This 10 page paper is the beginning proposal for a research study that asks if there is a relationship between operational risk management and profitability in the airline industry. The paper presents the problem, the questions, an overview of the literature on the topics and the research design. Bibliography lists 15 sources.
Name of Research Paper File: MM12_PGairrsk.RTF
Unformatted Sample Text from the Research Paper:
how does an airlines risk management strategies affect that airlines profitability? To discover the answers to the questions, the researcher needs to investigate different aspects and factors that are
inherent in the problem questions. First, what types of operational risks exist? Second, what is the probability of each type of risk? Third, what do airlines generally do now to
minimize their risk exposure? Finally, what could they do differently to minimize their exposure? The other area to investigate is the profitability of airlines today and how has that changed
over the recent years? Is there any kind of cyclical pattern to the profits from one year to the next? Another factor to investigate is what do the airlines identify
as having the greatest impact on their profit margins? Background and Justification We have all read and heard through our mass media that the airline industry has been
in a slump since the 9/11 attacks. Despite the assistance they received from federal agencies, we have read and heard about multiple airlines filing for Chapter 11 protection, e.g., Delta.
There have also been airlines that have just closed or that have merged with others. Zea (2002) reports some of the risks that must be managed in the airline
industry. There are five general risk categories: safety risks, strategic risks, hazard risks, financial risks and operational risks (Zea, 2002). Operational risks include: key manager planning, scheduling risks, accounting and
control systems, government intervention/regulation, supply chain equipment issues, information system failure, network constraints, 3rd party supply failure and things that anything that can interfere or interrupt the business, such as
a labor strike (Zea, 2002). Other risks include "computer crime," "credit risks," and "loss of reputation" (Jenner, 2006, p. 65). Loss of reputation has become more important as low-cost airlines