1) The document discusses risk management and insurance management practices at Garuda Indonesia Airlines. It provides an overview of risk management, identifies risks at Garuda such as past aviation accidents, and describes how the airline evaluates and mitigates risks. 2) Garuda uses a risk matrix to assess the likelihood and consequences of events to determine risk level. It then works to reduce risks through actions like waiting for better weather, taking a more experienced pilot, or cancelling flights. 3) Proper risk management is important for aviation safety given the risks involved in air transportation. Garuda strives to systematically identify hazards and determine appropriate responses to control risks.

1. BIG PAPER
RISK AND INSURANCE MANAGEMENT
(Case study from Garuda Indonesia Airlines)
Complied By:
BOGA KHURAIRI
C1K011007
DEPARTMENT OF NATIONAL EDUCATION
JENDERAL SOEDIRMAN UNIVERSITY
FACULTY OF ECONOMICS AND BUSINESS
PURWOKERTO
2014

2. I. INTRODUCTION
A. What is risk management?
Risk management is a process of thinking systematically about all possible risks, problems or
disasters before they happen and setting up procedures that will avoid the risk, or minimise its
impact, or cope with its impact. It is basically setting up a process where you can identify the risk
and set up a strategy to control or deal with it. It is also about making a realistic evaluation of the
true level of risk. The chance of a tidal wave taking out your annual beach picnic is fairly slim. The
chance of your group's bus being involved in a road accident is a bit more pressing.
Risk management begins with three basic questions:
1. What can go wrong?
2. What will we do to prevent it?
3. What will we do if it happens?
B. Managing risk
After you've done this look at the high end risks and see which ones you can avoid altogether or
eliminate, which ones can't be eliminated but can be reduced or modified to bring the risk within
acceptable limits, which ones you can share with or give away to someone else (for example, you
can get outside contractors to carry out dangerous operations after making sure they have the
requisite insurance) and which ones you can insure against. Come up with concrete plans for each of
these.
C. Related issue
Airplane is one of today's modern means of transportation. therefore security should be a top
priority, because it concerns the lives of all the passengers. this relates to the in an article in the
August 25, 2006, issue of Commercial and Business Aviation entitled Accident Prone Pilots, Patrick
R. Veillette, Ph.D., notes that research shows one of theprimary characteristics exhibited by
accident-prone pilots was their disdain toward rules. Similarly, other research by Susan Baker,
Ph.D., and her team of statisticians at the Johns Hopkins School of Public Health, found a very high
correlation between pilots with accidents on their flying records and safety violations on their
driving records. The article brings forth the question of how likely is it that someone who drives
with a disregard of the driving rules and regulations will then climb into an aircraft and become a
role model pilot. The article goes on to hypothesize that, for professional pilots, the financial and
career consequences of deviating from standard procedures can be disastrous but can serve as strong
motivators for natural born thrill seekers. Improving the safety records of the thrill seeking type
pilots may be achieved by better educating them about the reasons behind the regulations and the
laws of physics, which cannot be broken.

3. II. COMPANY PROFILE
A. History
Garuda Indonesia (PT Garuda Indonesia (Persero) Tbk) is the national airline of Indonesia. Garuda
is a bird name in the legend of Lord Vishnu mounts puppet. In 2007, the airline along with other
Indonesian airlines, was banned from flying to Europe because of what happened to Garuda
Indonesia Flight 200. A year later, the airline received certification IATA Operational Safety Audit
(IOSA) of IATA which showed Garuda Indonesia has met the international flight safety standards
On June 1, 2010, Garuda Indonesia to re-open the route Amsterdam closed in 2004 with Airbus
A330-200 with a capacity of 222 passengers with a stopover in Dubai, United Arab Emirates. This
shows Garuda Indonesia became interested in opening a route to Europe. In 2010, Garuda was
awarded the Skytrax "World's Most Improved Airline" on step Garuda led by Satar in overhauling
the national airline. [3]. In 2013, Garuda Indonesia received an award from Skytrax the "World Best
Economy Class" and "World Best Economy Class Seat".
B. Product
Indonesian state-owned airline providing domestic and international flight services.
C. Data
March 6, 1979 - Garuda Indonesia Flight 553 crashed into the slopes of Mount Bromo at an altitude
of 6,200 feet, killing all four crew members.
July 11, 1979 - Fokker F-28 crashed into the slopes of Mount Garuda Indonesia Pertektekan killed
57 passengers and 4 crew.
March 20, 1982 - Fokker F-28 Garuda Indonesia plunged after landing at the airport Branti,
Lampung, killing 23 passengers and 4 crew.
June 17, 1996 - Garuda Indonesia Flight 865, the plane caught fire after a failed takeoff from
Fukuoka Airport, Japan when going to take off to Denpasar, Indonesia.Kejadian is due to the
damage done to the engine, the turbo fan jet experiencing "fatigue" in structure so that the pilot had
to cancel this event off and make the plane split into three different parts and causing three of the
275 passengers were killed.
26 September 1997 - Garuda Indonesia Flight 152 crashed in the village of Buah Nabar, district and
articles, Deli Serdang, North Sumatra, Indonesia, killing all passengers, amounting to 222
passengers and 12 crew members. This accident caused by thick fog and forest fires are the worst in
the history of Indonesian airlines.
January 17, 2002 - Garuda Indonesia Flight 421 emergency landing after a failed landing at
Adisumarmo International Airport at night and only stopped after the plane crashed into the banks of
the Bengawan Solo river, killing one crew.

4. D. Organization
III. RISK MANAGEMENT
A. Risk identification Using Matrix
The most basic tool is the risk matrix. [Figure 4-1] It assesses two items: the likelihood of an event
occurring and the consequence of that event.
Likelihood of an Event
Likelihood is nothing more than taking a situation and determining the probability of its occurrence.
It is rated as probable, occasional, remote, or improbable. For example, a pilot is flying from point A

5. to point B (50 miles) in marginal visual flight rules (MVFR) conditions. The likelihood of
encountering potential instrument meteorological conditions (IMC) is the first question the pilot
needs to answer. The experiences of other pilots coupled with the forecast might cause the pilot to
assign “occasional” to determine the probability of encountering IMC.
The following are guidelines for making assignments.
• Probable—an event will occur several times.
• Occasional—an event will probably occur sometime.
• Remote—an event is unlikely to occur, but is possible.
• Improbable—an event is highly unlikely to occur.
B. Severity of an Event
The other item in the matrix is the severity or consequence of a pilot’s action(s). It can relate to
injury and/or damage. If the individual in the example above is not an instrument flight rules (IFR)
pilot, what are the consequences of encountering inadvertent IMC conditions? In this case, because
the pilot is not IFR rated, the consequences are potentially catastrophic.
The following are guidelines for this assignment.
• Catastrophic—results in fatalities, total loss
• Critical—severe injury, major damage
• Marginal—minor injury, minor damage
• Negligible—less than minor injury, less than minor system damage
Simply connecting the two factors as shown in Figure 4-1 indicates the risk is high and the pilot
must not fly, or fly only after finding ways to mitigate, eliminate, or control the risk.
Although the matrix in Figure 4-1 provides a general viewpoint of a generic situation, a more
comprehensive
program can be made that is tailored to a pilot’s flying. [Figure 4-2] This program includes a wide
array of aviation related activities specific to the pilot and assesses health, fatigue, weather,
capabilities, etc. The scores are added and the overall score falls into various ranges, with the range
representative of actions that a pilot imposes upon himself or herself.
Mitigating Risk
Risk assessment is only part of the equation. After determining the level of risk, the pilot needs to
mitigate the
risk. For example, the VFR pilot flying from point A to pointnB (50 miles) in marginal flight
conditions has severalways to reduce risk:
• Wait for the weather to improve to good VFR conditions.
• Take a pilot who is more experienced or who is certified as an instrument flight rules (IFR) pilot.
• Delay the flight.
• Cancelthe flight.
• Drive.

6. C. Managing Risks
Risk is the degree of uncertainty. An examination of risk management yields many definitions, but it
is a practical approach to managing uncertainty. [Figure 1-4] Risk assessment is a quantitative value
assigned to a task, action, or event. Although one can easily see both the hazard is high and the
severity is extreme, it does take the person who is using those bolts to recognize the risk.

7. Therefore, risk management is the method used to control, eliminate, or reduce the hazard within
parameters of acceptability. Risk management is unique to each and every individual, since there are
no two people exactly alike in skills, knowledge, training, and abilities. An acceptable level of risk to
one pilot may not necessarily be the same to another pilot. Unfortunately, in many cases the pilot
perceives that his or her level of risk acceptability is actually greater than their capability thereby
taking on risk that is dangerous.
It is a decision-making process designed to systematically identify hazards, assess the degree of risk,
and determine the best course of action. Once risks are identified, they must be assessed. The risk
assessment determines the degree of risk (negligible, low, medium, or high) and whether the degree of
risk is worth the outcome of the planned activity. If the degree of risk is “acceptable,” the planned
activity may then be undertaken. Once the planned activity is started, consideration must then be
given whether to continue. Pilots must have viable alternatives available in the event the original
flight cannot be accomplished as planned. Thus, hazard and risk are the two defining elements of risk
management. A hazard can be a real or perceived condition, event, or circumstance that a pilot
encounters.
It is apparent that this pilot knew the difference between right and wrong. He elected to ignore the
magnitude of the hazard, the final illustration of a behavioral problem that ultimately caused this
accident. Certainly one would say that he was impetuous and had what is called “get there itis.” While

8. ducking under clouds to get into the Michigan airport, the pilot struck terrain killing everyone
onboard. His erroneous behavior resulted from inadequate or incorrect perceptions of the risk, and his
skills, knowledge, and judgment were not sufficient to manage the risk or safely complete the tasks in
that aircraft. [Figure 1-6]
A key point must be understood about risk. Once the situation builds in complexity, it exceeds the
pilot’s capability and requires luck to succeed and prevail. [Figure 1-7]
Unfortunately, when a pilot survives a situation above his or her normal capability, perception of the
risk involved and of the ability to cope with that level of risk become skewed. The pilot is encouraged
to use the same response to the same perceived level of risk, viewing any success as due to skill, not
luck. The failure to accurately perceive the risk involved and the level of skill, knowledge, and
abilities required to mitigate that risk may influence the pilot to accept that level of risk or higher
levels.

9. IV. CONCLUSION
The concepts of hazard and risk are the core elements of risk management. Types of risk and the
experience of the pilot determine that individual’s acceptable level of risk. The pilot can assess risk by
using risk assessment models that quantify the risk by assessing the likelihood of an event occurring
and the consequences of that event. Conclusions that can be drawn from the case the airline Garuda
Indonesia is the greatest risk of an accident. and according to the company analysis of accidents
caused by pilots who do not meet the standards of aviation, mechanical failure, human error and so
on. therefore it shall be tightened in the recruitment company crew, especially pilots.