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13 CHAPTER THREE AIRPORT RISK MANAGER'S ROLE The risk management profession grew out of an insurance- solidated, single risk manager approach employed by large buying role. Its principal professional organization, the Risk airport operators, persons charged with the risk manage- and Insurance Management Society (RIMS), evolved from ment role in small airports include deputy directors, finance an earlier organization known as the American Society of managers, property managers, legal personnel, and various Insurance Management "acknowledging the shift toward committees within the airport operator organization. risk management" and away from just buying insurance and managing the accompanying services (Arnold 2002). Fifteen of 19 airport operators confirmed that risk management is a full-time position at their facility. Of the Nevertheless, insurance purchasing remains an impor- remaining airport operators with part-time risk managers, tant function of the present-day risk manager. Not all orga- the primary responsibility of these risk managers entails nizations have risk managers, however, although someone finance, legal matters, and property management. is always responsible for the functions that a risk manger performs. The survey included questions about employment of risk managers by airport operators; their insurance-pur- RISK ANALYSIS chasing responsibility and authority; their systems, methods, and procedures for insurance purchasing; and how this func- After computer problems crippled the new $20 billion Chek tion relates to their overall role within the organization. Lap Kok (Hong Kong) airport in July 1998, economic losses related to cargo delays amounted to more than $1 billion. The staggering losses led to an inquiry by an independent AIRPORT RISK MANAGERS commission to determine responsibility for these losses and to ensure that the same mistakes would not be made again Eleven of 19 airport operator respondents employ a desig- (Macdermott 1999). nated airport risk manager charged with the authority to make final insurance-purchasing decisions. Airport opera- The commission's report focused on the critical nature of tors without risk managers tend to rely on positions such as a comprehensive risk assessment and contingency planning to deputy director, a municipal risk manager (for operators that ensure the success of large-scale infrastructure projects such are part of a municipal agency), or legal or finance personnel as Chek Lap Kok. The report cited a multitude of operation to make the final insurance-purchasing decision. problems, from slippery floors, insufficient air conditioning, and escalator stoppages to more complex problems such as All but one large airport operator respondent stated that malfunctioning of both the flight information display system the airport risk manager is ultimately responsible for the risk and cargo-handling system. management role in their facility, including insurance-pur- chasing decisions. The remaining airport operator indicated Here, the lack of overall risk assessment resulted in a near that the Treasury/Risk Financing Department is charged irreparable breakdown in procedure, $1 billion in losses, with these tasks. embarrassment for the government-run airport, and 6 weeks of remediation before the facility could begin operations at Medium airport operators fall in line with their larger the intended capacity. counterparts. All but one medium airport operator respon- dent has a designated airport risk manager. The remaining Airport operators responding to this synthesis survey medium airport operator uses the services of a municipal instrument are aware of the need for risk assessment. Airport risk manager. operators, especially large and medium facilities, employ risk assessment techniques such as costbenefit analysis, Small airport operators tend to use a variety of resources evaluation of loss histories, benchmarking, and statistical to manage risk. Like the larger airport operators, some analysis to make the decisions that keep day-to-day opera- indicate use of a designated risk manager. Unlike the con- tions afloat and, for effective risk managers, successful.