Three challenges for Malaysia Airlines’ risk manager

Geopolitical risk in the skies over the South China Sea, together with managing process risk, and guarding against supply chain threats, are priorities for Malaysia Airlines’ chief risk officer.

Badrul Hisham Yusoff (pictured), the airline’s chief risk officer, spoke to StrategicRISK at the Risk Forum APAC 2018 event, held in Singapore in May.

Badrul assumed the role of chief risk officer at Malaysia Airlines from December 2016, after a tough period for the airline, including staff reductions in 2015 and two tragic air disasters in 2014.

Process risk

Addressing process risk, including the use of more automation within the organisation, is a major focus for Badrul.

“We’ve come from being a slow beast and we want to be a more agile animal,” Badrul told StrategicRISK.

A reduced headcount in recent years has put greater onus on managing process risk.

“We have been behind the curve and making more use of automation will help us support the business,” he said.

“We’ve got processes that currently require three or four people. With some investment in automation, we could get that down to one person,” said Badrul.

Employees’ time can be freed up to focus on other less menial tasks.

“As we automate, it will create new jobs – more specialist jobs, more analytical jobs,” Badrul said.

“We want to be lean and to have good data to support the business,” he added.

Geopolitical risk

Asia Pacific geopolitics are a concern for Badrul as more and more hotspots are emerging – including some at Malaysia Airlines’ doorstep.

“These hotspots affect the majority of daily operations of airlines in the region,” he said.

Consequently, over the past few years, Malaysia Airlines has been cautious in its outlook for flight operations.

“As an example, after MH17, to ensure safe operations in the planning for our flights to Europe, we avoid the hotspots over the Middle East and eastern Europe,” said Badrul.

“The flights which would normally take up to 14 hours became very much longer, up to 17 hours, and as there are other airlines operating the same routes, passengers became aware and it became a customer service issue,” he said.

“Under the circumstances of these hotspots in recent times we have reports of flight intercepts over international waters, despite flying on a scheduled and approved flight plan,” said Badrul.

“These intercepts were apparently due to aircraft flying into “unannounced” restricted airspace,” Badrul added.

Supply chain

Supply chain risks are another area of focus for the airline’s risk management efforts.

“We’ve identified supply chain risks and the need to increase productivity for the aircraft engineers.

“We have new management systems for ordering new parts, and to get aircraft in and out on time, for example,” said Badrul.

“The goal is to become more efficient – if you do it manually, you get less efficient,” he said.

Badrul suggests a background on the operational side, and as a pilot, has come in useful to the risk role.

“The rest of my team come from a non-operational background, so my perspective is slightly different,” he said.

“I guess I understand the operational people well, and what irritates them, he added.

The Bowtie

The airline had gone through a tough period in 2014 and 2015, before Badrul took the role of chief risk officer at the end of 2016. He had previously been its chief of pilot training.

There was a large reduction in staff headcount in 2015, in the period following two tragic air crashes: flight MH370, which went missing over the Indian Ocean on 8 March 2014; and flight MH17, shot down by a missile over Ukraine on 17 July the same year.

“The biggest focus has been towards making risk management tasks easier for the operational staff,” Badrul said.

“There are thousands of front-line operational staff who do not want to do a long day’s work only to have to fill out spreadsheets, so the challenge is to keep it as simple as possible,” he continued.

“We learned the hard way that trying to educate operational people in risk management and getting them to register risks is not easy,” Badrul added.

A management transition also stimulated a change in risk management. Resources were pooled, towards a centralised emergency response, for example.

Badrul emphasises the bowtie method as a useful approach to visualising the challenge, representing proactive as well as reactive risk management controls.

On one side are the multiple causes before an event, with prevention controls along the way towards an event itself occurring – at the centre of the bow. On the other side of the bow, after an event, come the recovery controls that lead outwards towards the ultimate outcomes.