INS510 Group 5 ( Aviation Industry RISK Assessment) PDF

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FACULTY OF BUSINESS AND MANAGEMENTBACHELOR OF BUSINESS ADMINISTRATION (HONS.) MARKETINGINTRODUCTION TO TAKAFUL (INS510)GROUP ASSIGNMENT:“AVIATION INDUSTRY RISK ASSESSMENT”PREPARED BY:NAME STUDENT ID CLASSNUR SYAIRAH BINTI RAZAMAN 2020384733 JBC2403AMUHAMMAD FIRDAUS HELMY BIN HAMIDON 2020970759 JBC24...

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FACULTY OF BUSINESS AND MANAGEMENT BACHELOR OF BUSINESS ADMINISTRATION (HONS.) MARKETING

INTRODUCTION TO TAKAFUL (INS510) GROUP ASSIGNMENT: “AVIATION INDUSTRY RISK ASSESSMENT”

PREPARED BY: NAME

STUDENT ID

CLASS

NUR SYAIRAH BINTI RAZAMAN

2020384733

JBC2403A

MUHAMMAD FIRDAUS HELMY BIN HAMIDON

2020970759

JBC2403A

MUHAMMAD ASYMEER BIN SULAIMAN

2020958165

JBC2403A

SITI AISHAH BINTI PAIMAN

2020970919

JBC2403A

FATIMAH ZAHRA BINTI ABDUL HADI KAMEL

2020983117

JBC2403A

DATE OF SUBMISSION: 18.7.2021

PREPARED FOR: PN. CHE’ KHALILAH BINTI MAHMOOD

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TABLE OF CONTENT ACKNOWLEDGEMENT

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1.0 INTRODUCTION

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2.0 POTENTIAL OF RISK 2.1 Fire Risks 2.2 Operational Risk 2.3 Environmental Risk 2.4 Technological Risk 2.5 Physical Risk

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3.0 FACTOR OF RISK 3.1 Negligent aircraft maintenance 3.2 Damages of Safety Management System 3.3 The Airplane Pollution 3.4 Lack of a mature and well-developed data security 3.5 Rapid Growth of Drones 3.6 Accident on the airports ramps and in the aircraft

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4.0 EFFECT OF RISK 4.1 The domino effect on companies' reputation 4.2 Disrupt the Safety Management System and passenger’s life 4.3 Employee Health Concerns 4.4 Expose to regulatory liability 4.5 Occupational Disease 4.6 On the ground problem

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5.0 IDENTIFY THE IMPACT USING RISK MATRIX 5.1 About Risk Matrix

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6.0 SELECTING TAKAFUL PRODUCTS 6.1. Employer’s Liability Takaful 6.2 Aviation Takaful 6.3 Improving Takaful Products

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CONCLUSION

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REFERENCES

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ACKNOWLEDGEMENT First and foremost, we want to thank Allah S.W.T. for all of his blessings for allowing us to complete the task that our lecturer had assigned to us. This assignment was completed with the help of all group members, despite a few issues that came up during the process of the project. Fortunately, all of the problems have subsided, and we have been able to react effectively and prudently. Countless thanks to Puan Che 'Khalilah Mahmood, who is our takaful lecturer because, without her guidance and help, we would not have been able to complete our report on time. She constantly instructs and gently guides us in fully understanding and producing good project work while studying takaful. On the other hand, we want to express our gratitude to our family, who have always supported, motivated, and cheered us up from the beginning till the project finished. We'd also like to thank individuals who helped us out in some way while we were working on the collective project. Finally, a heartfelt thank you to our beloved group members who always stick together and work hard to generate a quality project with all resources and duties. We hope that all of our efforts will pay off for ourselves and our team effort. We also want to express our gratitude to our classmates for their assistance in completing our group project.

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1.0 INTRODUCTION The term aviation is commonly used to describe mechanical air transport performed using aircraft. We decided to study risk in the aviation business for our project. What exactly does the aviation industry entail?

Aviation is referring to flying using an aircraft like an airplane or helicopter. The aviation industry includes practically all aspects of air travel as well as activities that assist in its facilitation, such as covering almost the entire airline business, as well as aircraft manufacturing, military aviation, and many other industries. According to the Revfine website, the most common types of aircraft are airplanes and helicopters. Most modern definitions of the term aviation include the usage of unmanned aircraft, such as drones.

Aviation is one of the continent's most international industries. It's one method to link people, companies, and cultures together. Aviation is vital for allowing efficient transport from one region to another, but it is also a significant contributor to global economic success by facilitating increasing global trade. Furthermore, the aviation industry provides millions of jobs for people around the world. Pilots, cabin crew, aerospace engineers, and air traffic controllers are some of the most well-known professions in the aviation industry. The aviation industry indirectly helped create many jobs in the tourism industry, business industry, and many more.

The spread of the coronavirus greatly impacted the aviation industry. This assignment is being carried out to discover the potential risk in the aviation industry, factors and the effect of the risk in the aviation industry in local and international, and also takaful products that are suitable in the aviation industry.

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2.0 POTENTIAL OF RISK 2.1 Fire Risks Fire may be described as an uncontrolled release of energy caused by combustible materials and has devastating repercussions. An operating aircraft contains numerous flammable items that can easily spark a fire. In many aspects of aircraft design, preventing and mitigating fire accidents has always been a critical point as the impact can be fatal to the flight crews and aircraft passengers. In the airline industry, fire accidents can fall into 3 categories which are in-flight engine fire, ramp fire, and post-crash fire. Ramp fires occur when an aircraft is parked on the ramp for refueling or maintenance whereas inflight fires most commonly occur in accessible areas such as the galley or lavatory, but they can quickly escalate into uncontrollable fires, resulting in significant loss of life ("About : FAA fire safety," n.d., para.4). The great majority of fire fatalities occur in post-crash fire accidents, which occur when an aircraft collides with the ground or any barrier, causing structural damage and potentially rupturing the fuel tanks. As fuel comes into contact with ignition sources, a fuel-fed fire can start. Eliminating all ignition sources in an aircraft would be ideal but it is not possible as the causes are diverse. Therefore, unique fire risk assessment procedures are required to deal with each scenario.

2.2 Operational Risk Operational Risk for the airline industry is more concerned with an airline Safety Management System (SMS). Safety Management System can be defined as A structured, standardized, and systematic approach towards integrating hazard-reducing practices in the work environment, promoting awareness of safe decision-making processes, and cultivating an attitude of safety at every level of an organization (Tyler Britton, 2018). In other words, SMS is a system that can increase awareness of the safety decisions made by crew in order to reduce the operational risk in this industry. Safety Management Systems have 4 components which are Safety policy, Safety risk management, Safety assurance and Safety Promotion. Safety policy can be defined as responsibilities and relationships in policies procedures. The objective for safety policy is to

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identify the roles, responsibility, and procedure in order to ensure the safety environment. While for safety risk management is to ensure that the risks associated with their activities are managed. Otherwise, these companies will not be able to stay in business for long. Due to poor risk management actions, they would either lose their license or customers. Safety assurance is to ensure that aviation service providers practise their safety programme on a continuous basis and that their safety programme remains effective even as their operating environment changes and safety promotion is to promote safety programmes in aviation.

2.3 Environmental Risk The term environmental is derived from the word “environment”. The term “environment” refers to the sum of all living and nonliving components. People, animals, and plants are examples of living components, while air, water, and land are examples of non-living components. The term "environment" refers to the things that surround us. Unfortunately, there are numerous hazards or dangers that have developed in the environment. Workplace environments are extremely essential and must be handled carefully. It is the environment in which workers must work in order to do their jobs correctly. If the office environment has a favourable influence, employee productivity will also be beneficial. The aircraft engine has become one of the environmental risks, and the aviation industry has contributed to it negatively. Aviation personnel, such as pilots, cabin attendants, mechanics, and luggage handlers, are the ones who are most vulnerable and spend the majority of their time dealing with this danger or hazard.

2.4 Technological Risk Cyber risk is a broad term that refers to a variety of dangers associated with the use of data and information technology. Hacker assaults, system disruptions, and data breaches are all important concerns for the aviation industry. The aviation industry has been dealing with cybersecurity threats for some while, and it is typically thought to be a step ahead of the competition when it comes to cyber risk management. The aviation industry is rapidly

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transitioning to digitalization, with new technologies and concepts being introduced primarily through non-aviation sources such as Cloud, 5G, Wi-Fi, satellite communications and Machine Learning. As a result, the current trend of cyber-attacks becomes much more dangerous. Data is one of the key reasons why the airline industry has become a prime target for hackers. Airlines' reservation and scheduling systems, as well as frequent flyer programmes, capture massive amounts of passenger data, including credit card numbers and passport numbers. In November 2018, the airline Cathay Pacific was the victim of a data breach that exposed the personal information of over 9 million customers. For safety and efficiency in operations, air transportation has always relied significantly on several systems. However, as a sector, it has frequently fallen behind the cutting-edge, due to safety concerns and complex certification processes. It's critical that the aviation industry places a high priority on building a solid IT infrastructure to protect its cyberspace from attackers.

2.5 Physical Risk Physical risk is a common hazard in many sectors and can affect people, things, and the environment. With or without contact, physical risk can cause harm. Physical pain, injury, disease, radiation, noise, vibration, and ergonomic hazards are all included. Because the workplace in the aviation industry is full of planes and vehicles, loud noise and vibration pose major risk factors to the workers. In addition, the ground workers are exposed to adverse weather conditions and lighting hazards that can cause serious diseases, injuries or death. Cosmic radiation and x-ray while screening baggage also can be dangerous to the workers as they may injure the eyes. Besides, the mishandling and emergence of foreign drones in the airport, on the other hand, can be harmful.

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3.0 FACTOR OF RISK 3.1 Negligent aircraft maintenance Cabin and cargo fire usually relates as a result of human error such as passengers smoking in the lavatory or improper storage of lithium batteries in personal electronic devices. While as with engine fire, ramp fire and post crash fires usually occur because of negligence of staff during performing aircraft maintenance. Most large aviation companies outsource 90% of their maintenance inspections. Outsourcing allows these businesses to save money on operations where they can purchase services from cheaper maintenance providers. As a result, they may hire inexperienced subcontractors with limited experience and inadequate inspection control to manage certain types of aircraft, jeopardizing the lives of passengers. The six most common psychological errors that might occur during maintenance inspection are perception errors, memory lapses, slips, wrong assumptions, technical misunderstandings, and procedure violations. Maintenance errors are more difficult to detect than many other threats to aviation safety, and they might remain latent, compromising the safe operation of aircraft for extended periods of time. On top of that, it does not only threaten flight safety, but they would also cost a fortune due to delays, cancellations, diversions, and other schedule disturbances.

3.2 Damages of Safety Management System The damage to the safety management system is due to the operational risk. There are 3 factor that show the damages of the safety management system; the first risk is loss control in flight (LOC-I) runway safety incidents and fatigue risk management. Loss control in flight is the risk that rarely happens in the aviation system. Hence, according to Tyler Britton, loss control in flight only contributes to 8% of accidents in the airline industry. The causes of LOC-I is a loss in situational awareness, low level of wind shield and others Fatigue risk can be described as tiredness or exhaustion. This risk is more concerning to the flight crew and cabin crew. Flight crew and cabin crew is the party who is responsible to ensure the safety management in flight runs smoothly. Without them, the safety management will be paralyzed and it will have a big impact on the aviation industry. Next, the runway incident is the most irritating incident that happened in the aviation system. Runway incidents are frequent incidents in the aviation system. The most factor that can contribute to runway incidents is weather, late changes of departure clearance and english language competency. The example situation of runway 7

incident is an aeroplane or vehicle entering the runway protected area incorrectly, unauthorised aircraft or vehicle crossing in the protected area of runway and others.

3.3 The Airplane Pollution The aircraft is the main factor of the environmental risk discussed. It

has caused an

uncomfortable risk, particularly to people, the employees that work there. The discharge of those gas pollutants from the aircraft and the nuisance of noise are two apparent factors that would be addressed here. The first one is the carbon footprint of aircraft. A carbon footprint is the entire quantity of greenhouse gas emissions generated by a product, service, or person. These gas emissions were produced by jet engines of aircraft in the aviation sector. This is due to the fact that when the aircraft's engine starts, it emits a large amount of hazardous chemicals. The primary component is kerosene, which is used as aircraft fuel. This specific chemical may be detected more than 8 kilometers away from the airport. Other chemicals that affect both the environment and humans include carbon dioxide, carbon monoxide, hydrocarbons, sulphur oxides, and nitrogen oxides. The second type of environmental disruption caused by the aviation sector is noise pollution. Noise nuisance is defined as excessive noise or disruption that has a negative impact. When the aircraft is 100 feet away from the ground, it is estimated the engine's decibel(dB) level will range from 120 to 140 dB. As an example, the 120 dB might be equal when there is a rock concert. Most importantly, it is claimed that any sound that exceeds 85 dB has the potential to harm an individual's hearing. The aircraft sector has also gotten several complaints about noise, where it is louder than normal. As a result, exposing the employee to it on a regular basis might be hazardous.

3.4 Lack of a mature and well-developed data security One of the factors that cause cyber risk attacks under the technology risk that happen in this industry is due to the lack and poorly developed data security. Aircraft wireless connectivity technology is being introduced in the airlines sector. This technology will enable the pilots and

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maintenance crew to use Electronic Flight Bag (EFB) tablets, iPads, or a simple laptop, and, through WiFi, access and obtain critical flight data. Attackers could use this interconnectivity to not only get access to but also change data and it will affect a flight's safety. These problems affect more than just onboard systems. Major efforts are also being made to enhance Air Traffic Control Systems.There is also a significant lack of cybersecurity awareness training as well as operational training for pilots or air traffic controllers to assist them in reducing and managing potential cybersecurity incidents.

The aviation security system is severely weak when compared to the current safety record, which has substantially improved air safety levels. When it comes to discussing cybersecurity dangers and best practises, there is an obvious need for more contact across stakeholders. There is also a significant lack of cybersecurity awareness training as well as operational training for pilots or air traffic controllers to assist them in reducing and managing potential cybersecurity incidents. The aviation business is a gold mine for attackers looking to profit from sensitive data. Aviation sector has a huge reliance on IT systems for booking, ticketing, flight operations and due to that this industry is highly exposed to business interruptions, which can occur as a result of a hacking effort, human error, or any technical flaw. The airline industry is also impacted by the cybersecurity skilled workers that are impacting so many other businesses, making it more difficult to hire the cybersecurity expertise they need. In order to manage today's complex technology, the sector must improve its security strategy. Airlines simply can not stop all malware from reaching in, but they can use PARANOID's OS-Centric Positive Security to prevent structural damage and data breaches.

3.5 Rapid Growth of Drones One of the most significant issues affecting the aviation business especially in physical risk is the increasing growth of drones. A drone is a technologically advanced flying robot that may be controlled remotely or run autonomously using the software. Drones are being used for several tasks, including recreation, photography, business, and military applications.

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In the aviation industry, drones will increase efficiency because they can simply fly into the air, provide maps of the runaway, and conduct aerial surveys of terminal buildings. It brings many advantages while increasing the risk. Mishandling of drones around airports, colliding with airplane wings or engines, and using drones near runaways from unknown users are all variables that lead to drone-related accidents at airports, especially when a photographer wishes to shoot take-off and landing airplanes. The number of planes nearly colliding and caused due to drones, as well as other irresponsible activity near airports, is on the increase. Safety reports involving drones in the US grew from zero in February 2014 to over 250 in June 2017, while the number of times a drone endangered the safety of an aircraft in UK airspace rose by more than a third in 2018 alone to 125 (AGCS Global, 2020). If a small drone collides with an airplane's engine, it might inflict physical damage worth up to 10 million USD (41,496,618.70 MYR). Other cases, according to the TRT website, in March 2018, drones threatened the lives of 278 people in New Zealand. New Zealand Airlines Managing Director David Morgan said 278 passengers and crew were at risk as a 5-meter drone approached the NZ92-type passenger plane from Tokyo, which was scheduled to land at Auckland airport.

3.6 Accident on the airports ramps and in the aircraft The movement and operation of aircraft and ground vehicles expose groundworkers to a variety of dangers. In the aviation sector, this is one of the physical risk fact...