Corporate Risk Management for International Business

Business management requires both holistic and tailored strategy for every business since every corporation has its own unique characteristics and qualifications. Different qualifications create different risks, and different risks require customized approaches by managers. Air transport has always been seen as having an inherently strategic role. It has obvious direct military applications, but it is also highly visible and, for a period—and in some countries still—is viewed as a flag carrier, a symbol of international commercial presence. Air transportation is a key strategic asset in that it provides access to markets and thereby enables the economic development of nations and regions. However, the airline industry is exposed to risk which may affect operations, customers, corporate value, security, and safety. Risk can also be introduced to an enterprise through air transportation industry-based and organization-based changes, each of which may also bring changes in the type of risk. These present and emerging risks are the main reason for growing importance of enterprise risk management implementation in the airlines. The study begins with a definition of business, international business, and multinational enterprises. Following, international business history, its importance, characteristics, benefits, and problems are explained. In the second chapter, risk, risk management, and enterprise risk management are explained, followed by risks related to the airline industry in this study.

Resources are vital for any business. To survive, organizations have to both use and allocate some resources. Resource availability is one of the biggest uncertainty sources for managers. To get optimum resources from optimum sources, managers develop strategies. Sources of resources are also sources of risks. To take correct risk, sources should be taken into careful consideration. Third parties are always sources of risk. Risk includes two sides—both threat and opportunity. We believe that there is high relation between risk management and resource dependency. This is important since managing the uncertainty of sourcing is considered in setting corporate risk strategies. In this chapter, we tried to examine the link between corporate management strategies in view of resource availability uncertainty with practices in business, especially the civil aviation business. We have developed some hypotheses in this concept. The collection of data for the analyses of the hypotheses has been gathered by interviews that were held with the high-level executives from TAV Airports Holding: TAV companies’ practices have been investigated to expose the relationship between resource dependence and risk management practices. It has been concluded in the research that resource dependence and theories of transaction costs, especially in managing the uncertainty of sourcing, are taken into account for development of the corporate risk strategies. This chapter attempted to obtain information about the practices in the sector with using semi-structured interviews from the qualitative techniques. Also, interviews were conducted with senior managers of Sun Express Airlines and the Budapest Manager of Turkish Airlines and Fraport IC İçtaş Antalya Airport Terminal Investment and Management Inc.; the interview form was also presented. Therefore, both airport station management and airline management were in the scope of the study. An attempt to obtain the total original image with the leading representatives of the sector in the country and the perspective of enterprise risk management in the light of the hypotheses was made. The findings proved that in order to achieve in business strategies, corporates should find an optimum way to provide scarce resources. The setting of resource dependency based strategies was found necessary for competitive differentiation and the institutional sustainability. What we conclude is, manager’s strategies may change according to resource uncertainty, resource availability, and competitive qualifications.

Enterprise risk management is not a kind of one time event. ERM may be considered as a management philosophy, mentality, and as a holistic system. As a leading holistic management system, Enterprise Risk Management will both affect and shape the corporate culture and style of leadership and corporate strategy. Strategy is among other things about risk attitude, risk taking approach, risk culture, and risk appetite. For these reasons, to develop strategy and achieve it, managers have to implement enterprise risk management as a shaped/individualized style. Human factor has a dual role in business, and actually in life––as risk source and risk manager. Humans both create and manage risks. Based on this reality, enterprise risk management takes into consideration organizational behavior, as well as, physiology and sociology.

Stress has considerable potential to affect individuals. Humans mostly reflect their own stress on their work, family, environment and personal lives. Stress is a kind of risk source since it creates differentiated reactions to stimuli, and stress has considerable potential to affect our motivation level, as motivation is of critical importance to individual performance. Individual performance creates organizational performance, therefore stress must be managed by managers to sustain business. We present a considerable topic in this part as Critical Event Stress Management. As members of the aviation industry, we are also risk managers since even small mistakes may create disasters and our error free behavior according to established procedures may save many lives.

Strategy, in the global business environment, is tied to competitiveness. Human resource management is inextricably linked with other organizational management functions as contemporary organizations are in need of both competent and globally minded human resource talent. To achieve this aim, organizations must exercise care in creating both a strong and sustainable organizational culture. Furthermore, in aviation, risk exists in people, procedures, equipment, acts of nature, security, and so on. The record of safety in the industry shows us that the human element in aviation presents the biggest risk for such reasons as attitude, motivation, perception, ability, awareness level, culture, discipline, ethic, training, and so on. Enterprise/corporate risk management-based strategic approach helps organizations improve performance in both competitive and differentiation areas such as training and awareness, culture and attitudes, individual creativity, and developing innovative risk solutions. In seizing opportunities and minimizing operational losses, managers should integrate their strategy and human resource practices with risk management. We assume that considerable interrelations exist between corporate strategy, human resources management, organizational and national culture, and values of individuals and risk management. These interrelations have the potential to affect corporate strategy. Risk management presents reasonable assurance to improve a corporation’s talent management, competitive human resource management, and employer branding, as well as to ensure effective ways of education and training, and recruit and retain high-performance workers at all levels. Hasan Polatkan Airport which is operated by Anadolu University has a unique structure among international airports in the world in terms of that it is operated by cooperation of government and university and its operations are international. A problem with this research is flexibility, which is needed due to the university’s autonomous structure and dynamic nature of the aviation industry, and conflicts with bureaucracy that have dominant position on government. We will present our research which was designed via the Analytic Hierarchy Process (AHP) methodology applied to personnel selection at Anadolu University Airport. An analytic hierarchy model has been created with the purpose of determining priority personnel selection criteria. The model has been analyzed through a sample using the AHP which is a multi-criteria decision-making method. Saaty Compliance Indicator has been used to understand how close estimated values obtained via AHP to actual data. It is possible that the model developed can be generalized for the aviation industry. We aim to contribute to the management and strategy field via help improvement awareness to the strategic human resource management together with this model.

In this chapter we present case studies from Turkey’s Leading international companies: TAV Airports Holding and BRISA Holding. In an effort to understand Enterprise Risk Management in applied settings, this chapter provides valuable direct insights from leading corporations in Turkey. For that we are indebted to key corporate managers, Esin Rodoplu Kablan (TAV) and Cumhur Bilgili (BRISA), who authored the cases.