Airlines are one of the important means of transport around the world and considered one of the quickest mode of transport in most of the country in the world. “The accident rate for airline travel is lower than for any other mode of transportation, and it continues to decline” (Lane, 2005). However, with incidents like September 11 attack, MH370 and MH17, it shows that accidents do happen and cause a lot of fatalities. “Airlines choose to avoid the financial distress by purchasing insurance against loss-through-accident” (Lane, 2005). It is also considered one of the method to transfer the risk so that the company will have sufficient coverage to compensate for the loss in the unfavourable event. The objective of this paper …show more content…
RISK FACED BY AIRASIA BERHAD
Based on AirAsia Annual Report 2016, AirAsia has identified the significant risk faced by the company and how they mitigate those risk. The risk is classified into six categories namely strategic risks, operational risks, financial risks, cyber security risks, compliance risk and safety risks.
4.1 Strategic Risks
The first risk identified under strategic risk is the decline in sales which is due to the unexpected changes in demand caused by events such as pandemics in key markets, political conflict or market depressions that could impact our income stream significantly. The mitigation action taken by the company is to conduct periodic market analysis and coordinated responses to market events. AirAsia has also launched low-fare promotions from time to time to generate sales in periods of low …show more content…
The mitigation action taken is by implementing specialised tools to mitigate the risk of automated ticket touts as well as awareness campaigns on e-mail phishing prevention.
4.5 Compliance Risk
AirAsia must meet regulatory requirements of local aviation and consumer authorities in multiple jurisdictions. Unexpected or sudden changes in these requirements may risk non-compliance of local rules and regulations. The mitigation action taken is by maintaining a high level of engagement with local regulators and authorities to ensure any new regulatory requirement is understood and swiftly adhered to. In addition, AirAsia also constantly monitor the local regulatory landscape for new or amended regulations that it is required to comply with.
4.6 Safety