The risk management system used in the airline industry are associated with brand reputation, deregulation, debt funding and competition, employee relation, fuel price and currency fluctuation, key supplier risk, safety & security, global economic slowdown and Government intervention. The risk associated with the brand reputation is involved with the market value and recognition of the brand. Any incident or series of events that can hamper the image of the brand will affect the leadership of the airline industry. According to Davidson et al. (2010, p.162), the obstacle created in the brand value of the airline name will eventually affect the customer choice and profitability of the company. The high rise in competition is making the airlines meet all the criteria of the customer, making them realize the planned benefits and other executive risks. Relaxing the restrictions brings a negative impact over the margins created by the industry. The competitor firms allow mergers and acquisition that bring a potential threat to the market position and revenue of the airline brand. The ongoing financial operation depends on the financial condition of the market and other financial requirements that is attractive to the lenders. The substantial debt must be refinanced and repaid.
In addition to this, the airline industry spends almost millions for the fuel and oil. The impact on the operation is effected through the price of the oil and petroleum products. The purchase scale of the oil and petroleum can generate profit and loss of the industry. Moreover, the revenue depends on the financial structure of the market on which the industry operate. Lee and Jang (2015, p.440) stated that the deterioration in the global economy further affects the financial position of the industry. The adversity falls on the material of purchase inducing a threat to the revenue earned by the company. The principle of the business lies on the key suppliers. The risk associated with the suppliers or the failure in their business provides a profound impact on the airlines business. If the business of the suppliers of the raw material fails due to any incident, the negative influence is met with the airline business. It will give birth to chaos and disruption in the operational system. Failure to maintain the safety of our customers and employees induce risk for the safety and security of the customers. Lee and Moon (2016, p.115) mentioned that this situation will let the customers lose their trust on the airline and will opt for those that provides much tighter and secured security of their personal information.