Incorporating Enterprise Risk Management Into the Curriculum: The Delta Air Lines Case Study

Abstract

AbstractThis article describes a group project that was designed and implemented in an MBA‐level corporate risk management class. The primary objective of this project is to integrate the concepts of enterprise risk management into the graduate‐level risk management and insurance curriculum. This project combines both traditional and innovative risk management techniques into one semester‐long group case study. The Delta Air Lines case study was divided into three segments to focus on three distinct objectives. The first component, identification of Delta's horizon risks, is designed to spur creative thinking among the groups. The second component, analysis of workers' compensation claims, is a very traditional risk management exercise in risk evaluation designed to utilize traditional statistical analysis techniques (specifically, trending). The third component is estimating both total loss distributions and layers of loss due to airline crashes for potential capital market risk financing alternatives. This component involves more innovative financial risk management techniques (i.e., distribution fitting and simulation analysis). The objective is to familiarize students with the current techniques being used to evaluate risks that are currently (or potentially) being securitized in the capital markets.