Question: Critically analyse a high-profile organisational failure, and apply the Risk Strategy and Risk identification elements of the risk management framework to explain why it occurred and how future occurrences might be avoided.

Organisations face numerous risks on a daily basis. These risks range from financial to reputational, legal, operational, and environmental, among others. Effective risk management is essential to an organisation's survival, and its success in achieving its objectives. However, even with the best risk management practices in place, organisational failures can still occur. A high-profile organisational failure occurred in 2019, which offers a good case study for analysing why organisational failures occur and how future occurrences can be avoided. This paper analyses the Boeing 737 Max crisis and applies the Risk Strategy and Risk identification elements of the risk management framework to explain why the crisis occurred and how future occurrences can be avoided.

Boeing 737 Max Crisis The Boeing 737 Max is a series of aircraft designed by Boeing that first entered service in 2017. However, in 2018 and 2019, two fatal accidents occurred that involved the Boeing 737 Max aircraft. The first accident occurred in October 2018 when Lion Air Flight 610 crashed into the Java Sea, killing all 189 passengers and crew onboard. The second accident occurred in March 2019 when Ethiopian Airlines Flight 302 crashed near Addis Ababa, killing all 157 passengers and crew onboard. Investigations into the accidents revealed that they were caused by a malfunction in the aircraft's Maneuvering Characteristics Augmentation System (MCAS).

The MCAS is a system designed to help prevent the aircraft from stalling in certain flight situations. However, a faulty sensor in the MCAS caused the system to erroneously activate, forcing the aircraft's nose down and making it difficult for the pilots to regain control of the aircraft. Investigations revealed that Boeing had known about the potential for MCAS malfunctions before the accidents occurred but did not take adequate action to address the issue. The Boeing 737 Max crisis resulted in a loss of confidence in the aircraft and significant financial losses for the company.

Risk Strategy The Risk Strategy element of the risk management framework involves identifying and prioritising risks and developing strategies to manage them. In the case of the Boeing 737 Max crisis, it is clear that the risk strategy employed by Boeing was inadequate. Boeing had identified the potential for MCAS malfunctions before the accidents occurred, but did not take adequate action to address the issue. Instead, the company relied on pilot training to mitigate the risk. The company's risk strategy was based on the assumption that pilots would be able to identify and respond appropriately to MCAS malfunctions, which turned out not to be the case. In addition, the company did not adequately communicate the potential for MCAS malfunctions to pilots, airlines, and regulators.

The failure of Boeing's risk strategy can be attributed to several factors. First, the company had a culture that prioritised cost-cutting and profitability over safety. This culture was reinforced by the company's management, who incentivised employees to prioritise cost-cutting over safety. Second, the company was under pressure to compete with its rival, Airbus, which had recently released a new aircraft that was seen as a direct competitor to the Boeing 737 Max. This pressure led the company to rush the development of the 737 Max and cut corners in the development process. Third, the company's risk management processes were not adequate. The company failed to adequately identify and prioritise risks and did not have adequate processes in place to manage risks.

Risk Identification The Risk Identification element of the risk management framework involves identifying all potential risks that an organisation faces. In the case of the Boeing 737 Max crisis, it is clear that the company failed to adequately identify and address the potential for MCAS malfunctions. The company identified the potential for MCAS malfunctions during the development process, but did not take adequate action to address the issue. This failure can be attributed to several factors.

First, the company relied too heavily on automated systems in the design and development of the aircraft. The reliance on automation led to a lack of understanding of the potential failure modes of the system, which in turn led to a failure to identify the risks associated with the system. Second, the company did not adequately assess the risks associated with the MCAS system. The company assumed that the risks were low and did not consider the potential for catastrophic failures. Third, the company did not adequately consider the potential for human error in the design and development of the system. The company assumed that pilots would be able to identify and respond appropriately to MCAS malfunctions, which turned out not to be the case.

To avoid similar failures in the future, several steps can be taken. First, organisations must ensure that their risk management processes are adequate. This includes identifying and prioritising risks, developing strategies to manage risks, and ensuring that these strategies are implemented effectively. Second, organisations must foster a culture of safety that prioritises safety over cost-cutting and profitability. This can be achieved by incentivising employees to prioritise safety and ensuring that safety considerations are given priority in all decision-making processes. Third, organisations must ensure that they have adequate processes in place to manage risks associated with automation. This includes ensuring that there is a clear understanding of the potential failure modes of automated systems and that these systems are designed and developed with the potential for catastrophic failures in mind.

Conclusion The Boeing 737 Max crisis offers a good case study for analysing why organisational failures occur and how future occurrences can be avoided. The failure of Boeing's risk strategy can be attributed to several factors, including a culture that prioritised cost-cutting over safety, pressure to compete with rivals, and inadequate risk management processes. The failure to adequately identify and address the potential for MCAS malfunctions can be attributed to a reliance on automation, a failure to adequately assess risks, and a failure to consider the potential for human error. To avoid similar failures in the future, organisations must ensure that their risk management processes are adequate, foster a culture of safety, and ensure that they have adequate processes in place to manage risks associated with automation. The lessons learned from the Boeing 737 Max crisis should serve as a reminder of the importance of effective risk management in ensuring organisational success and survival.