Risk Management for Airlines - How to Mitigate Risk and Ensure Safety

High oil prices 

This has always been one of the common issues affecting the aviation industry. This is because oil has been scarce leading to shooting prices in the world market. It is quite expensive to use and making it a challenge because the costs involved are high. This in turn affects the costs of transportation, scaring away customers, or even leads to low numbers of people using carriers and airlines. In the long term, the companies experience losses. 

Oil protectionism 

This often happens in the form of lobbying, by imposing tariffs on imported oil. This makes it expensive for the countries importing oil to use in the aviation industry. Small producers attempt to influence the decisions of the government on imported products. They determine the price of oil in the market of a country thus can choose to hype prices of oil because the consumers will have no choice (mhugos, 2019) . This leads to high costs of tra nsport and also high costs involved by companies producing carrier services. 

Security threats 

The entire oil industry from the oil wells to the refineries is affected by threats like oil piracy, terrorism, and also organized crime. On such occasions where they occur, the prices shoot high and the costs are adversely affected. Oil piracy in the world market is a big threat to the entire aviation industry as it will lead to delayed flights and costly plans made by individuals and organizations. 

Solutions to oil challenges 

The world market should ensure equal oil distribution and come up with an equilibrium price that suits all consumers of oil. This will help reduce unnecessary competition by oil companies which in turn positively affects transportation carriers and shippers. Oil protectionism can be solved by the world market by coming up with policies that favour the world market. 

Reference 

mhugos. (2019, December 17). SCM Globe . Retrieved from Alexander the Great Needed Great Supply Chains: https://www.scmglobe.com/alexander-the-great-needed-great-supply-chains/