The paper "Managing the Risk Issue" is a perfect example of a Management Case Study. Risk management is becoming of the issue in almost every sector. This is because of its ability to influence the operations of a given sector or industry. For instance in the transport sector its estimated that cost of operations as a result of fluctuating oil prices in the world market are always fluctuating (Flynn 2000). This has real increased the cost of doing business in the industry as many of the companies have failed to break-even.
Further, safety is also become a very critical risk issue in the transport. It is estimated that over 50,000 people world over die each year as a result of transport-related accidents. On the same line following the recent increase in terror attacks in the industry, it is becoming a worrying trend for many investors including the airline, road and water operators. The other emerging risks in the transport industry include the change in climate and happening of natural disasters such as earthquakes and floods (Willis Environmental 2001). The objective of this report is to take a critical view on risk management in the transport industry and report different risks in the industry, the management process and the risk associated with managing them and the ways in which some of the risks can be managed and thereafter identify what aspect is likely to go wrong when implementing the risk management approach (AASHTO 2002). Issue Identification and Literature Review.
Even though these have been considered as the most common risks in the industry it’ s now becoming very clear that other forces are becoming into play and thus posing more risk to the sector.
Among these emerging risk issues in the transport industry include the ever-increasing of world oil prices, economic instability as a result of great world recessions and increased threats from the terror activities (Goldman S 2003). All these issues are causing a major worry for the industry and therefore more than ever before it’ s becoming very necessary to redesign their management approaches to address all these risks. To start with, large world transport depends on fuel to run the vessels. However, following the political instabilities in many countries that are large producers of oil like the kingdom of Saudi Arabia, Iraq, Iran, Nigeria, and Libya has led to the scarcity of this major commodity and thus leading to escalation of prices of this important commodity.
The other risk is now becoming very common and that is really threatening the industry, which is the act of terror by Lockwood (2007). This report identifies acts of terror as the recent emerging risk issue in the transport industry that needs to be addressed.
Terror acts in the sector have been common starting with the most common of September 2001 in New York and Washington were quite a number of people lost their lives. The other events of terror in the transport sector have been recorded in the Indian Ocean along the coast of Kenya, Tanzania, and Somalia (EC 2008). It’ s argued that the hijacking and attacking of ships along this region is planned and managed by Somalia pirates who have become a major threat in the horn of Africa. In essence, therefore, this is becoming major risk and is expected that if not tackled at earlier stages, terrorism is going to cause a lot of damage to the industry especially the supply chain as many investors are likely to withdraw from those regions that are at risk.