Risk has two components, one the possibility of not achieving a particular outcome, and the second is the result of failure to achieve the outcome. The former is the probability of risk and the later is the loss. So Risk management is a set of action that help the project managers plan to deal with uncertain occurrences. It is through risk management, project managers assess risk and manage to reduce it to an acceptable level. The key idea in risk management is not to wait passively for a risk to materialize and become a problem. The objective of risk management is to ensure that for each perceived risk we know well in advance how to tackle it.
In the case study, Jetblue had faced the virtual shutdown of the airlines operations following a Valentine's Day storm in Feb.2007. Due to adverse weather conditions and poor management, airline faced a critical situation, which ultimately had not even put an additional financial burden on its system but also blown away it's hard-earned reputation. Jetblue's immediate problem was to manage the passengers, those back in terminal from the stranded plane, those passengers who are still coming with the hope that they can still get another flight, their baggage management, due to massive cancellations airline could not be able to accommodate those passengers in already occupied subsequent flights and finally broke down in communication due to heavy load on communication lines resulted in chaos. These all-immediate problems combined together created havoc and tarnished the image of the airlines.
Now if we analyze the whole case study we will find that these immediate problems are the result of improper/absence of risk management policies in the planning process. Risk management is a dynamic process because it deals with the activities that are yet to happen. Risk management has two folds agenda, first deciding actions for preventing risk from happening and second deciding actions for tackling risk that materialize. Now as a Project Manager, when we are planning any action, apart from other factors, we must gather as much information as we can about potential risks in the project. The project management plans the strategies for avoiding risks or controlling them. Jetblue have the information that as winter embrace the weather, the storm was anticipated by other airlines, which led them to cancel their flights but Jetblue opted to wait out without any proper future planning to deal with the potential risks of bad weather. Due to unprepared ness for potential risks, an airline was not able to deal with the sudden problems. Airline's main problem was its short-term plans without any other alternative options, which cause so many failures in different systems and the problems had occurred continuously one by one, results in mismanagement and tarnished the overall image of Jetblue. Due to unprepared ness of the risks involved in the airline's operations and absence of any contingency planning to mitigate the risks/uncertainties Jetblue faced number of problems. Airlines information system such as reservation system was not able to deal with the extended volume of customer calls. Due to massive cancellations and non-availability of facilities through website the problems aggravated. Navitaries system has been configured for Jetblue to only accommodate 650 agents