Analysis

Managing strategic risk in aviation

Deloitte on disruption

All airlines face a distinct set of business risks and challenges, as well as a marketplace that continues to be reshaped by new entrants, evolving economic conditions, and shifting consumer preferences. That’s enough to keep most leaders busy without considering the disruption and potential consequences of hard-to-identify, high-impact threats that can erode strategic value. Or risks that present new and compelling opportunities. Once airline executives understand the true nature of these risks, they can more confidently evaluate the organization’s capacity to respond to them.

Disrupt aviation: Changing dynamics and new opportunities for US airlines

A good pilot knows you can’t fly by just the seat of your pants. Without actively monitoring the instrument panel, scanning the visual horizon, and listening for updates from air traffic control, you can miss a vital adjustment—or fail to make the course correction. The same goes for strategic risk in the aviation industry.

An array of forces is changing the face of commercial aviation. From rapid technological development and competing service models to shifting demographic and consumer demands. Few could have foreseen this pace of change five years ago, let alone ten or twenty. And this pace of change is ever increasing.

History is already littered with iconic names of airlines that are no longer listed on arrivals and departures boards. But what this paper offers isn’t a history lesson. It’s a call to action. Because complacency in the face of strategic risks can lead to dire outcomes.

Disrupt aviation: Unpredictable and malicious threats

Running an airline requires many human and technical touch points, leaving airlines especially vulnerable to bad actors with intent to do harm. These bad actors can imbed themselves in the normal flow of business operations, both locally or across vast integrated systems and processes.

This report takes a look at three key areas of unpredictable and malicious threats, all of which could potentially inflict damage on the airline industry:

  1. Cyber incidents and data breaches
  2. Insider threats and the risk from within
  3. Supply chain disruption (third-party and vendor threats)

Mitigating these threats requires a significant investment in risk sensing and control technology, processes, and protocols. But when constrained by limited resources, how does an executive team choose how much to invest in each area? And how can executives better predict and address threat scenarios?

 

About Deloitte on disruption in US airlines

As airlines navigate through the disruptive effects of demographic shifts, geopolitical conflicts, evolving business models, and other ever-changing industry dynamics, Deloitte Advisory offers many services to help our clients prepare for uncertainty and take advantage of opportunities. Spotting and preparing for strategic risk is one essential component of addressing the challenge business leaders face today. Read our perspectives to learn why. And, what companies can do to respond.

Did you find this useful?