Question 2

Air Canada - Risk Management (You have already bought this case from The Case Centre)

Synopsis

In early 2011, Calin Rovinescu, the chief executive officer (CEO) for Air Canada, was reviewing the companys risk management program. Risk management was an important issue for Air Canada, and Rovinescu knew that any changes to the policy would need to be reviewed by the board. Given that four of the 10 board members were relatively new appointments, Rovinescus presentation would need to be comprehensive. The next regularly scheduled board meeting was just a short time away, so Rovinescu had to move quickly.

Questions

a. Assess the general business environment, current corporate strategy, and possible future challenges. (10 Marks)

b. How are Air Canadas largest competitors managing financial risk? Do their risk management practices create a competitive advantage or disadvantage, based on your forecast? (10 Marks)

c. Based on Air Canadas business environment, its current risk management program and the comparable analysis you have made, give a detailed recommendation to the board, including a proposed new risk management program. (10 Marks)

d. From Question 2 C, give concrete examples of your recommendation. (10 Marks)

e. From Question 2 C, explain the underlying risks of implementing your recommendation for the parties involved. (10 Marks)