Roles Of Risk Management Essay

The most important role of Risk management in organisations past and present, is to identify, analysis, assess, control and avoid, minimize, or eliminate unacceptable risks. This essay will discuss the importance of risk management in firms and industries and the consequences of inadequate risk management in organisations focusing mainly on Kingfisher Airlines. Organisations need to take risks to grow and develop. Because risk is inherent in everything organisations do, the type of roles undertaken by risk professionals are incredibly diverse. According to R.E. Beard ‘today the theory of risk generates an interesting and far-reaching field for research and the development of the theory is far from complete’.

Not only is risk present in everything

He wanted to fly overseas routes. However, Indian have regulations in place that set out that aviation firms that have been running for at least five years are only allowed to fly overseas routes. In 2007, He bought the bleeding Air Deccan, India’s first low-fare carrier, promoted by G.R. Gopinath. Kingfisher Airlines merged with Deccan Aviation Ltd, which ran Air Deccan, in April 2008. KFA attained Air Deccan’s international flying rights. In September 2008, Mallya launched Kingfisher’s first international flight—from Bengaluru to London. Many say it was this decision that led to the grounding of Kingfisher Airline years later.

But where did it all go wrong for Kingfisher Airlines and Vijay Mallya? Before KFA had even entered, the aviation industry was already struggling with crude oil prices high and the fuel prices making up nearly half of operating costs for airlines. The company ignored the risks and warning signs of failure and the decisions made by the airline were somewhat

Air Deccan was a low-cost airline and Kingfisher was a first class business airline, two totally different pricing strategies. In return Kingfishers brand imagine of first class, premium, luxury was lost. It merged too fast without taking into account the consequences that would arise in the future.

Kingfisher Airline also experienced a high level of financial risk due to excessive debt. As of 31st of December 2011 the total debt of Kingfisher Airlines was Rs 7057.08 krone. Kingfisher last seen a positive cash flow in March of 2008. A better financial risk management may have helped mitigate the problem. It appeared there was no efficient risk management put in place to keep tabs before it all went downhill.

As stated earlier in the essay, the price of fuel in the aviation industry was astonishing throughout the life of Kingfisher Airlines. In India there is also huge taxes on fuel. Fuel prices fluctuate from time to time and is an uncontrollable risk. Kingfisher should have taken this into account before providing a first class premium airline. Due to the company being first class, it could not increase the seats on the flights unlike the low-cost airlines. Low-cost airlines increase seats to make up for the loss of profit on fuel. This is another example of operational risk and how the business didn’t get their target market right which led to