What are the most effective strategies for transferring and sharing risk at airports?

1 Contractual arrangements

One of the most common ways of transferring and sharing risk at airports is through contractual arrangements. These are agreements between airport managers and other parties that specify the rights, obligations, and liabilities of each side in relation to a specific activity or service. For example, airport managers can transfer the risk of construction, maintenance, or operation of certain facilities or equipment to contractors or concessionaires, who in turn assume the responsibility and cost of delivering the agreed outcomes. Alternatively, airport managers can share the risk of demand, revenue, or performance with airlines or other users, who in turn pay a variable fee or share a percentage of the income or savings. Contractual arrangements can help airport managers reduce their exposure to risk, allocate risk to those who can manage it better, and create incentives for efficiency and quality.

2 Insurance and hedging

Another way of transferring and sharing risk at airports is through insurance and hedging. These are financial instruments that provide protection or compensation in case of adverse events or fluctuations. For example, airport managers can buy insurance policies that cover the damage or loss of assets, liabilities, or income due to natural disasters, accidents, terrorism, or litigation. Alternatively, airport managers can hedge their exposure to currency, interest rate, or fuel price changes by using derivatives, such as futures, options, or swaps. Insurance and hedging can help airport managers mitigate the impact of risk, diversify their sources of funding, and stabilize their cash flow.

3 Collaboration and communication

A third way of transferring and sharing risk at airports is through collaboration and communication. These are processes that involve exchanging information, knowledge, and resources with other stakeholders, such as regulators, customers, suppliers, or competitors. For example, airport managers can collaborate with regulators to comply with safety, security, or environmental standards, or to obtain permits, licenses, or approvals. Alternatively, airport managers can communicate with customers to understand their needs, preferences, or feedback, or to inform them of any changes, delays, or disruptions. Collaboration and communication can help airport managers improve their reputation, trust, and loyalty, as well as identify and resolve potential issues or conflicts.

4 Risk management framework

A fourth way of transferring and sharing risk at airports is through a risk management framework. This is a system that defines the objectives, policies, procedures, and tools for identifying, assessing, monitoring, and controlling risk at airports. For example, airport managers can use a risk register to document the sources, causes, effects, and responses to risk, or a risk matrix to prioritize and classify risk according to its likelihood and impact. Alternatively, airport managers can use a risk dashboard to track and report the status and performance of risk, or a risk audit to evaluate and improve the effectiveness of risk management. A risk management framework can help airport managers align their risk strategy with their business strategy, enhance their risk culture and awareness, and demonstrate their accountability and transparency.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?