Singapore Airlines 2011 Annual Report Download - page 34

STATEMENT ON RISK MANAGEMENT
SINGAPORE AIRLINES
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1 RISK MANAGEMENT EMBEDDED IN ORGANISATIONAL PROCESSES
1.1 Since 2002, a formalised Risk Management Framework has been implemented across SIA Group
under which risks are identified, evaluated and controlled on a coordinated and integrated basis.
All business units are involved in identifying and evaluating risks from the bottom up, and these risks
are then reviewed by Risk Management Committees at Company and Group level to provide a top
down perspective as well. Under the Framework, the risks are then prioritised and business units use
both preventive and mitigation controls to manage risk exposures within prescribed tolerance limits.
These risk management activities are now carried out regularly as embedded organisational processes
within the Companies.
2 RESPONDING TO MAJOR EVENTS
2.1 Major Events Affecting Airlines and Air Travel
During the 12 months from April 2010 to March 2011, a number of major events affected airlines
and air travel generally – from airspace closure over Europe due to volcanic ash clouds, to massive
snowstorms in Europe and the USA, to aircraft engine concerns requiring regulatory compliance
actions, to massive flooding in Australia and to earthquakes in New Zealand and Japan.
2.2 Risk Responses and Crisis Contingency Plans
While the specific individual events above were not predictable, the generic nature of the events,
such as airspace closure and natural disasters affecting air travel or airline operations, were identified
within SIA Group as major risks, and contingency plans were put in place. This permitted the Group
to implement coordinated and effective responses in a timely manner. Prior simulation exercises
on similar scenarios allowed management to adapt contingency responses to the actual disruption
events. Lessons learnt from these events were then incorporated back into the responses.
3 ONGOING ACTIVITIES TO IMPROVE MANAGEMENT OF RISK
3.1 Annual Risk Review
During the year, the Annual Risk Review was carried out Group-wide, with key strategic and non-
strategic risks surfaced and reviewed by the Company Risk Management Committee, the Group Risk
Management Committee and the Board Safety & Risk Committee.
3.2 Review of Risk Responses and New Risks
The various Risk Committees reviewed specific key risks and the corresponding risk controls for
adequacy and effectiveness, based on independent verification of tests and simulations conducted.
New risks potentially arising from changes to operations, such as from outsourcing, were also
identified and the risk response plans were reviewed.