EB39: Transitioning From Disaster Response and Recovery to Enterprise Risk Management. Joe DesPlaines, Frontier Airlines

Transcription

1 EB39: Transitioning From Disaster Response and Recovery to Enterprise Risk Management Joe DesPlaines, Frontier Airlines

2 Frontier Airlines: 350 Flights per Day = 1 flight : 4 minutes in business day Monthly Passenger Volume = 1 million + DOT Major Airline status Annual Risk Management cost = ~$10.2 million Includes Safety, Security, Regulatory Compliance, Emergency Management, etc.

3 Today s Agenda: - Why do airlines focus almost exclusively on aviation disaster response? - What caused Frontier to broaden its focus to enterprise risk management? - What is Frontier Airlines process to transition from an aviation emergency response culture to an enterprise risk management environment? - Is the Frontier transition working successfully?

4 -Airbus A320 -Airbus A319 -Airbus A318 -CRJ - Q400 - Why do airlines focus almost exclusively on aviation disaster response? Sometimes Bad Things Happen

5 Air travel is still the safest means of transportation* - Automobile accidents U.S ,000 fatalities - Commercial aviation accidents fatalities *National Transportation Safety Board statistics

6 Commercial Airline Regulating Agencies: - FAA - DOT - NTSB - DOS - DHS - Others (OSHA, EEOC, etc)

7 Expanded Vision to Enterprise Risk Management Change Drivers: - Audit Committee Identifies Risk Exposure - AOG Incidents - Recent Natural Disasters - Business Interruptions at Other Airlines

8 Expanded Vision to Enterprise Risk Management Audit Committee Identifies Risk Exposure: - Sarbanes Oxley Internal Audits

9 Expanded Vision to Enterprise Risk Management AOG Incidents: - Aircraft On Ground Incidents

10 AOG Incidents: Total for Ground Accidents in 2006:???????

11 Expanded Vision to Enterprise Risk Management Recent Natural Disasters: Blizzard Denver International Airport closed for three days

12 Expanded Vision to Enterprise Risk Management Business Interruptions at Other Airlines: - Technology - Compliance - Workforce Continuity

13 Technology Computer Gremlin Strands Thousands of United Airlines Passengers By Katherine Noyes ECT News Network A computer outage at United Airlines on Wednesday caused the cancellations of 24 domestic flights and the delays of 268 domestic and international flights. The financial costs for the airline will be substantial, considering that a flight on an airplane such as a Boeing 737 brings in revenues between $15,000 and $20,000, and that United operates roughly 4,000 flights per day.

14 Technology Airlines holiday troubles blasted Computer backup needed, experts say By KATIE FAIRBANK Dallas Morning News Dallas - An operational meltdown at a Delta Air Lines Inc. regional affiliate is prompting calls for both a federal investigation and more investment by the nation s airlines into backup systems and other technologies. Comair was unable to schedule sufficient flight crews, stranding as many as 30,000 people in 119 cities over the weekend, after its computers crashed on Christmas Day.

15 Information Technology Areas of Attention: - Power redundancy - Change control - Network redundancy - Capacity - Security - Disaster Recovery - Plan Testing

16 Compliance F.A.A. Fines Southwest Air In Inspections By MATTHEW L. WALDREP Published: March 7, 2008 The Federal Aviation Administration proposed a record penalty, $10.2 million, against Southwest Airlines on Thursday because, it said, the carrier had misled officials about whether it kept flying older Boeing 737 planes for several days last year after failing to inspect them for cracks in the fuselage.

17 Expanded Vision to Enterprise Risk Management Single points of Failure: - Subject Matter Experts - Procedures

18 Expanded Vision to Enterprise Risk Management Too many heroes, not enough planning

19 Transition - Risk exposure - Aviation Emergency Response structure - Cultural shift

20 Corporate beliefs - Every crisis is different - Risk Management/Business Continuity Plans are not a recipe - There is no such thing as too much practice - Business Continuity is a people process that is technology enabled. * *Scott Roe, President, Corporate Risk Solutions

21 Ideal structure* All Inclusive Mitigation Strategy that includes 1. Crisis/incident management 2. Disaster recovery 3. Business resumption *The value of Business Continuity Training and Exercising, Marc Jacobs, Corporate Risk Solutions, CXO America, March, 2008

22 Ideal Developmental Responsibilities* Executive support Business Impact Analysis (BIA) and/or Risk Analysis (RA) Notification and plan activation Roles and responsibilities documentation Vital records recovery for manual/alternative processes Reputation Management - customer, employee & stockholders Detailed resumption, recovery and restoration procedures Tabletop scenario or live exercise to test the plan for functionality Training, communication and corporate awareness programs *The value of Business Continuity Training and Exercising, Marc Jacobs, Corporate Risk Solutions, CXO America, March, 2008

23 Expanded Vision to Enterprise Risk Management 1. Collect data on business interruptions measure impact 2. Secure Senior Executive support

24 Expanded Vision to Enterprise Risk Management 3. Create a Risk Management (Business Continuity) Planning Team 4. Begin to establish a Risk Management environment

25 Expanded Vision to Enterprise Risk Management 5. Identify Critical Functions 6. Conduct a Critical Function Threat Analysis (BIA) 7. Document existing risk mitigation strategies for identified threat exposures

26 Expanded Vision to Enterprise Risk Management 8. Develop organization wide Risk Management (Business Continuity) plans based on threats to critical functions 9. Develop a standardized approach to project risk management 10. Conduct plan training and testing

27 Expanded Vision to Enterprise Risk Management 11. Develop a plan maintenance process 12. Transition ownership to critical business units

28 Today s Agenda: - Why do airlines focus almost exclusively on aviation disaster response? - What caused Frontier to broaden its focus to enterprise risk management? - What is Frontier Airlines process to transition from an aviation emergency response culture to an enterprise risk management environment? - Is the Frontier transition working successfully? Questions?