Every industry has its own unique risks, especially aviation, but they typically fall into the same categories: People, Market, Event, and Safety. Aviation risk management is no different. People risks include employee burn-out and turnover, or even employee theft. Market risks can include rising fuel prices, increased competition, or even new regulations. Event risks are the most talked-about. A severe storm damages your fleet, or an ash cloud shuts down flights, and suddenly your cash-flow is strained. Safety risks are hazards that increase the chance of someone getting hurt. Those hazards can be on the plane, on the pilot, or in the environment.
A solid risk-management plan will address all these areas. Security systems will help monitor your employees. But employee retention plans are your best defense. Solid training programs and incentive programs will make sure your employees have the skills to do the work, and the motivation to do it well. We all know that skilled and happy employees do the best work, and cost employers less in errors and injuries. Market risks can be addressed with smart investment strategies, and business diversification that limit stress on cash flow as markets fluctuate. Retention accounts can be established to fund small losses that fall below insurance deductibles, and actually earn income for the business when funds are not needed to pay claims.
Most, though not all, event risks can be addressed with the right insurance coverage. Effects of damage to fleet, employee injury, and liability lawsuits can all be addressed with the right insurance coverage. General liability, property, workers compensation, and professional liability are all necessary components of coverage for many aviation businesses.
There is no “magic bullet” for risk management. Not all risks are preventable; and not all are insurable. But a proper risk-management plan, combined with the right insurance can help keep you flying.