Managing Risk at the Enterprise Level: A New Framework for Business Aviation

Executive Summary

Risk management in business aviation has traditionally been viewed through a narrow lens, often equated with insurance coverage or regulatory compliance. However, discussions during an insurance-focused roundtable session at a recent B2B aviation summit revealed a growing recognition that effective risk management must extend far beyond policy placement. Instead, participants emphasized the importance of Enterprise Risk Management (ERM) as a strategic framework that integrates operational, financial, organizational, and reputational risk into decision-making at the highest levels.

Across the session, three central themes emerged. First, attendees highlighted the need to reframe insurance as one component—rather than the foundation—of risk management, noting that overreliance on coverage can obscure gaps and create false confidence. Second, discussions underscored the value of structured risk identification and prioritization, using tools such as probability matrices and cross-functional categorization to align aviation risk with broader organizational objectives. Third, participants repeatedly returned to the challenge of organizational alignment, particularly the disconnect between flight departments and corporate leadership when evaluating risk, value, and investment.

The conversations made clear that ERM is not about eliminating risk, but about understanding it well enough to make informed, strategic choices. Organizations that embrace ERM as a living process—rather than a compliance exercise—are better positioned to protect enterprise value while enabling operational flexibility.

Introduction: Rethinking Risk in Business Aviation

Business aviation operates at the intersection of operational complexity, financial exposure, and reputational sensitivity. Aircraft are high-value assets, missions are often time-critical, and incidents—no matter how minor—can carry outsized consequences.

Yet despite these realities, aviation risk is frequently managed in isolation. Insurance is purchased, policies are renewed, and compliance boxes are checked, often without fully integrating aviation risk into the organization’s broader enterprise risk strategy.

The insurance roundtable provided an opportunity to challenge this approach. Participants explored ERM not as a theoretical construct, but as a practical framework for understanding how aviation risk fits into the larger organizational picture. The discussions revealed both enthusiasm for ERM’s potential and frustration with its uneven adoption.

Theme One: Insurance Is Not Risk Management

One of the most consistent messages from the session was that insurance, while essential, is often misunderstood as a comprehensive risk solution. Participants emphasized that insurance is fundamentally a financial transfer mechanism, not a substitute for identifying, managing, or mitigating risk.

Attendees noted that insurance policies are, by design, fragmented. Separate contracts may cover hull, liability, directors and officers, cyber exposure, or workers’ compensation—each with its own limits, exclusions, deductibles, and conditions. These structural realities can create significant coverage gaps, overlaps, or ambiguities that only become visible after a loss.

Several participants cautioned that organizations relying solely on insurance may overlook risks that are uninsurable, underinsured, or only partially covered. Reputational damage, operational disruption, and long-term organizational impact often extend well beyond what policies address.

Rather than viewing insurance as the starting point, attendees advocated positioning it as one “leg of the stool” within a broader ERM framework. In this context, insurance supports risk decisions—it does not define them.

Theme Two: Identifying, Categorizing, and Prioritizing Risk

A second dominant theme focused on the mechanics of ERM itself. Participants agreed that the effectiveness of any ERM program hinges on how risks are identified, categorized, and prioritized.

Attendees discussed several tools for structuring this process, including SWOT analysis, probability and severity matrices, and aviation-specific adaptations of flight risk assessment tools. These frameworks help organizations move from vague concerns to actionable insight.

Importantly, participants emphasized that aviation risks rarely fit neatly into a single category. A single hazard—such as staffing challenges or supplemental lift—may simultaneously affect operational safety, financial exposure, brand reputation, and regulatory compliance.

Examples discussed during the session illustrated this complexity. Employee retention strategies, including moonlighting, were viewed as both an opportunity and a risk—supporting staffing resilience while introducing potential fatigue or conflict-of-interest concerns. Similarly, sharing tools or parts across operations was seen as operationally necessary, yet not without liability and accountability considerations.

By systematically categorizing risks and evaluating probability and severity, organizations can make informed decisions about whether to avoid, mitigate, transfer, finance, or even exploit certain risks. The goal, participants agreed, is not risk avoidance, but value optimization.

Theme Three: Bridging the Gap Between the Flight Department and the Enterprise

Perhaps the most animated discussions centered on organizational alignment. Participants repeatedly noted a disconnect between flight departments and corporate leadership when it comes to understanding aviation risk and value.

In many organizations, the flight department operates physically and organizationally apart from headquarters. This separation can lead to aviation being perceived as a cost center rather than a strategic asset. As a result, risk discussions may focus narrowly on expense reduction rather than enterprise impact.

Attendees discussed several strategies for closing this gap. One approach involved reframing aviation risk in terms familiar to executive leadership, such as enterprise value, capital investment, and crisis response capability. When viewed through this lens, aviation’s role extends beyond transportation to include resilience and continuity during organizational disruption.

Emergency response planning emerged as a particularly effective bridge. Participants noted that involving corporate leadership in emergency response drills not only improves preparedness but also builds understanding of aviation’s complexity and criticality. In these scenarios, flight departments can emerge as trusted advisors rather than isolated operators.

The reporting structure of aviation leadership was also discussed. When directors of aviation report outside the executive suite, risk communication may be diluted or delayed. Participants explored both formal and informal ways to elevate aviation perspectives within organizational decision-making.

ERM in Practice: From Theory to Action

Throughout the session, attendees emphasized that ERM must be actionable to be effective. Frameworks and matrices are valuable only when they inform real decisions.

Practical examples included evaluating hangar renovations not merely as capital expenditures, but as investments in organizational resilience and asset protection. Supplemental lift decisions were similarly framed as risk tradeoffs involving control, dispatch authority, and safety oversight.

Participants agreed that ERM works best when it is iterative. Risks should be regularly reviewed, reassessed, and reprioritized as conditions change. Static risk registers quickly lose relevance in dynamic operational environments.

Crucially, ERM requires cross-functional engagement. Aviation risk cannot be fully understood or managed in isolation from legal, finance, human resources, or executive leadership. Collaboration enhances both insight and buy-in.

Accepting Limits: You Can’t Have Everything

A recurring sentiment throughout the discussion was the recognition that risk management is ultimately about choice. Resources are finite, and tradeoffs are unavoidable.

Participants acknowledged that organizations often struggle with this reality, seeking comprehensive protection without accepting corresponding cost or complexity. ERM provides a framework for making these tradeoffs explicit and intentional.

By articulating what risks an organization is willing to accept—and which it is not—leaders can align aviation decisions with enterprise priorities. This clarity reduces friction, improves communication, and supports more consistent outcomes.

Conclusion: ERM as a Value Driver

The insurance roundtable discussions revealed a clear shift in how business aviation professionals view risk. Insurance remains essential, but it is no longer sufficient on its own. Enterprise Risk Management offers a more holistic, strategic approach—one that aligns aviation operations with organizational value.

Participants expressed optimism that as ERM becomes better understood, aviation will be seen not merely as a risk to be insured, but as a capability to be managed and leveraged. When risk is framed in enterprise terms, flight departments gain a stronger voice in strategic conversations.

Ultimately, ERM is not about eliminating uncertainty; it is about navigating it deliberately. Organizations that embrace this mindset will be better equipped to manage complexity, protect value, and make informed decisions in an increasingly demanding environment.