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IND001: Industry – Aviation Industry Session. April 28, 2014 2:00PM – 4:00PM. General Aviation Risk Issues. April 28, 2014. General Aviation Risk Issues Speaker: Steven W. Whitlock CIC, CRM, CAIP Senior Vice President – AirSure Limited

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IND001: Industry – Aviation Industry Session

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Ind001 industry aviation industry session

IND001: Industry – Aviation Industry Session

April 28, 2014

2:00PM – 4:00PM


General aviation risk issues

General Aviation Risk Issues

April 28, 2014


Ind001 industry aviation industry session

  • General Aviation Risk Issues

  • Speaker:

  • Steven W. Whitlock CIC, CRM, CAIP

  • Senior Vice President – AirSure Limited

  • B.S. / A.S. Degrees from Embry-Riddle Aeronautical University

  • Former general aviation underwriter and risk manager for a Miami-based National Airline


General aviation risk issues1

General Aviation Risk Issues

  • What is General Aviation?

    • Aircraft Owners & Pilots Assoc.: All Civilian flying except scheduled passenger airline service

    • National Business Aviation Assoc. & General Aviation Manufacturers Assoc. (GAMA) jointly through “No Plane No Gain”: Focus on Business Aviation

    • GAMA: All aviation other than military and commercial airlines


General aviation risk issues2

General Aviation Risk Issues

  • What is General Aviation (cont’d)

    • Wikipedia: All civil aviation operations other than scheduled air services and non-scheduled air transport operations for remunerations or hire.

    • Merriam-Webster: The operation of civilian aircraft not under the direct control of a common carrier


General aviation risk issues3

General Aviation Risk Issues

  • General Aviation Facts

    • 360,000 aircraft including helicopters, piston-powered airplanes, turboprops and long-range business jets worldwide. (223,000 in the U.S.)

    • 35,000,000 flight hours per year. (23,000,000 in the U.S. – 2/3rds for business purposes)

    • 166,000,000 passengers annually.

    • Primary training ground for airline pilots

    • 600,000 pilots in the U.S. (majority are comm’l)


General aviation risk issues4

General Aviation Risk Issues

  • General Aviation Facts (cont’d)

    • Employs more than 1.2 million people in the U.S.

    • 74% of flights do not carry executives. Time critical sales, technical, middle management.

    • 5000 public-use airports in the U.S. Airlines serve only about 550.

    • Airlines serve only about 70 major hubs and have abandoned nearly 100 mid-sized cities in just the last year.


General aviation risk issues5

General Aviation Risk Issues

  • Risk Classification

    • Aircraft - Business & Pleasure

    • Aircraft – Industrial Aid

    • Aircraft – Commercial

      • Charter / Aircraft Management

      • Training

      • Pipeline / Powerline Patrol

      • Medical Evacuation

      • Government Contractor


General aviation risk issues6

General Aviation Risk Issues

  • Risk Classification (cont’d)

    • Rotorwing

      • Med Evac

      • Offshore

      • Heli-logging

      • Industrial Aid

      • Pleasure & Business

      • Air Charter

      • Training


General aviation risk issues7

General Aviation Risk Issues

  • Risk Classification (cont’d)

    • Fixed Base Operations

      • Line Services (fueling, parking, catering, car rentals)

      • Aircraft maintenance

      • Aircraft completions / paint

      • Aircraft Storage

      • Aircraft / Parts sales

      • Charter

      • Aircraft rental

      • Aircraft training


General aviation risk issues8

General Aviation Risk Issues

  • Risk Classification (cont’d)

    • Corporate Non-Owned

    • Airports

    • Ground Handlers

    • Caterers

    • Maintenance, Repair, Overhaul (MRO)

    • Manufacturing (Airframe, Engines, Avionics, Components)


General aviation risk issues9

General Aviation Risk Issues

Typical Pleasure & Business Aircraft


General aviation risk issues10

General Aviation Risk Issues

Typical Industrial Aid or Air Charter Turboprop aircraft. May also be Pleasure and Business if “owner flown”.


General aviation risk issues11

General Aviation Risk Issues

Typical Industrial Aid or Air Charter mid-sized Business Jet


General aviation risk issues12

General Aviation Risk Issues

Typical Industrial Aid or Air Charter large-cabin long-range Business Jet.


General aviation risk issues13

General Aviation Risk Issues

Typical Rotorwing Emergency Medical Evacuation


General aviation risk issues14

General Aviation Risk Issues

Typical Fixed Base Operation ramp and hangar


General aviation risk issues15

General Aviation Risk Issues

Typical Fixed Base Operation underground fuel farm and truck


General aviation risk issues16

General Aviation Risk Issues

Typical Aircraft Maintenance hangar


General aviation risk issues17

General Aviation Risk Issues

Typical Helicopter maintenance facility


General aviation risk issues18

General Aviation Risk Issues

Paint preparation


General aviation risk issues19

General Aviation Risk Issues

Completion Center paint and interior preparation

Airliner configured for corporate business travel


General aviation risk issues20

General Aviation Risk Issues

Textile preparation for interior installation


General aviation risk issues21

General Aviation Risk Issues

Typical Aircraft Maintenance, Paint Prep, Paint, FBO and Aircraft Storage in one location


General aviation risk issues22

General Aviation Risk Issues

Typical Airframe Manufacturer


General aviation risk issues23

General Aviation Risk Issues

Bad things can happen in an aircraft hangar


General aviation risk issues selection of insurers of general aviation risks

General Aviation Risk IssuesSelection of Insurers of General Aviation Risks

USAIG / USAU

Global Aerospace

AIG Aviation

Starr Aviation

Allianz

XL

Swiss Re

QBE

Phoenix Aviation / Old Republic

Berkley Aviation

W. Brown & Associates / Catlin

Houston Casualty / USSIC

Aerospace Insurance Managers

ACE USA

Great American Insurance Co.

Meadowbrook


General aviation risk issues24

General Aviation Risk Issues

  • Corporate Non-Owned Aircraft Liability

    • Liability arising out of the use of aircraft not owned in whole or part by the corporation.

    • Typical risk profiles:

      • Your company charters aircraft from a FAA certificated Part 135 Air Taxi operator, or

      • You have an officer or employee who uses an owned, borrowed or rented aircraft for company business


General aviation risk issues25

General Aviation Risk Issues

  • Corporate Non-Owned Aircraft Liability (cont’d)

    • Use of Air Charter services

      • Due Dilligence

      • Third Party Auditors – IBAC / IS-BAO Certified

        • International Standard for Business Aircraft Operations

        • Established or developing formal SMS program

      • Air Charter Safety Foundation

      • ARG/US (Aviation Research Group)

      • Wyvern


General aviation risk issues26

General Aviation Risk Issues

  • Corporate Non-Owned Aircraft Liability (cont’d)

    • Use of Air Charter services (cont’d)

      • Minimum Insurance Standards

        • Aircraft Liability (Specify minimum limit)

        • Additional Insured

        • Aircraft Hull (not less than market value)

        • Waiver of Subrogation

        • Primary Insurance

        • Breach of Warranty

        • Set-offs

        • Insurance company at least A. M. Best A+

        • 30 day Notice of Cancellation

        • Certificate of Insurance


General aviation risk issues27

General Aviation Risk Issues

  • Corporate Non-Owned Aircraft Liability (cont’d)

    • officer or employee who uses an owned, borrowed or rented aircraft for company business

      • Consider restrictions or prohibition

      • Published corporate policy

      • Secure copy of primary policy

      • Secure as much coverage under primary policy

      • Consider purchasing a Corporate Non-Owned Policy


General aviation risk issues28

General Aviation Risk Issues

  • Own or Operate a Business Aircraft

    • Evaluate insured value and liability limits

    • Flight crew – annual simulator-based recurrent training

    • Active SMS program

    • Available coverages:

      • Diminution of Value

      • Turbine Engine Mechanical Breakdown

      • Extra Expense coverages with no minimum period or daily limit, not less than 120 days.

      • Trip Interruption coverage. Evaluate costs to continue a road-trip with a leased or chartered aircraft.

      • Liability and Hull War Risks


General aviation risk issues29

General Aviation Risk Issues

  • Owned Aircraft Managed & Insured by a Third Party Management Company

    • Management Agreement – Review

    • What happens if the Management Company damages the aircraft while towing in or out of the hangar?

    • What happens if the Management Company violates terms & conditions of their insurance?


General aviation risk issues30

General Aviation Risk Issues

Questions?

Thank You

Steve Whitlock – [email protected]


Questions thank you steve whitlock swhitlock@airsure com

Questions?Thank YouSteve Whitlock – [email protected]


Air methods

Air Methods


Ind001 industry aviation industry session

  • Eric Marsh

  • Risk Manager Air Methods Corporation

  • 2 years with Air Methods

  • 10 years insurance broker

  • Master’s Degree Aeronautical Science

  • Private Pilot

  • Navy P-3 Orion Hydraulics and Airframes Mechanic

  • MBA Student


Air methods1

Air Methods

  • HEMS – HELICOPTER EMERGENCY MEDICAL

  • SERVICES

  • 387 AIRCRAFT

    • 321 HELICOPTERS

    • 26 FIXED WING

  • 4000 EMPLOYEES

  • OPERATE IN 37 STATES

  • Sundance Helicopters – Las Vegas tour operator

  • Blue Hawaiian – Hawaiian tour operator


Ind001 industry aviation industry session

Safety Management System


Ind001 industry aviation industry session

Enterprise Risk Management


What is erm

What is ERM

  • Enterprise Risk Management – RIMS defines ERM as a strategic business discipline supporting the achievement of an organization’s objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated portfolio.


What is sms

What is SMS

  • Safety Management System – the formal, top-down business approach to managing safety risk, which includes a systemic approach to managing safety, including the necessary organizational structures, accountabilities, policies and procedures (FAA Order VS 8000.367)


Definitions

DEFINITIONS

Risk

Safety

Possibility of loss or injury peril

Someone or something that creates or suggests a hazard

Freedom from harm or danger

The state of not being dangerous or harmful


Ind001 industry aviation industry session

ERM

SMS

SMS - safety decision making throughout the organization

A structured means of safety risk management decision making

Increased confidence in risk controls though structured safety assurance processes

  • Encompasses all areas of organizational exposure to risk

  • Provides a structured process for the management of all risks

  • Prioritizes and manages those exposures as an interrelated risk portfolio


Ind001 industry aviation industry session

ERM

SMS

A safety promotion framework to support a sound safety culture

  • Seeks to embed risk management as a component in all critical decisions throughout the organization.


So what

SO WHAT!


Ind001 industry aviation industry session

SMS = ERM


Ind001 industry aviation industry session

  • DO YOU EVER WALK

  • AWAY FROM A PRESENTATION

  • THINKING, “THAT WAS GREAT

  • INFORMATION BUT I HAVE

  • NO IDEA HOW TO GET

  • STARTED!”


Getting started

Getting Started

SMS

ERM STARTER KIT

http://www.rims.org/resources/ERM/Pages/ERMStarterKit.aspx

ERM

  • SAFETY MANAGEMENT SYSTEM

  • (SMS)

  • IMPLEMENTATION GUIDE

  • http://www.faa.gov/about/initiatives/sms/reference_library/policy_and_requirements/


Getting started1

GETTING STARTED

  • THE FAA WEBSITE HAS A PLETHORA OF INFORMATION TO HELP A RISK MANAGER PREPARE A FORMAL SMS/ERM PROGRAM

  • http://www.faa.gov/about/initiatives/sms/


Getting started2

GETTING STARTED

  • SAFETY MANAGEMENT INTERNATIONAL COLLABORATION GROUP

  • RISK BASED DECISION MAKING PRINCIPLES

  • http://www.skybrary.aero/bookshelf/books/2077.pdf

  • THE SENIOR MANAGERS ROLE IN SMS

  • http://www.skybrary.aero/index.php/The_Senior_Manager%27s_Role_in_SMS


Integrating sms and erm

INTEGRATING SMS AND ERM

  • IF YOUR ORGANIZATION IS IMPLEMENTING AN SMS OR ERM PROGRAM CAPITALIZE ON THE MOMENTUM TO INTEGRATE THE OTHER!


Integrating sms and erm1

INTEGRATING SMS AND ERM

  • BOTH PROGRAMS LOOK TO ACHIEVE THE SAME BASIC PREMISE:

  • BY UNDERSTANDING OUR RISKS, THE COMPONENTS INVOLVED IN THOSE RISKS, AND HOW THEY AFFECT OTHER PARTS OF THE COMPANY WE ARE ABLE TO BETTER MANAGE THE RISK AND AVOID SURPRISES


Sms implementation levels

SMS IMPLEMENTATION LEVELS

4

CONTINUOUS IMPROVEMENT

3

PROACTIVE PROCESS

2

REACTIVE PROCESS

1

PLANNING AND ORGANIZATION

0

ORIENTATION AND COMMITTMENT


Rims erm starter kit

RIMS ERM STARTER KIT


Integrated model

INTEGRATED MODEL

ORIENTATION AND

COMMITTMENT

PROACTIVE

3

0

4

1

2

CONTINUOUS IMPROVEMENT

PLANNING AND ORGANIZATION

REACTIVE


Even more granular

EVEN MORE GRANULAR


Obtaining the board s buy in

OBTAINING THE BOARD’S BUY IN

The Company relies heavily on technology and automated systems to operate its business and any significant failure or disruption of the

technology or these systems could materially harm its business.

Billing investigations and audits – State and federal statutes impose substantial penalties—including civil and criminal fines, exclusion from participation in government programs, and imprisonment—on entities or individuals (including any individual corporate officers or physicians deemed responsible) that fraudulently or wrongfully bill governmental or other third-party payers for services.

Our operations are affected by adverse weather conditions and seasonal factors.


Obtaining the board s buy in1

OBTAINING THE BOARD’S BUY IN

  • THE BEST PLACE TO START IS THE RISK FACTORS SECTION OF THE 10K

  • IF YOU ARE NOT PUBLICALLY TRADED HAVE A MEETING WITH SENIOR MANAGEMENT AND DISCUSS THEIR RISK ISSUES

  • LET SENIOR MANAGEMENT KNOW THERE NEEDS TO BE SOMEONE RESPONSIBLE FOR IMPLEMENTING CORPORATE WIDE RISK MANAGEMENT AND THAT SOMEONE SHOULD BE YOU


Obtaining the board s buy in2

OBTAINING THE BOARD’S BUY IN

  • WHAT DO THE CEO’S OF OTHER COMPANIES THINK OF ERM?

  • DAN AKERSON – CHAIRMAN ANC CEO GENERAL MOTORS:

  • “I THINK RISK MANAGEMENT IS AN ELEMENT OF ALL GOOD BOARDS AND EXECUTIVE TEAMS AND IT WILL ENSURE THE VIABILITY IN DOWNTURNS AND HIGH RISK PERIODS……


Obtaining the board s buy in3

OBTAINING THE BOARD’S BUY IN

  • “THERE IS PROVEN, SCIENTIFIC EVIDENCE THAT ORGANIZATIONS THAT HAVE A HIGHER RISK MATURITY HAVE STRONGER FINANCIAL PERFORMANCE.” – LOGIC MANAGER

  • POINT OUT WHAT YOUR COMPETITION IS DOING!


Going through the sms process

GOING THROUGH THE SMS PROCESS

  • Tatonduk Outfitters LTD 121

  • Peninsula Airways, Inc. 121

  • Northern Air Cargo, Inc. 121

  • Era Aviation, Inc. 121

  • Coastal Helicopters, Inc. 135

  • Taquan Air 135

  • Temsco Helicopters 135

  • Ryan Air (ATS), Inc.135

  • Northern Air Services 145

  • Federal Express Corp. 121

  • GoJet Airlines, LLC 121 Endeavor Air121

  • Trans States Airlines, LLC 121

  • EagleMed, LLC 135

  • United Parcel Service Co. 121

  • Flight Safety International 142

  • Aviation System Standards FAA 135

  • Air Evac EMS, Inc. 135

  • SpiritJets, LLC135

  • Corporate Flight Mgt, Inc.135

  • Aviation System Standards FAA 135

  • EagleMed, LLC 135

  • CHAMPLAIN ENTERPRISES 121

  • PIEDMONT AIRLINES INC 121

  • ATLAS AIR INC 121

  • BALTIA AIRLINES INC. 121

http://www.faa.gov/about/office_org/headquarters_offices/avs/offices/afs/afs900/sms/media/sms_newsletter.pdf


Going through the sms process1

GOING THROUGH THE SMS PROCESS

  • US AIRWAYS INC 121

  • DYNAMIC AIRWAYS LLC 121

  • JETBLUE AIRWAYS, CORP. 121

  • MOUNTAIN AIR CARGO INC 121

  • SKYLEASE 1, INC. 121

  • HYANNIS AIR SERVICE 121

  • POLAR AIR CARGO

  • WORLDWIDE INC 121

  • US AIRWAYS INC 121

  • DYNAMIC AIRWAYS LLC 121

  • JETBLUE AIRWAYS, CORP. 121

  • MOUNTAIN AIR CARGO INC 121

  • SKYLEASE 1, INC. 121

  • HYANNIS AIR SERVICE 121

  • PSA AIRLINES INC 121

  • CHAUTAUQUA AIRLINES INC 121

  • FRONTIER AIRLINES INC 121

  • REPUBLIC AIRLINES INC 121

  • SHUTTLE AMERICA CORP 121

  • MN AIRLINES LLC 121

  • GULF AND CARIBBEAN

  • CARGO INC 121

  • KALITTA AIR LLC 121

  • ABX AIR, INC 121

  • USA JET AIRLINES, INC 121

  • AIR WISCONSIN AIRLINES 121

  • UNITED AIRLINES, INC 121


Going through the sms process2

GOING THROUGH THE SMS PROCESS

  • Airnet System Inc. 135

  • Aitheras Aviation LLC 135

  • Executive Air Taxi 135

  • Executive Jet Management, Inc. 135

  • First Wing Aircraft Charter & Mgmt 135 Mercy St. Vincent 135

  • Midwest Aero Club, LLC135

  • NetJets Aviation, Inc 135

  • Oak Air, LTD. 135

  • Priester Aviation 135

  • Travel Management Co LTD. 135

  • Ultimate Jet Charters Inc. 135

  • Bowling Green State University 141

  • University of North Dakota

  • School of Aviation141

  • Aviator College 141

  • F & E Aircraft Maintenance 145

  • AAR Aircraft Services, Inc. 145 Propulsion Tech 145

  • Precision Turbines, Inc. 145

  • A/C DUCTING REPAIR 145

  • ST AEROSPACE 145

  • Jack Harper 135

  • K&S Helicopters 135

  • Makani Kai Helicopters 135

  • Med-Trans Corporation 135

  • Pinnacle Air Charter LLC 135

  • Reach Air Medical Service LLC 135

  • Rogers Helicopters 135

  • Schubach Aviation135


Well said

WELL SAID

  • JEAN ROSE – EXECUTIVE DIRECTOR GLOBAL HUMAN RESOURCES GENERAL MOTORS

  • “ERM IF DONE PROPERLY LOOKS AT A CROSS FUNCTIONAL VIEW…….ALL OF THE FUNCTIONAL AREAS, REGIONAL AREAS WEIGHING IN ON WHAT’S HAPPENING. VARIOUS SUBJECT MATTER EXPERTS WEIGHING IN. THEY ARE CARRYING AROUND THAT INFORMATION THEY NEED TO UNDERSTAND ABOUT THE COMPANY AND THEN THEY ARE SHARING IT IN A FORMAT WHERE SOMEONE ELSE MIGHT SAY I’M HEARING SOMETHING IN FINANCE THAT MIGHT IMPACT HR, OR SOMETHING IN HR THAT MIGHT IMPACT MANUFACTURING. IT’S A FORUM THAT ALLOWS EVERYBODY TO TALK ABOUT THE CRITICAL RISKS OF THE COMPANY.”


Questions final comments and contact information

Questions, Final Comments and Contact Information

Eric Marsh, Risk Manager

Air Methods Corporation

7211 S. Peoria St.

Englewood, CO  80112

P: 303.792.7550

C: 720.272.1299


Roundtable

Roundtable


Ind001 industry aviation industry session

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