WTW and the University of Cambridge’s Centre for Risk Studies have unveiled their revolutionary new Airport Risk Index (ARI) designed to help owners and operators build operational resilience against the growing number of risks they face. The ARI, which was three years in development with the WTW Research Network, was presented to more than 100 global airport executives at WTW’s annual Airport Risk Community (ARC) conference in Lisbon in September.
The Index combines historical and predictive analysis to give airports the ability to interrogate their assumptions on risk. In an operating environment of non-stop change and competing demands on resources, it is easy to focus on the current issues that often dominate executive surveys, rather than the ‘what if’s’. The index sets out both likelihood and impact for the indexed threats to offer a perspective on what has always been possible and what we need to prepare for.
In its present configuration, the ARI compares 110 of the world’s busiest airports (by passenger volume) against 19 of the sector’s most prominent threats, measuring the probability and impact of any interruption in operations.
The airports were chosen as a representation of the largest commercial airports but also considered the importance of the interconnectivity of the airports across the globe. By also mapping the characteristics of these airports, such as runway composition and number of terminals, airports can explore the index results for similar organisations. In this way, users can see how they compare to best practice, and in doing so, see where they need to improve and where often limited risk-management resources are best applied.
The 19 threats were chosen for their potential to cause high-impact events that could shut down an airport for extended periods or cause a prolonged and significant disruption. More common disruptions that usually do not cause lengthy delays were omitted, as it is rarely the day-to-day operational events that push resilience beyond capacity, plus it is those rare threats that can fall off top 10 risk lists.
Because events happen with varying intensity – simply listing a systems intrusion as a ‘cyber-attack’ is not very helpful for building resilience. To explore the ranges of possible events, historical precedents and research were used to create multiple scenarios, each with a storyline that allows airport operators to build shared understanding about how events might unfold. Each scenario gradually increases in impact but decreases in likelihood to provide a more complete representation of the risk. Every scenario that is possible, has been underpinned by historical precedents, and can be explored to understand where to focus resources.
This deep level of analysis depicts a corresponding numerical view of disruption to operational activity, as well as a projected recovery curve for each of the 66 scenarios for each airport depending on their resilience and vulnerability assessments.
Even with the depth of processing and research that went into each of these scenarios, the Index was not designed to give exact answers, but to encourage stakeholders to ask the right questions. Just as no risk operates in isolation, responding to the VUCA (volatility, uncertainty, complexity and ambiguity) environment needs action across the breadth of an organisation – there is no shortage of parties with a stake in the game, with different perspectives and levels of understanding.
This shared view allows exploration of key questions such as:
This modelling can also help users to investigate operational impact of threats by exploring potential pathways through the index. For example, while the index has three different cyber scenarios, it may also be useful to explore other end points, such as aircraft crashes, power outages or fire and explosion scenarios, to determine where resilience could be exceeded.
Looking to the future, there may also be additional threats that need to be considered. As the world transitions to a low carbon economy and looks to diversify energy security, nuclear facilities may appear on your risk lists as governments approve new sites. Sea level rise may also change the risk profile of perils such as tsunami and flood. Risk is not static, it’s dynamic and it’s also interconnected – as an example, the International Civil Aviation Organization suggested in September the industry starts paying more attention to cumulative risk in its latest guidance on preparing now for climate change.
In an era when mounting demands for greater risk transparency and accountability are being driven by environmental, social and governance requirements, the ARI is designed to help organisations build stakeholder confidence for today and the future. As WTW explores the outputs with the Airport Risk Community, we will be keeping an eye on where the index could be further developed, including additional scenarios and cumulative impacts.
Ultimately, with the Airport Risk Index framework, airports will be able to reassure governments, regulators, investors, insurers and business partners that they have a real-time understanding of their risks and the resources in the right places to help ensure operational dependability.
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