Identifying, addressing, and preventing risks observed in the global economic setting from occurring represents one of the main tasks of an organization. Being one of the globally renowned brands, Boeing has been quite successful in its approach to managing risks, mostly due to the incorporation of the contingency framework. However, a more effective framework for addressing currency-related risks must be integrated to ensure that the company remains at the top of the target market. By ensuring that the decision-making framework is supported by innovative technology such as AI and a contingency-based risk management approach, Boeing managers will be able to adders the current uncertainty issue.
When considering the financial performance of Boeing, one must address the role of international financial markets first. The specified institutions play a central function in the organization’s risk management strategies since they allow hedging risks associated with the international exchange (Wangui & Jagongo, 2019). Specifically, allowing organizations such as Boeing to address the concerns associated with currency fluctuations, international financial markets create an additional layer of protection for Boeing’s risk management by integrating hedging instruments such as forwards (Wangui & Jagongo, 2019). Therefore, international financial markets play a central role in Boeing’s financial risk management approaches.
Examining the effects of the exchange rate on the company in question, one will have to admit that Boeing has suffered significant losses due to the associated fluctuations. Specifically, the first quarter of the 2022 report mentions that the company has spent almost $4,000,000 on managing the issues associated with exchange rate fluctuations (Isidore, 2022). Therefore, an appropriate risk management strategy for addressing the observed concerns is required, preferably that one based on contingency and flexibility in decision-making, as the 2007-2008 reports suggest (“The Boeing Company 2008 annual report,” 2008). Considering the fourth-quarter results published in 2021 will allow noticing a tendency in Boeing’s management of financial risks and suggest that the company requires an update in its framework for reducing financial losses (“Boeing reports fourth-quarter results,” 2021). Specifically, a contingency-based model using a profound and multifaceted analysis of core financial, economic, political, and social trends will be needed.
An overview of the current strategy that Boeing has been deploying to manage core risks will show that the key dents in the firm’s present approach suggest the presence of exchange-related risks. Indeed, the company’s failure to manage its adjusted earnings and the inability to revisit the risk management framework to incorporate COVID-19-related measures indicates that Boeing’s current strategy lacks flexibility (Wangui & Jagongo, 2019).
Furthermore, Boeing’s diversification model developed for the company’s expansion should be considered. Involving a broader range of tools for risk management, which is an obvious advantage, lacks a wider scope, represents a key disadvantage, and has led to an increase in losses observed over the past couple of years (Isidore, 2022). For this reason, the risk mitigation approach must feature contingency elements that will allow Boeing to remain flexible and responsive to rapid changes. The specified goal can be achieved by incorporating innovative digital tools for scanning the targeted environment and a comprehensive market analysis. Indeed, when considering Boeing’s previous approaches to risk management, one must admit that before the 2008 crisis, Boeing was less meticulous in its financial analysis (Isidore, 2022). Specifically, the company did not consider the option of hedging to minimize exchange-related risks.
By integrating a contingency framework that allows an organization remains flexible in managing risks and developing a corresponding framework for navigating and managing organizational change, Boeing will be able to survive in the target socioeconomic and sociocultural settings. Furthermore, the current framework needs to be supported by innovative solutions, particularly the use of AI. Thus, forecasting core risks and the design of appropriate solutions will demonstrate a positive shift from the current decision-making model.
Boeing reports fourth-quarter results. (2021). Boeing.
Isidore, C. (2022). Boeing posts massive charge for 787 Dreamliner problems, sending losses soaring. CNN.
Wangui, D., & Jagongo, A. (2019). Financial risk hedging practices, management strategies and debt capacity: Theoretical review. International Academic Journal of Economics and Finance, 3(3), 218-230.