Corporate sustainability model for the Airline Business

The radical adjustments as well as effective risk management’s implementation is influenced with the introduction of the latest security provisions along with consumer uncertainty, aircraft costs, escalating fuel costs and static labor in case of airline business. At the time of integrating new business, operations and process this business climate should be taken into consideration for knowing how to balance the opportunity and risk. It is risky and costly to mismanage the risk and also not possible to prevent all risks. Hence effective risk management is only an effective solution for these cases.

For implementing the effective risk management the effort level placed is considerable and there is no similarity in between two solutions of the effective risk management. Different structures, financial resources, cultures, objectives, strategies and risk appetites are comprised in the companies. The greatly influenced efforts regarding the corporate sustainability are the air transportation and airline industry’s sustainability nature as well as objectives.  In accordance with the characteristics in a process of implementation, the model CSM has been improved and developed.  For this reason a basic process model is presented by the CSM model.

To airline industry, the effective risk management model of the Protiviti is provided as a best sample model. To understand and implement the CSM model, this model is considered to be useful. In order to assist the management of airline to go away from traditional risk management towards the holistic risk management, this Protiviti model is designed. The uncertainties occurring across the financial and physical assets are managed through traditional risk management. Since the risk management managerial approach and its system objective is to protect, enhance and create the enterprise value the risk is observed to be opportunity when compared with effective risk management and CSM. In strategy of the company and above the organization the risk management is embedded and managed through this approach.          

To implement the corporate sustainability management, the industry of airline is one of the complex and dynamic industries. One of the fastest growing airlines of the world also experiences the major challenges as well as new risks with respect to the survey of Oliver Wyman are given below:

  • Issues of post-merger integration
  • Increased competition
  • Probable market liberalization and regulatory changes and
  • Changes in fuel prices

                   An approach of comprehensive and analytic intensive is utilized by the OW for determining and down selecting the key internal as well as external risks that are being experienced by the main Asian airlines. In accordance with the corporate sustainability fundamentals, related efforts, sustainable development and requirement, a new model can be formed. A continual improvement is enabled in decision making if the series of steps included in the process of CSM are undertaken in sequence. In every processes step the consultation as well as communication is reflected. In the process of risk management, monitoring and reviewing is considered to be an important and integral step . The steps are:

  • Internal as well as external airline business environment analysis includes for corporate sustainability management the resource allocation.
  • Corporate based strategy as well as relevant infrastructure’s establishment includes human based sources, technological and human based sources.
  • CSM committee and function establishment includes assigning responsibilities and roles along with information, feedback systems and data flow’s establishment.
  • Prioritization, analyzing and identifying and mapping the sustainability basing the risks into the economic, social and environmental risk categories.
  • For good risk response decision making includes mitigate, assume, transfer or avoidance to each risk.
  • The corporate sustainability based system’s continuity is presented for new as well as changed risks.

The new model’s sub components and its cyclic nature are described by the below process steps:

Step 1-

  • Corporate objectives and goals of airlines.
  • The internal and external pressures determination over the airlines.
  • Airline’s management systems, information systems and internal audit structure analysis.
  • Culture, common language and infrastructure of airline to risk management and corporate sustainability.
  • Stakeholder relations such as stakeholder identification, outreach, marketing and media relations analysis.
  • Airline resource determination and its allocation.
  • Business strategy of airline and their relationship with the corporate sustainability’s determination.
  • Corporate appetite and tolerances of airline’s determination.
  • In accordance with corporate sustainability, airlines corporate procedures and policies review.
  • To corporate sustainability, triple bottom line’s establishment (Oliver Wyman, 2007).
  • Using the present managerial applications, functions and approaches supporting the sustainability.

Step 2-

  • Organizational sustainability strategy’s definition and integrating through strategic planning.
  • For sustainability high corporate level, risk perceptions and sustainable development awareness institution.
  • Risk management guidelines, reports and best practices determination.
  • A general risk terminology and language is developed.
  • Abilities and capabilities of organization institution.
  • Development and research.
  • System staffing, design and funding.
  • Regarding the fundamentals training and education.
  • Risk profile of corporate sustainability’s institution (T. Hikmet Karakoc, 2008).

Step 3-

  • ERM function’s establishment.
  • In organization committee the ERM’s place.
  • Roles as well as responsibilities assignment.
  • CSM philosophy’s establishment.
  • Suitable CSMIS’s establishment.
  • Reporting line and format’s establishment.
  • CSM and its associated system’s updation and enhancement.
  • The effective, well-timed data flow, feedback reporting and line measurements are offered (Ljubljana, 2008).

Step 4-

  • Best management, guidelines, sustainability, surveys, risk management framework and sustainable development’s analysis as well as reviewing.
  • Analysis tools, models and method’s identification.
  • For the risks assess, prioritize and identify.
  • Key risks and capabilities analysis.
  • Strategies as well as design capabilities institution.
  • Respective to triple bottom line risks classification.

Step 5-

  • Risk mapping and selection for agreeable responses of risk.

Step 6-

  • Constant monitoring and review function’s institution for managing the system efficiency as well as workable level in developed conditions.
  • Continuity offered for CS based system of ERM and its development.
  • For new as well as developing risks and its sources the CSM process has to restart on loop.

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