Full Answer Section

1. Risk 2: Increased Competition
   • Balanced Scorecard Component: Customer
   • Classification: Strategic

Risk Evaluation

1. Risk 1: Fluctuating Fuel Prices
   • Probability: High
   • Impact: High
   • Justification:
     • Probability: Global events, economic conditions, and geopolitical instability make fuel prices highly unpredictable, leading to a high probability of fluctuations.
     • Impact: Fuel is a substantial portion of airline operating costs. Significant price increases can drastically reduce profitability, impacting the company’s financial stability.
2. Risk 2: Increased Competition
   • Probability: Medium
   • Impact: High
   • Justification:
     • Probability: The airline industry is competitive, with both domestic and international players. Market dynamics, new entrants, and evolving customer preferences contribute to a medium probability of increased competition.
     • Impact: Increased competition can lead to price wars, reduced market share, and decreased profitability, significantly impacting TransGlobal Airlines’ long-term strategic goals and market position.

Risk Mitigation

1. Risk 1: Fluctuating Fuel Prices
   • Mitigation Strategy: Implement a comprehensive fuel hedging strategy.
     • This involves entering into contracts to purchase fuel at a predetermined price, reducing the impact of price volatility.
     • Explore fuel-efficient aircraft and alternative fuels to lessen reliance on traditional fossil fuels.
2. Risk 2: Increased Competition
   • Mitigation Strategy: Enhance customer loyalty and brand differentiation.
     • Invest in improving customer experience through upgraded services, personalized offerings, and loyalty programs.
     • Strengthen the airline’s brand image through effective marketing and communication, emphasizing its unique value proposition (e.g., safety, service, and stewardship).