hence elimination from the market. Since privatization of British airways, it has been facing completion in the international and local markets. Virgin Atlantic has really given British Airways a scorching run for its cashon the North Atlantic routes. Despite that fact that it is being driven apoplectic by regulation Branson building new routesto the United States, whenever he was allowed and, when he was blocked he moved in the other direction and came up with new routes that leads to Hon Kong, Tokyo Japan, Johannesburg in South Africa, and recently, he has moved to Caribbean, New Delhi, Shangai, Lagos as well as Toronto. In retrospect, such moves appear to be smarter as compared to how they used to be, (Clark, 2002). This risk could be categorized under strategic risks. In my evaluation, this risk has higher effects on the airline. This is based on the fact that, the British Airways’ European short hauls has been thoroughly hit hard by stiff competition from airlines offering low cost services like, Ryanair and Easyjet. Along with this British Airways has created its own enemies in Go the subsidiary aircraft that it sold to competition earlier. Deregulation of the European Union Airspace The deregulation of the European Union air space in 1990s has had much impact on the structure of the industry in the whole Europe. The shift that took place towards the so called budget airlines con shorter routes has been a significant risk to many established airlines. For instance, airlines like Easyjet and the Ryanair have expanded so much at the expense of traditional national airlines. Such like a risk can be categorized under strategic risks which are defined by the choices of business design and how it interacts with external factors, (Michael, 2002). Due to deregulation of European airspace in 1993, unrestricted cross boarder flying was allowed in the skies of Europe. As an effect, it led to freeing-up air carrier markets. There were dozens and dozens of new, cut rate airlines sprung up to compete with high price, high cost state-owned airlines. The monopoly that was being enjoyed by British Airways over the U.K skies was squashed and as a result, costs had to be lowered for survival. In addition, there has been variety of options available to inter-continental as well as transatlantic travelers, hence costs has become an issue, (McCormick, 1997). In my own risk evaluation, this risk has no capability of causing much harm to the airline. This is based on the fact that, it is just a matter of creativity and innovation to deal with the condition. Terrorism The third risk faced by the British Airways is terrorism. Terrorism is the systematic use of terror particularly as means of coercion. Common definition of terrorism only refers to the violent actions which are aimed at creating fear, are perpetrated for religious , deliberate targets, disgracing the security of non-members, political as well as ideological goals. Some definitions have also included the action of unlawful war and violence. The word terrorism in itself is charged both politically and emotionally, hence compounding the difficulty in the provision of a precise definition, (Hoffman, 1998). The September 11 terrorist attack in the United States have plunged the currier into one of its worst ever financial performances. The passenger traffic was far much lower than a fifth. This was based on the fact that, most travelers stayed away , especially on the ...