Embedding Risk Management
to Achieve Strategic and Operational Objectives
Rob Kella - Chief Risk Officer
Overview
2
Managers inherently make decisions about risk everyday
Make decisions visible
Consider risk appetite and tolerance within the governance
limits of the business and then align them with the
achievement of strategic objectives
Refuelling
Risk and Assurance at Qantas
Established in March 2006 –
Supporting the Management of Risk
4
Chief Risk Officer
Group
Facilitation
• Border regulation
compliance and risk
management
• National and international
compliance with new
laws and regulations
Environment
and
Fuel Efficiency
• Environmental
compliance and risk
management
• Environmental
improvement programs
(inclusive of fuel and
non-fuel initiatives)
• Climate change
Group Risk and
Reporting
Internal Audit
Security
• Risk management
advisory
• Internal compliance
and control
• Security compliance
and risk management
• Internal and external
reporting
• Corporate governance
• Group
security services
• Project office
Aviation Medical
Services
• Business resilience
Occupational
Health and
Safety
Safety
• Aviation and
occupational medical
services
• Occupational safety
compliance and risk
management
• Aviation safety
compliance and risk
management
• Medical advice
(employees and
passengers)
• People safety
improvement program
• Oversight of group
aviation safety
standards
Why Manage Risk?
Increasing complexity of external risk environment
Continuous pressure to change – cost reduction and increased risk of
doing business
Management demands for more timely risk information
Increasing/changing demands from regulators; evolving compliance
requirements
Re-alignment of governance models within the Group to support business
objectives
5
Know Your Risk Factors and
Their Relationships
6
Strategic
Low cost carrier models unbundling airline Unstable
Regional & global
services
geographical
Economics
regions
Consolidation Rapid technology
Cost competitiveness
super carriers
advancements
Unrestricted
Credit rating
Industrial
Externally driven
air rights
relations
Capacity
Change
management
management
Growth of internet
as a sales channel
Domestic &
International
Competition
Cost reduction
programs
Internally driven
Maintenance
and reliability
Revenue management
Capital expenditure
Rising energy costs
Financial
Brand
Pricing/yield
management
New market segments
On-going security
challenges
Customer service
Fleet
management
Supply constraints aircraft delays
Safety
Regulatory
changes environment
Operational
Pilots on the Flight Deck
Risk Management Framework
8
How do we effectively and efficiently manage risks?
What are your
business
objectives?
What will prevent
you from
achieving them?
What are the
high-level causes/
consequences?
Who are the
primary risk
owners?
Strategic Risks
Business
Objectives
/ Drivers
Process
Risks
Technology
Risks
Execution Risk
Compliance/
Control
Risks
Financial
Risks
The Qantas Approach Embedding Risk Management
9
Risk Management done in isolation is not sustainable, you need a
supporting risk management framework
Qantas’ System of Risk Management
Qantas Group Risk Assessment Guide
1. Establish the Context
•
•
•
•
•
W hat can happen – identify list of risks to be m anaged
How can it happen – consider possible causes and scenarios
2. Identify Risks/Hazards
•
•
•
•
•
•
3. Analyse and Evaluate Risks
Identify existing controls/m anagem ent strategies
Rate effectiveness of controls/m anagem ent strategies
Describe and rate the worst consequence of the scenario (refer
page 2 )
Rate the likelihood of the consequence (refer page 3)
Based on consequence and likelihood ratings assign the risk
level (refer page 3)
Set priorities
4. Treat and Control Risks
Structure
Operations
• Governance structure
• Specialist risk groups
• Reporting and monitoring
frameworks
• Risk management methodology
• Awareness and capability
• Support
•
•
•
•
Identify and assess range of options for treating risk (refer page
4)
Prepare risk treatm ent and control action plans: responsibilities,
schedules, expected outcom es, budgets, perform ance
m easures, review process
Im plem ent plans
Analyse the effectiveness of the treatm ent/control and evaluate
residual risk
+ QGRAG supporting materials
Monitor and Review
Communicate and Consult (refer page 4)
Strategy
• Policy
• Leadership/
commitment/
culture
• Alignment with
vision/ objectives/
strategy
•
Define the problem /describe the change
Identify internal and external stakeholders
Size the discussion – how m any, how big (dollars, people,
aircraft, etc.)
Determ ine relevant consequence ratings for this assessm ent
Qantas Group
Risk Assessment Guide
10
Establish Context
Identify risks and hazards
Analyse and evaluate risks
Treat and control risks
Monitor and review
Ownership and
accountability for
risk management
is paramount
for business
success
Airbus A320 On Approach
Supporting Tools
12
VALUE:
• Quick
snapshot of
key risks
E
L
P
M
A
X
E
Y
L
N
O
• Risk trends
over time –
focus on risk
indicators
• Enhanced
analysis
• Integrated risk
reporting
• Clusters of
risks against
objectives
‘heat-map’
Aircraft in Maintenance Hangar
Key Messages
14
Understand your risk appetite and risk tolerance (governance model aligns
individual business unit appetite and tolerance with Group appetite)
Risk specialists support and embed risk practices in line management
The business needs to own and manage their risks
Risk management operationalised - need risk KPIs (linkage to outcomes)
‘If you don’t measure it you don’t manage it’
– will reduce waste and re-work
Support through appropriate frameworks and tools
Boeing B737-800 on Approach
Ongoing Success Factors
16
Continued support/advocacy from the top
Promotion and support of a risk culture - Culture that empowers risk ownership
Organisational positioning – Operationalise risks
Organisation that embraces change
Culture that empowers sharing
Structured/disciplined framework and supporting tools
Active monitoring and support
Qantas A380 to the Flight Line