Initial Risk Assessment

Why – understanding risk posture

When you begin a new initiative, you usually want to understand the ‘high water mark’ level of risk across a range of risk categories.

The categories can include reputational, financial, health and safety, and so on.

Understanding the ‘high water mark’ level of risk sets the risk posture for the initiative and usually results in changes to the initiative scope and approach to address risks.

You may then likely also develop a more comprehensive risk register which is then tracked throughout the project.

How to create

  1. Create a 2-level view using the Assessment element as shown below.
  2. Review with your team to edit as required, adding anything that may have been missed.
  3. Use AIM to add an initial Severity rating and then edit as required. Most Enterprise risk toolkits require that risks have a Severity rating applied, indicating the impact if that risk occurs. To get AIM to add a Severity rating, click the “Add Tags” button, enter ‘Severity’ as the Property Name, and put “The severity rating of the risk from 1 (low) to 5 (high)” in the Property Description.

Level 1

Establish the risk categories. You can generate these using a prompt like the one below or manually enter Assessment elements for the top level of your hierarchy using your organisation’s defined risk categories. Most organisations have a risk evaluation toolkit that defines these.

“What are all of the risks that can occur when running the business? I want risks across a broad range of categories, e.g. reputational, financial, health and safety, and any category of risk that can affect the <your industry or initiative> end to end.”

Level 2

Add an Assessment layer. Leave it to auto-determine the element count, and change the max number of elements if necessary.

“Give me specific examples of the highest risks.”

Example

Climate Change Impact RiskChanges in weather patterns or severe weather events can disrupt flight schedules and increase operating costs, such as fuel for rerouting or delays. [Severity]: Climate change poses a high-risk due to unpredictable and long-term effects on the environment.Disruption of Flight Schedules due to Extreme WeatherAnalysis of disruption risks linked to climate-triggered flight schedule changes. [Severity]: Extreme weather conditions can lead to significant disruptions.Increased Fuel Consumption due to Weather-Induced ReroutingExamination of potential inefficiencies due to weather-induced fuel consumption increament. [Severity]: Weather-induced rerouting is somewhat under control but still poses a moderate risk.Higher Operating Costs from Climate Change Mitigation MeasuresInspection of rising operating costs from implemented climate change countermeasures. [Severity]: Costs have to be incurred by the operational shifts due to climate change mitigation measures.Revenue Loss from Climate Change-Induced Reduction in DemandEvaluation of revenue threats from lowered demand due to climate change effects. [Severity]: Climate change-related issues can impact consumer behavior leading to dropping demands.Regulatory Compliance Risks associated with Carbon EmissionsAssessment of compliance risks pertaining to carbon emission regulations. [Severity]: Non-compliance with regulatory standards can lead to heavy penalties.Cyber Security RiskAirline systems are at risk of being targeted for attacks, data theft, or ransomware. This can disrupt operations, compromise passenger data, and lead to reputational damage. [Severity]: With increasing dependency on technology, the threat of cyber-attacks is very high.Potential Attacks on Flight Control SystemsThe flight control systems could be targeted leading to potential safety risks. [Severity]: Any vulnerabilities in flight control systems can have catastrophic results.Risk of Data TheftSensitive data such as passenger information and flight details may be stolen. [Severity]: With increasing digitalization, the risk of data theft is very high.Threat from Ransomware AttacksAirline operations could be disrupted due to ransomware attacks. [Severity]: Ransomware attacks are becoming increasingly common and can have severe impacts.Reputational Damage Due to Cyber AttackA cyber attack could lead to reputational damage leading to loss of customers. [Severity]: Any cyber attack leading to data breaches can severely damage the company’s reputation.Financial Impact of Cyber Security BreachesA cyber attack may lead to financial loss due to operational disruption, penalties, and remediation. [Severity]: Financial losses from a cyber breach could be significant, especially factoring in potential lawsuits and fines.Financial RiskWith high operational costs, airlines are sensitive to economic downturns, fluctuations in fuel prices, or shocks like pandemics which can reduce passenger numbers. [Severity]: Due to uncertain economic conditions, financial risks are high.Fuel Price VolatilityAssessment of the impact of fluctuations in fuel prices on the company’s operations and profitability. [Severity]: Fuel prices are volatile and an increase in price can impact the financial condition significantly.Economic Downturn ImpactEvaluation of the company’s resilience and adaptability to economic downturns or recessions. [Severity]: An economic downturn can lead to reduced demand and revenue.Pandemic DisruptionAnalysis of the enterprise’s stability and adaptability in the face of global health crises. [Severity]: A pandemic can lead to a sudden halt in operations and severe financial losses.Regulatory Change ConsequencesAssessment of the impact of changes in aviation regulations on the company’s compliance and operations. [Severity]: Unexpected regulatory changes could interfere with operational plans.Technological Disruption ThreatEvaluation of the enterprise’s readiness for innovation and adaptability to technological disruption. [Severity]: Rapid technological change can disrupt operations and necessitate high investment costs.Operational RiskFactors such as mechanical failures, human error, or regulatory issues can impact safety or disrupt flight schedules, damaging reputation and increasing costs. [Severity]: Operational risks, while prevalent, can be mitigated with proper management.Increased mechanical failuresAnalysis of growing instances of mechanical failures, posing potential threats to operational efficiency and safety. [Severity]: Mechanical failures can lead to operational disruptions and safety concerns.High occurrence of human errorInsight into the high incidence of human errors, revealing a need for improved training and protocols. [Severity]: Human errors can lead to operational, safety, and reputational risks.Strict regulatory modificationsEvaluation of recent drastic regulatory changes, representing a significant challenge and need for compliance adjustment. [Severity]: Strict regulatory modifications could result in additional compliance efforts and costs.Significant disruption to flight schedulesExamination of major disruptions in flight schedules, exposing risks to customer satisfaction and logistics. [Severity]: Disruptions to flight schedules can lead to service quality decline and monetary losses.Damage to brand reputationAssessment of negative impacts on brand reputation, identifying threats to customer loyalty and market position. [Severity]: Brand reputation is extremely critical in terms of customer loyalty and market share.Reputational RiskNegative incidents, poor customer service, or PR mishaps can damage the airline’s reputation, which can have impacts on customer loyalty and ticket sales. [Severity]: Any damage to reputation can have a severe impact on customer loyalty and public perception.Negative Publicity from Flight Delays or CancellationsAnalysis of the company’s reputation impact due to flight delays or cancellations. [Severity]: Negative publicity can damage the image of the company and affect customer loyalty.Poor Customer Service ComplaintsEvaluation of customer dissatisfaction arising from poor customer service. [Severity]: While critical, strong customer service training programs can reduce the risk of poor customer service.Damage from Social Media MishapsAssessment of potential damage from social media incidents. [Severity]: In this digital age, any negative publicity on social media can severely damage reputation.Failure to Meet Sustainability GoalsInsight into the company’s ability to achieve its sustainability targets. [Severity]: Environmental concerns are becoming increasingly important, and failing to meet them can lead to negative publicity.Incidents of Non-Compliance with RegulationsScrutiny of the organization’s regulatory compliance incidents. [Severity]: Non-compliance with regulations can lead to hefty fines and damages to reputation.Severity345