Risk Management: Aviation Company's Responsibilities and Policies - Essay Example

? Risk Management Explain Aviation Companies Responsibilities And Policies As They Relate To Weather Hazard, Structure And Energy OfThe Atmosphere And Air Mass Circulation And Fronts. The aviation industry has had to deal with weather related issues such as an emergency landing; aircraft crashing and delayed take off. The aviation companies take responsibility in case weather related issue arises. Pilots encounter weather related dangers in the airport and en-route. These include icing, turbulence and low levels of wind shear. Despite technological developments, weather forecasting presentation and dissemination of weather related data still provides a challenge. Weather continues to be a contributing factor in the airline industry occurrence worldwide (Fisher, & Jones, 2007). Though accidents in the aviation sector are rare, a report in 2007 showed that 43% of accidents in the aviation industry resulted from operations in adverse weather. Weather also has a massive impact on air traffic systems, and it leads to numerous injuries of passengers and flight crews yearly. Because of weather related impacts on the aviation industries, airline companies assume the responsibility of weather related phenomenon such as reduced visibility, turbulence, and thunderstorms for the safety of operations. These responsibilities include communicating the issues as they arise, to the passengers, crew and the aircrafts in air. The companies also assume the responsibilities of compensating the victims of weather related deaths and injuries. The aviation company always seeks the best weather for its operations (Ditcher, & Doiron, 2008). Pilots encounter many weather related hazards such as low visibility turbulence and air mass circulation. Weather related incidents occur frequently, but they account for a quarter of aviation fatalities. As a result, airline companies formulate weather related policies, and they take responsibility in case of a weather related mishaps. The company should ensure that its aircrafts have the latest weather related technology. Accidents and disruptions in air traffic result from the misunderstanding of weather information and an innate uncertainty of weather prediction and forecast (Ditcher, & Doiron, 2008). Aviation companies must continue researching and developing technology that increases the precision, reliability and accuracy of weather forecast. They formulate policies implemented by their respective weather offices such as the introduction of advanced and complex technologies. Among the policies, the company ensures that none of its aircraft takes off or lands in adverse weather conditions. All fights during such conditions either seek alternative landing or are cancelled. However, the company has policies and assumes responsibilities of seeking alternative transport for the stranded passengers, or compensates them for the extra distance they travel seeking an alternative airport (Fisher, & Jones, 2007). The aviation companies have responsibilities and policies that ensure their pilots have adequate training on handling weather related issues. Mostly, weather related accidents result from the pilot’s lack of understanding of the weather and flying environment, which contribute to pilot errors. The company ensures that their pilots have operational knowledge relevant to weather. Most of the pilots have difficulty in applying what they learnt on weather during their training. As a result, the aviation company ensures that the pilot has an adequate perception on weather knowledge. They do this by facilitating refresher courses, which integrate weather categories, services, decision-making and interpretation. The policies on pilots are based on the pilot’s ability to decode information related to weather, and weather charts (Blakey, 2004). The company takes the responsibility of their pilot’s decisions made in adverse weather. Therefore, the airline ensures that the pilot has adequate information by gathering and processing this information. The airline also has policies that target working memory and formulation and implementation of an action plan. These responsibilities ensure that the pilot has sufficient information of the weather and the environment they fly in before they make any decision. The company also acquires the latest weather forecasting technology for the generation of information to be relayed to the pilot and airline crew (Blakey, 2004). The aviation company places risk control measures through its responsibilities and policies. This includes defense against hazards that create human errors (preventive controls), and mitigating the harm as the incidences occur. This defense category has three groupings; human, system and engineering defense. Engineering defense physically prevents hazards from causing harm; such defenses include fitting aircrafts with weather radars and de-icing. System defense controls weather hazards by placing procedures for following. These procedures include company policies concerning operations during weather occurrences and recovery procedures. Human defense includes actions, expertise and competencies required of aircraft and airline operators in preventing hazards. This includes the ability of pilots to recognize and diagnose radar echoes (Ditcher, & Doiron, 2008). Use Weather Observations, Analysis and Forecasting To Determine Risk Management Policies Natural disasters resulting from extreme weather conditions have financial implications, which have led, to an appraisal of risk management policies. These events have cost nations up to 70 billion dollars losses, for instance the Japan earthquake. Climate alteration scenarios project frequent weather extremes such as heat waves, flooding and drought that lead to massive losses. Changing developments and nonlinear tipping can set off sudden disasters. Despite the uncertainty in weather and climate projections, extreme weather conditions will still occur and affect human lives and health, and infrastructure and ecological system. Therefore, systems and strategies for lowering risks that arise from the hazards have been set up through risk management. Institutions and governments have various risk management strategies for reducing the risk to infrastructure and individuals. It is crucial to prioritize risk management as a step towards reducing the risk on people and structures. From this prioritization, a variety of actions such as monitoring and warning systems and financial insurance and instruments can help to manage hazards identified with weather changes. Weather monitoring through observations and analysis has deteriorated as a discipline because of underfunding and pressure. However, the available infrastructure is used in observing the weather and making analysis for determining risk management policies (Molyneux, 2011). Weather risk management involves products allowing the management of weather related risks. Like financial derivatives, weather related risk derivatives are applied to hedge risk. The value of this function depends on the worth of the causal asset, commodity or index. When using weather observation, the price of the weather option lies on the underlying weather statistic. This (weather derivatives) defend against extreme weather outcomes. Institutions such as agricultural companies, municipalities, energy and utility companies are the main customers of these weather derivatives. The risks involved in weather derivatives include average and abnormal temperature, precipitation and snowfall, wind speed, humidity and river flow. These risks are applied when formulating policies for risk management. For instance, most temperature contracts in the present application have their basis on the Heating Degree Days in case of winter and Cooling Degree Days for summer. These weather derivatives work based on the measurable indices, and pay off depends on the performance of the index relative to strike value and not the actual loss. This means that coverage has a defined utmost limit. Weather alternatives pay off depending on the causative weather statistics below or above a limited strike value. When the weather statistic is below the strike value, put off option pays, while, when the strike value is above the strike value, call option pays. For instance a municipality that pays 3.0 million for removing 12 inches of snow; the municipality could seek the call option which provides 250,000 dollars for every half inch above the 12 inch strike, up to a maximum of 20 inches (Pollner, & Watson, 2010). References Blakey, M. (2004). Federal Aviation Administration Safety Management System Manual. Federal Aviation Administration. Page 77-78. Ditcher, J. & Doiron, G. (2008). Weather Risk Management through a Systemic Approach to the Investigation of Weather Events. International Society of Air Safety Investigators Seminar. Page 1-6. Fisher, G. & Jones, B. (2007). Integrating Space Weather Observation & Forecast into Aviation Operations. American Meteorological Society & Solar Metrics Policy Workshop Report. Page 1-14. Molyneux, D. (2011). Weather Risk Management. Zurich Re. Page 7-29. Pollner, J. & Watson, J. (2010). Climate Change Adaptation in Europe and Central Asia: Disaster Risk Management. Page 2-8. Read More