While risk management is not a new concept, recently it has been receiving increasing recognition as a critical component of your business’ strategy for success. Effective risk mitigation increases safety and reduces costs – an appealing combination for any organization. In 2008, when the International Civil Aviation Organization (ICAO) first recommended that all aviation entities create a safety management system, it established a systemic, organization-wide approach to help companies formalize safety management as a best practice (See: “Six Sigma for Corporate Aviation,” BAA March/April 2014).
Across the business aviation industry, more companies are voluntarily developing risk mitigation efforts, even if they are not required to, in order to demonstrate safety-related best practices. They seek advice in identifying risk factors they should be addressing, and in developing a strategy for measuring and monitoring company-wide continual improvement. Many are aircraft operators; others, who rely on outside operators to transport their employees safely, are requiring such programs of their vendors.
For example, companies who use aircraft charter for executive transport may implement a risk management program requiring operators to prove that they have instituted an ICAO-approved Safety Management System (SMS).
At its simplest level, risk management includes implementing the following seven steps:
1. Identify risks or hazards that you have seen or can expect to see.
2. Determine the degree of severity of impact (low, medium, or high) if the risk occurs.
3. Determine the likelihood (certain/frequent, possible/remote, unlikely/improbable) that the risk actually will occur.
4. Identify the consequences or impact if the risk does occur.
5. Identify options to reduce the risk.
6. Create a five-part strategy to reduce risk:
- Prioritize risks: address first and allocate the most resources to those with the worst possible consequences and highest probability of occurring .
- Measure the results achieved from each risk mitigation action to determine if it is effective.
- Modify your procedures as necessary for each action that proves effective, to maintain continual improvement.
- For each risk identified, decide whether your organization will attempt to avoid, accept, reduce/mitigate, or transfer the risk.
- Continue to measure and evaluate risk mitigation efforts.
7. Implement risk reduction activities.
Useful tools may include :
- Creating a decision matrix,
- Developing new or modified processes,
- Writing and using employee training curricula,
- Creating minimum standards for your vendors, and
- Others as may be appropriate for your company.
Successful organizations include and engage employees at all levels. Encouraging buy-in and involvement from the front lines to top management, sometimes with help from outside consultants or specialists, will establish a “safety culture” throughout the organization, and insure that management accomplishes its safety management goals.
Several current industry trends may have an impact on your company’s risk management efforts. These include :
An increased focus on data-driven, “predictive” risk mitigation measures, including monitoring and determining the occurrence of risks in relation to activities over which the organization has some influence or control.
Risk management/SMS plans are being implemented in branches of aviation other than aircraft operations. These may include : ground handling, airport operations, charter and charter brokers, procurement, and contracting, among others. These may require modifications to your own program, if you already have an ICAO-compliant SMS in place.
More industry-focused risk mitigation requirements on specialized areas such as oil and gas and law enforcement. If any of these come to apply to aircraft operations (e.g. increased product quality specifications for aviation fuel suppliers), if you have an SMS in place, you may need to modify your own program.
While a guaranteed zero rate of incidents and accidents is ideal, by taking these seven steps to incorporate best risk management efforts into your company’s culture, and working toward continual improvement, you will have the best chance of getting as close as possible to zero. BAA