Lufthansa International Strategy

0 Comment

Integration promotes effective identification and management of business risks at their early stages so that remedial actions can be taken in time. In addition, Lufthansa has centralized its risk management process and actions in order to ensure that the identification and management of business risks are consistent and relevant to the company’s investment objectives. The business risk management plan of Lufthansa comprises of a risk map that is regularly updated and aligned to meet the needs of the company’s policies and business environment. It is standardized across all business segment of the company and comprises a list of all risks as well as instruments to manage them. Lufthansa considers risk as material if it can cause a loss of at least one-third of all the operating results of the company or lead to a loss of 300 million Euros to the company. Risk materiality is computed uniformly across all segments. The total company figure is computed by summing up the results of individual business segments. To ensure that Lufthansa’s opportunity and risk management strategy becomes practical, the company appointed business risk managers in all business segments to ensure that all risk management requirements and procedures are followed. In addition, the company has a fully constituted risk management committee that reports directly to Lufthansa’s managing board. The committee core objective is to identify and evaluate the risk across all functions and process in the company (Vandone, 2009). They are also charged with the responsibility of making constant improvements to the effectiveness and efficiency of risk management. Managing directors are responsible for approving and implementing acceptable risk management practices and procedures. Lufthansa’s risk management committee prepares reports on issues surrounding business opportunity and risk quarterly.