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Essay / Research Paper Abstract
This 9 page paper looks at the way in which Southwest Airlines manages risk. The paper considers financial risk and the use of hedging as well as the way culture is managed in line with enterprise risk management. The bibliography cites 8 sources.
Page Count:
9 pages (~225 words per page)
File: TS14_TEriskSW1.rtf
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Unformatted sample text from the term paper:
decades, with more than 35 years of continuous profits (Southwest, 2008). In order to produce these types of results the firm needs to be able to deal with risks, especially
in an industry that is renowned for high overheads and low profit margins and where difficulties have been seen not only with poor results but with other airlines entering bankruptcy
or having to consider mergers to survive. In any business there will always be risks, it is the responsibly of management and
the board of directors to seek out ways of minimizing risks with the use of a range of frameworks, differing types of organizations will face different risks, dependant on a
number of factors, not only the type of industry in which they operate, which can pose some significant risks, but also as a result of factors such as internal culture,
values and expectation. Southwest Airlines manage risks in a number of ways with specific tools and with approaches that are aligned to enterprise risk management techniques. One of the main
risks faced by the airline industry at the current time is that of rising fuel costs. It has seen many airlines introduce fuel surcharges and look for ways increasing income,
such as charging for checked luggage. Southwest are managing this financial risk associated with rising fuel costs with the use of hedging. Hedging is a tool that is made
use of by traders or companies that want to protect an open position. An open position is a position where losses may be incurred as the company or trader has
some commodities, which are bought, but not sold, or sales that are not covered or hedged, meaning that fluctuations could impact on the value of the trade, as seen with
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