Be 1ntuitive 1ncorporated Consulting

179 Turbot Street,

Brisbane, 4000, QLD
October 13, 2017
October 13, 2017

Doug Nichols
Aerion Corporation
Suite 500, 5190 Neil Road,
Reno, Nevada, 89502, USA

Dear Doug Nichols,

Here within is a preliminary risk assessment of the proposed AS2 project. Be 1ntuitive 1ncorporated Consulting
believes it will cover all risk aspects in the lead up and beyond of the AS2 project.

Our team greatly appreciates your consideration of our assessment for the AS2 project, and look forward to hearing
from you soon.

Sincerely,

Be 1ntuitive 1ncorporated Consulting

Enclosure: Risk Assessment

Risk Assessment
AS2 Project

Prepared for the Aerion Corporation

By Be 1ntuitive 1ncorporated Consulting

Executive Summary

Aerion Corperation commissioned a report into project risks from Be 1ntuitive 1ncorporated Consulting. The report
contains an analysis of risk at 5 project phases (Section 2);

Phase 1 - Prototypeing and Design

Phase 2 - Marketing and Client Acquisition
Phase 3 - Manufacturing
Phase 4 - Maintenance and Operation
Phase 5 - End of Life cycle; Beginning of new Project.

A risk register of sixty risks where identified with there likelihood and consequences, project stage and responsible
party (Section 4). This register provided the basis for analysis of major risks.

Major risks from each phase where identified and discussed in detail and discussed (Section 5). Risk reduction
strategys for these major risks where identified (Section 6).

These major risks for each phase where;

Phase 1 - Revisions to Design Standard would result in the aircraft needing to be redesigned. Resaulting
increased costs.
Phase 2 - Without Market Validation; Production Funding would not be granted. It is therefore eventual
that potential customers are identified and engaged. The resulting lack of production financing would end the
project.
Phase 3 - Workplace Health and Safety risks to workers during the manufacturing stage need to be managed.
Workplace accidents resulting in injury or death would undermine confidence in company and result in financial
loss.
Phase 4 - Maintenance Procedures and Scarcity of Manufacturing Materials
Phase 5 - Performance Deterioration of the plane poses a risk to the viability of Aerion on future projects in
addition to financial loss due to reparations to affected parties.

The proposed risk management solutions aimed to remedy and reduce both the conscience and likelihood of the risk
occurring. For the major risks of each stage the following is recomended;

Phase 1 - Ensure the analysis of each design feature is thoroughly reviewed by experts
Phase 2 - Ensure the required capital is being funded by reliable investors before the implementation of the
project.
Phase 3 - Ensure a standard safety procedure is being strictly conducted within the work space.
Phase 3 - Ensure proper safety equipment is given prior to work and have a strict policy about safety.
Phase 4 - Regular maintenance schedules
Phase 4 - Ensure worker hired is qualified for the position
Phase 4 - Ensuring a quality check after the regular maintenance
Phase 5 - Using quality parts with reasonable prices that is easily available in the market.
Phase 6 - Implement quartely meetings with department heads to discuss about performance.

It is expected that though following the aforementioned risk management strategies that likelihood of Aerion
Corporations AS2 project being successful will be improved.

1
Contents

1 Synopsis 3

2 Methodology 5

3 Risk Matrix Definitions 6

3.1 Likelihood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3.2 Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3.3 Risk Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3.4 Appetite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4 Risk Register

5 Major Risks 9

5.1 Phase 1 - Revisions to Design Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.2 Phase 2 - Market Validation and Production Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.3 Phase 3 - Workplace Health and Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5.4 Phase 4 - Maintenance Procedures and Scarcity of Manufacturing Materials; . . . . . . . . . . . . . . . . . . . 10

5.5 Phase 5 - Performance Deterioration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

6 Risk Reduction Strategy 11

6.1 Strategy 1 - Improve Design Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

6.2 Strategy 2 - Steady Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6.3 Strategy 3 - Health and Safety Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6.4 Strategy 4 - Improve Maintenance Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6.5 Strategy 5 - Improvement of KPI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

7 Conclusion 13

2
1 Synopsis

The Aerion Corporation was founded in the year 2002 with the sole aim to commercialize a new generation of
supersonic technology. Building on the success of ASSETs (Affordable Supersonic Executive Transport) technological
developments, Aerion would go to spend more than $100 million on research and development[1].

Moving forward, Aerion has designed an aircraft intended to target the high-speed business-class market. Aerions
AS2 aircraft aims to achieve supersonic travel speeds, a speed previously deemed to be too dangerous and costly[2].
With air travel rising in usage and long inter-continental flights becoming more frequent, the market for faster travel
has once again opened with multiple competitors seeking to gain a foothold[3].

Aerions board of members share a high prestige. The Chief Executive Officer Doug Nichols benefits the company
with his prior experience as Chief Financial Officer of BOEING during the 747/767 programs as well as more
business-oriented craft[4]. With the other members offering a wide range of skills, Aerion has the leadership
background necessary to carry out large scale projects.

Aerion currently holds a technological collaboration with the Airbus Group[5]. As of May 22nd 2017, Aerion also has
begun a joint venture with the business giant General Electric Aviation in an engine study to development the AS2s
supersonic power-plant[6]. These partnerships with highly reputable companies helps boost Aerions credibility and
likelihood of final product deliverance in the future.

To date, Aerion has solely focused on research and development of their technology. With the shift to commercialization,
beginning with the AS2 aircraft, Aerion intends to complete its first delivery by 2025, at a cost of $120 million
(USD). This price-point stands much higher than current smaller business jets offering similar passenger capacity and
hence, convincing the customers to switch to this faster travel may prove difficult. Despite this however, Aerion has
currently accumulated 20 AS2 pre-orders. With this, Aerions focus has shifted its focus on meeting their deadline,
else risk customers cancelling.

Aerion has a total of 4 stages till the product end-of-life. Each stage, including the end-of-life should be followed by
a company review and estimate.

Figure 1: Board Schedule

Aerion currently has a strong head-way with their design stage. Coupling this with their acquired pre-orders, this
places the company within the late of the prototyping stage and beginning of the manufacturing stage. Reviews of
the product risk areas should be conducted post each stage.

3
The AS2 Aircraft is aimed at a market currently non-existent. With multiple competitors racing to bring a supersonic
airplane to the market, Aerion is under high time stresses to secure a foothold in being a market leader.

With this great opportunity however sits large risk. With the emergence of the market, companies are at risk from
several sources, including but limited to:

Customer shift to more suitable competitor,

Unexpected technological difficulties,

Another global financial recession,

Customer pre-order cancellation and,

Prototype failure.

These are just a few of the risks that are further detailed later in the report.

With the presence of risk, mitigation and contingency strategies should be in place to avoid or lessen the impacts.
These strategies can be sub-categorized into key fields;

Social - The company public image,

Financial - The company financial situation,

Political - Regulatory bodies and testing,

Each subsection would feature respective strategies in risk mitigation. Risk assessment is carried out with all factors
attributing with high chance, high level consequence taking precedence. This is outlined in the next section.

4
 2 Methodology

Prior to the execution of risk assessment, a well-defined flow diagram was presented by the B11 team member in order to determine and outline the approach
of the methodology and the risk consultation process. The objective of the methodology flow diagram is to provide a systematic approach in terms of
determining, reducing and eliminating any potential risks presented in the AS2 project. As a result the flow diagram shown in will be used as a guidance for
the development of this risk management report.
5

Figure 2: Methodology Flow diagram

By evaluating an in-depth approach of the risk management methodology, it is expected that the risks of the project AS2 can be controlled and minimized.
Moreover, it should be noted that the project objectives such as scope, time limitation and overall project cost should be identified at the early stage of the
project. To maximize the effectiveness of the risk assessment, continuous consultation between the management team and the staff involved in the AS2 project
should be arranged during its lifetime, allowing for adjustment and improvement on any issues that may arise.
3 Risk Matrix Definitions

A risk matrix produced for Aerion Corporation will be defined of associated risks across multiple principles.
Corresponding hierarchies of consequence and likelihood have been conformed for the AS2 project. Of which, each
principle will be outlined further.

3.1 Likelihood

The feasibility of potential risks corresponding to the AS2 project are measured in incremental probability of
occurrence. Such qualitative measures are defined as the following:

Likelihood Level of Description Period of Occurrence

Likelihood
Rare 1 Risk is very unlikely to occur Unlikely to occur throughout project life
and only occur in exceptional
circumstances
Improbable 2 Risk is unlikely to occur Likely to occur once throughout project life
Potential 3 Risk may occur Once in 3 years
Possible 4 Risk will likely occur Once in a year
Probable 5 Risk will occur Once in a third of a year

Table 1: Qualitative Measures of Likelihood

Given the AS2 project has seemingly been a long term ambition, the likelihood of conceivable risks have been
based over a time period of 15 years. Though the project is aimed to be delivered by 2023, the industry is highly
precautioned and associated risks need to be established appropriately to minimize very high or extreme failures.

3.2 Consequences

The severity of potential risks relative to the AS2 project ranked in levels of impact. Each consequence and
description will be outlined further.

Consequence Level of Implication Description

Consequence
Insignificant 1 Little to no effect Investigation, routine maintenance and conditioning to
mitigate problem
Minor 2 Minimal effect First aid treatment, Routine maintenance and conditioning
to mitigate problems, Minuscule financial losses
Moderate 3 Low as External assistance required relative to medical or
practically maintenance, Temporary system closure, Medium financial
applicable losses
Major 4 Impacted Medical treatment required, Lengthy system isolation or
seriously disorientation, High financial losses
Extreme 5 Detrimental Injury leading to death, hospitalization or loss of
productivity, Loss of system, Significant financial losses

Table 2: Qualitative Measures of Consequence

6
3.3 Risk Matrix

Based upon the defined consequences and likelihood of relative risks corresponding to the AS2 project, the following
risk matrix has been adopted:

Consequence
Insignificant (1) Minor (2) Moderate (3) Major (4) Extreme (5)
Rare (1) Negligible (1) Negligible (2) Low (3) Low (4) Medium (5)
Likelihood

Improbable (2) Negligible (2) Low (4) Medium (6) Medium (8) High (10)
Potential (3) Low (3) Medium (6) Medium (9) High (12) High (15)
Possible (4) Low (4) Medium (8) High (12) High (16) Very High (20)
Probable (5) Medium(5) High (10) High (15) Very High (20) Very High (25)

Table 3: Risk Matrix

With the following risk rating system:

Risk Rating Risk Level Project Relevance

Very High 20 Terminate proceedings and reevaluate before continuing
High 10-19 Mitigation methods must be implemented and certified before further action
Medium 5-9 Implement mitigation methods
Low 3-4 Proceed with caution; monitor scenario
Negligible 2 Proceed with project

Table 4: Risk Rating

3.4 Appetite

Aerion Corporation is pushing the boundaries of supersonic air travel by optimizing fundamental subsonic concepts.
Fortifying a rapid mode of travel with, a faster future as their business approach with first flights beginning in 2023
with services running by 2025 [7]. The company hence prides itself delivering a tremendous form of business air
travel with up to 70% faster travel times in comparison with todays airliners. With such ambitions, the corporation
should employ a high level of risk appetite due to the nature of the industry it is approaching. Innovation is required
to supplement the end goals of travel time reduction and improved operation efficiency as should the AS2 project in
regards to the utmost risk mitigation. With the backing of Airbus and support of other aeronautical institutions,
the AS2 project can become a reality in a safe manner.

7
4 Risk Register
Risk Risk Risk Risk Party
Risk Risk Description Associated Consequences Risk Area Mode of Action
Likelihood Severity Level Rating Responsible
ID
Project Phase 1 - Prototyping and Design
Permits or agency actions delayed or take longer than Deadlines may not be met leading to revenue
1 Potential Moderate 9 Design Team Extend deadlines
expected losses/project schedule Medium Compliance

2 Unforeseen design exceptions required Safety of prototype maybe detrimental Possible Major 16 High Design Team Reevaluate design
Compliance
Very
3 New or revised design standard Safety ramifications Possible Extreme 20 Design Team Reevaluate design to ensure utmost safety measures
High Compliance
Deadlines may not be met leading to revenue Project Good team Communication and Project manager need
4 Additional design scoping Potential Major 12 High
losses/project schedule Compliance Consultants to agree extent of works
Need to redo work which will cause project not finish on Project
5 Staff misunderstand requirements Potential Moderate 9 Ongoing team/staff meeting
time Medium Compliance Consultants
Project
6 Existing prototype contracting breached Legal claims and sanctions Improbable Moderate 6 Financial Ensure contract clauses concise and measurable
Medium Management/HR

7 AS9100 standards not satisfied Failure of standard aerospace compliance Improbable Extreme 10 High Design Team Design is verified to meet AS9100 standards
Compliance

8 Not adequate users of design software Detail of design flawed Potential Major 12 High Design Team Extensive training to learn fundamental practices
Operational

9 Poor team dynamics Prototype not adequate/ deadline delays Rare Moderate 3 Low Design Team Rigorous aptitude and job interview measures
Operational
Reasonable deadline scheduling accounting for team
10 Optimistic scheduling Deadlines are not met Potential Major 12 High Design Team
Operational member and stakeholder dependencies
Project Phase 2 - Marketing and Client Acquisition
Funding to complete project relinquished or inadequate Very
11 Project not becoming a reality Possible Extreme 20 Financial CEO Alternative funding measures
for project completion High
Project
12 Inability to spend project funds within deadlines Project not becoming a reality Possible Rare 5 Financial Allocation of budgeting within target time of year 2023
Medium Management
Project Contractors and anyone on site must be inducted under
13 Board member major health impact Injury/ loss of life Potential Extreme 15 High
Operational Management workplace health and safety controls
Project
14 Customer back-out Project will lose funding and not become a reality Possible Moderate 12 High Financial Communicate with customer regularly
Consultants
Lack of support from the stakeholders causes company Project
15 Stakeholders becomes disengaged Improbable Major 8 Financial Communicate with stakeholders regularly
to lose assets Medium Consultants
Expedite procedures to enable decant strategy to be Project Negotiations well advanced giving time to agree finite
16 Lack of decant strategy Improbable 2 Strategic
developed Insignificant Negligible Management changes in scheme details
Expenditures fluctuate greater than anticipated causing Project
17 Contingency plan fails Improbable Major 8 Strategic Continually review market and reevaluate
a loss Medium Consultants
Project
18 Client dissatisfaction Marketed prototype not perceived well by clientele Potential Moderate 9 Strategic Ensure stakeholder requirements are met
Medium Consultants
Project Phase 3 - Manufacturing
Project
19 Inaccurate contract time estimates Impacts financial resources Potential Moderate 9 Reallocate budgeting
Medium Compliance Management
Emission of dust and particulate matter from Amenity impacts on existing residents in the vicinity of Mitigation of emissions through construction site
20 Possible Major 16 High Contractor
construction activities the project site Compliance enclosures and air quality control measures

21 Increased site traffic impeding public access Reduced existing access for pedestrians Potential Minor 6 Contractor Select transportation routes to minimize congestion
Medium Compliance

22 Degradation of traffic and transport infrastructure Damage to infrastructure Potential Minor 6 Contractor Adequate maintenance and repair measures
Medium Compliance
Associated noise of hauling construction Transportation routes underlying site traffic
23 Increased road noises/disturbances Potential Minor 6 Contractor
equipment/materials Medium Compliance management

24 Traffic incidents with road users Injury to road users Potential Moderate 9 Contractor Site traffic management
Medium Compliance
Destruction/damage to environment and those in the
25 Accidental spill from material transfer Rare Major 4 Low Contractor Control measures for spillages of materials
vicinity of the material spillage Compliance

26 Late materials delivery Increases pressure on deadlines Potential Moderate 9 Contractor Source materials from reputable companies
Medium Compliance
Project
27 Accidental injury to site personnel Compensation claims and delay of project Potential Major 12 High Adequate health and safety measures enforced
Compliance Management
Project
28 Liquidation of contractor Project delayed and unnecessary expenditures Possible Major 16 High Selection process to identify suitable candidates
Compliance Management
Project
29 Liquidation of supplier Project delayed and unnecessary expenditures Possible Major 16 High Financial standing check and selection processes
Compliance Management

30 Poor quality of materials Project delayed and unnecessary expenditures Possible Major 16 High Contractor Material selection processes
Compliance
Labour and machinery selection processes including
31 Inadequate manufacturing Project delayed and unnecessary expenditures Possible Major 16 High Contractor
Compliance supervision of manufacturing
Workplace health and safety measures to be
32 Loss of construction equipment Destruction / Loss of Equipment Property Rare 1 Contractor
Insignificant Negligible Compliance implemented by contractor

33 Construction equipment failure Destruction / Loss of Equipment Property Improbable 2 Contractor Remediation of site post events
Insignificant Negligible Compliance
Very Contractors and anyone on site must be inducted under
34 Workplace health and safety Injury/ loss of life Possible Extreme 20 OHS
High Compliance workplace health and safety controls
Failure to provide total vacant possession before Very Prioritize key acquisitions to enable expedient
35 Injury/ loss of life Possible Extreme 20 OHS
construction starts High Compliance demolition of priority areas for Utilities

36 Extreme weather Project delays, Increases pressure on deadlines Rare Major 4 Low OHS Organize work in advance giving time for reschedule
Compliance
Increased risk of crashes at localized Social construction Site
37 Changed road environment during construction Rare Major 4 Low Construction traffic routes to be designated
zones Compliance Management
Project Contractor to have planned liaison with local community
38 Complaints from the Public during construction Project delayed and unnecessary expenditures Potential Moderate 9
Medium Compliance Management and to employ Public Liaison Officer.

39 Failure to secure provisional or early orders Project delayed and unnecessary expenditures Rare Major 4 Low Contractor Organize work in advance giving time for reschedule
Compliance
Project Constant benchmarking to ensure appropriate funding is
40 Fluctuation in material prices during pricing Budget not maximized leading to inefficiency Potential Major 12 High Financial
Management allocated

41 Supply chain delay Project delays, Increases pressure on deadlines Potential Major 12 High Contractor Contractor to ensure supply chain protection
Compliance
Project Phase 4 - Maintenance and Operation

Design to incorporate noise mitigation measures, Set

42 Noise pollution Annoyance, resident complaints Possible Major 16 High OHS/Operation
Operational up suitable working hours
Management

Resident complaints, physical and behavioural impacts Limited activity creating dust. Monitor conditions and
43 Dust or sediment pollution Possible Major 16 High OHS/Operation
on mammals in vicinity of project site. Operational have suppression measures
Management

Human discomfort, building damage if vibration exceeds

44 Vibration disturbances Possible Major 16 High OHS/Operation Need to carefully consider adjacent properties
associated thresholds Operational
Management

45 Air quality reduction Human discomfort, complaints to Council Possible Major 16 High OHS/Operation equipment shall be enclosed where possible
Operational
Management

Physical and behavioural impacts on plants in vicinity of Prepare a management plan, or update any existing
46 Contamination of flora Potential Moderate 9 OHS/Operation
project site. Medium Operational management plan
Management

Physical and behavioural impacts on plants in vicinity of Need to carefully consider adjacent structures and ensure
47 Debris accumulation Potential Moderate 9 OHS/Operation
project site. Medium Operational appropriate propping as required, nearby excavations
Management

Physical and behavioural impacts on plants in vicinity of OHS/Operational

48 Bird strike to turbine Potential Major 12 High Full habitat check to be undertaken in advance of works
project site. Operational Management/Airport
Staffing
Inaccurate cost estimations of Project Constant bench marking to ensure appropriate funding
49 Budget not maximized leading to inefficiency Improbable Major 8 Financial
implementation/maintenance Medium Management is allocated
Required skill sets of particular staffing positions may Up to date documentation standards and or
50 Staff availability not be available throughout project causing an adverse Possible Major 16 High HR collaboration methods to keep quality of work at a high
Operational
effect on quality of deliverables standard
Project
Management/ Ongoing mechanisms of testing to ensure failure does
51 Very High failure of AS2 Injury or death of consumers/ loss of assets Improbable Extreme 10 High
Operational Feasibility not occur
Team
Very Project Drafted procedures of routine maintenance and
52 Maintenance procedures May lead to drastic circumstances of loss of life or assets Possible Extreme 20
High Compliance Management appropriate logging and cautionary systems
Fuel or operating mechanisms become a scarce Very Project Concurrent researching into alternative resource
53 Scarcity of manufacturing materials; Possible Extreme 20
commodity High Operational Consultants utilization
AS2 project does not meet environmental legislations, Project Adequate controls placed to ensure conservation where
54 Environmental agreements Possible Moderate 12 High
emissions wise or adverse effect on environment Compliance Management possible
Project Phase 5 - End of lifecycle; Beginnings of new project
Project Return of investment strategies/suitable stakeholder
55 Low return on investment Company looses assets and further enters liquidation Improbable Extreme 10 High Financial
Management expectations
Project Ensure project is run efficiently and product is most
56 Competitor supersonic airline Company may lose out to consumers and reduce revenue Improbable Major 8 Financial
Medium Consultants appealing on market
Machinery becomes outdated to a point where it is not Project
57 Vendor support of AS2 machinery post project Improbable Major 8 Operation Utilize monitoring and mitigation services post project
able to be operated Medium Management
Machinery becomes outdated to a point where it does Project
58 Non-compliance to reissued standards Improbable Minor 4 Low Adopt new compliance standards should they change
not meet compliance standards Compliance Management
Very Project
59 Unintended performance deterioration KPIs are not met Possible Extreme 20 Operation Regular AGM meetings to ensure KPI targets are hit
High Management
Project
60 Fuel/energy costs not financially feasible anymore Operational costs exceed what is feasible Improbable Extreme 10 High Financial New project implements a new energy/fuel source
Management
5 Major Risks

The Risk Matrix defined a Very High Risk as one that would result in the termination of any further proceedings
and reevaluation before any further action is taken towards the project. For the purposes of this report, a Major
Risk will be defined as any risk denoted as very high listed in the risk register. Other risks deemed High Risk in
the Risk Register may also be mentioned. Five very high risks were identified for the AS2 project, namely;

inadequate funds,

workplace health and safety,

failure to provide total vacant possession,

maintenance procedures,

scarcity of manufacturing materials,

deterioration of KPIs.

In general, these major risks can be categorized as either a compliance, financial, strategic or an operational risk.
Financing projects of this size is difficult and largely depends on the success of the initial prototyping phase. It
follows that the large scope of the project inevitably imposes significant risk on the its progression and ultimate
success. Furthermore, due to the nature of the project, it was identified that a number of operational hazards pose
great risk to not only the final product, but to the health of individual employees, and therefore the project can
potentially be viewed as a risk to Aerion itself.

Major risks exist in all phases of the project lifetime. To provide meaningful and accurate commentary, each risk
will be discussed in the context of its respective phase as well as the overall project.

5.1 Phase 1 - Revisions to Design Standards

During the prototyping and design phase, the primary risks are operational and compliance related, with the major
risk identified as revisions to the design standards. At this stage, the project has not attained funding adequate for
fully-fledged manufacturing and therefore time, efficiency and design accuracy is crucial is a sufficient prototype is to
be developed. In the event that the design standards were updated or recreated, Aerion would have no choice but to
stop prototyping and undertake necessary modifications to the aircrafts design in order to meet the new standard.
This could potentially be enough to bring the project outside of the allocated budget, resulting in the termination
of the project altogether. It is important the design and engineering team are made aware of these risks and how
necessary success in this phase is for the success of the project.

5.2 Phase 2 - Market Validation and Production Funding

Assuming the prototyping phase was successful, Aerion must acquire enough clients for market validation in order
to ultimately obtain adequate funding. The major risk in this phase is purely financial; if Aerion does not receive
adequate funding for the project, it will force termination. Additionally, even in the event that financing is successful,
the failure to acquire adequate clients, or failure to retain acquired customers, poses additional, albeit less detrimental,

9
risk to the project. The CEO is the primary driver of this, and all project stakeholders understand this in order to
adequately support them.

5.3 Phase 3 - Workplace Health and Safety

Almost all risks identified in the manufacturing phase are compliance related and primarily concern the project
management and human resources teams. Major risks in this phase are healthy and safety related; the risk of loss of
life during physical manufacturing, as well as failure to provide total vacant possession before construction starts, is
potentially Very High to the project. In contrast to risks identified in the previous two phases, should these events
unfold, not only will the project be suspended but the reputation of Aerion will also be negatively affected. These
risks should be of greatest concern to Aerion as a Very High event like loss of life would undoubtedly negatively
affect the companys ability to receive endorsement for future projects.

5.4 Phase 4 - Maintenance Procedures and Scarcity of Manufacturing Materials;

Although the AS2 is complete and operational, Aerion is still responsible for its maintenance and therefore continues
to face major risk in this phase. Most notably, and similarly to phase 3, is the risk of loss of life due to manufacturing
defects or during maintenance operations. Additionally, depending on the size of a particular manufacturing defect,
large financial investment may have to be allocated to resolving the issue before continuing and could ultimately
be Very High for Aerion as a whole. The scarcity of manufacturing materials also poses a major risk, as a global
shortage in crucial parts would halt production of AS2 entities. It should be the responsibility of both project
managers and consultants to reduce these risks.

5.5 Phase 5 - Performance Deterioration

Although the project is complete, Aerion as a company is still subject to risks posed as a result of the projects
performance. Should the AS2s performance deteriorate, or KPIs are not met, Aerions ability to undertake new
projects is severely diminished. Lack of future funding, high employee turnover rates and weakened public image
are all possible consequences of unintended performance deterioration. The entire project team is responsible for
ensuring consistent and satisfactory performance for the AS2. Particularly, project managers should lead efforts to
maximize success in this phase.

10
6 Risk Reduction Strategy

The major risks have been identified and deemed very high rating that would lead to disastrous consequences if not
dealt with appropriately. Below is the recommended strategies to overcome the mentioned major risks to reduce the
possible consequences.

Risk Associated Risk Risk

Risk Strategy
Phase Description Consequences Severity Rating
ID
Ensure the analysis of each design
Poor design Safety Very
1 3 feature is thoroughly reviewed by
standards Ramifications Extreme High
experts
Funding to
complete
project Project not Ensure the required capital is being
Very
2 11 relinquish or becoming a funded by reliable investors before
Extreme High
inadequate for reality the implementation of the project.
project
completion

Ensure a standard safety

procedure is being strictly
Workplace conducted within the work
Injury/ Loss of Very
3 34 health and space.
life Extreme High
safety Ensure proper safety equipment
is given prior to work and have
a strict policy about safety

May lead to Regular maintenance schedules.

drastic Ensure worker hired is qualified
Maintenance Very
4 52 circumstances of for the position.
procedures Extreme High
loss of life or Ensuring a quality check after
assets the regular maintenance.

Fuel or operating
Scarcity of Using quality parts with reasonable
mechanisms Very
4 53 Manufacturing prices that is easily available in the
become a scarce Extreme High
materials market.
commodity
Unintended Implement quarterly meetings with
Very
5 59 performance KPIs are not met department heads to discuss about
Extreme High
deterioration performance.

Table 5: Risk Reduction Strategy Table

6.1 Strategy 1 - Improve Design Standards

The aircraft design is the base of the project. Having a good quality standard in the design and features of the
product is crucial. This is to minimize the possibility of a malfunction due to a fault in the design. Having multiple
experts to analyze and review each design feature thoroughly is recommended to ensure minimum defects is made.

11
A prototype is then made and tested before the actual product is manufactured to ensure top quality in terms of
design feature.

6.2 Strategy 2 - Steady Capital

For every project to be implemented, investors are very important to fund the project with the much needed capital.
Having the lack of capital would lead to a failure in the project with intensive planning, work, time and effort
being gone to waste. This would also lead to having a poor reputation in the market and affected future projects.
Therefore, it is very vital to ensure the required capital is being funded by reliable investors ,whom fully understand
the prospects and the consequences, before committing to the project.

6.3 Strategy 3 - Health and Safety Standards

Health and safety is one of the main risks that occurs in every industry. With the lack of workplace health and safety
management, it would lead to workers having injuries or for extreme cases, loss of life. Thus, making such standards
is very crucial. The main method to avoid such accident would be to ensure a standard safety procedures are being
strictly conducted within the work space. In addition, it is also important to ensure proper safety equipment is
given prior to work which includes a strict policy of the safety misconduct.

6.4 Strategy 4 - Improve Maintenance Procedures

In the aerospace industry, having regular quality maintenance for the aircraft is needed. This is due to the wear
and tear of internal parts or a malfunction of specific parts due to external forces. With the lack of maintenance
procedures, it may lead to drastic circumstances of loss of assets or life. Therefore, having regular maintenance
is highly recommended with it being done by a qualified worker for the position of maintenance. To ensure the
quality of the product, it would also be ideal to send the product for quality checks to reduce the possibility of risks
occurring.

6.5 Strategy 5 - Improvement of KPI

In every business, it is always planned to be blooming of success. However, there are still a possibility of unintended
performance deteriorating by identifying that the companys key performance indicators (KPIs) are not met.
Organizing quarterly meetings with department head to discuss about the companys performance is recommended.
This is the ensure the companys data is kept up to date. Meeting are also used to discuss solutions for problems
that comes up each quarter year.

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7 Conclusion

Under the outlined risk assessment guidelines formulated for the AS2 project Be 1ntuitive 1ncorporated Consulting
feels that a strong risk register has been developed for implementation during the 5 stages that Aerion Corporiation
will undertake during the AS2 project. Each the risks in the register post a threat to the integrity of the AS2 project
and the cooperation its self. Only though due diligence, continual risk reassessment and monitoring will Aerion be
able to ensure its risk are adequately managed.

With regard to the AS2 projects 5 stages; each stage provides unique challenges that must be managed to ensure
successes in that stage and in progressing into the next stage. It is important to note that although each is
distinguishable, cross over will occur as the project progresses and therefore the proposed risk reduction strategies
should be implemented as soon as viable. Particularly strong cross over will ocour at the Phase 3 Manufacturing
and Phase 4 Maintenance and Operation; as the planes are put into production they will be put immediately into
service requiring maintenance while Aerion is still manufacturing the aircraft.

Out of the sixty risks in the risk register 6 standout as major obstacles, these are as follows;

Phase 1 - Revisions to Design Standard would result in the aircraft needing to be redesigned. Resulting
increased costs.
Phase 2 - Without Market Validation; Production Funding would not be granted. It is therefore eventual
that potential customers are identified and engaged. The resulting lack of production financing would end the
project.
Phase 3 - Workplace Health and Safety risks to workers during the manufacturing stage need to be managed.
Workplace accidents resulting in injury or death would undermine confidence in company and result in financial
loss.
Phase 4 - Maintenance Procedures and Scarcity of Manufacturing Materials
Phase 5 - Performance Deterioration of the plane poses a risk to the viability of Aerion on future projects in
addition to financial loss due to reparations to affected parties.

Only though implementing risk management solutions can Aerion Corperiation reduce their exposure. The proposed
risk management solutions aimed to remedy and reduce both the conscience and likelihood of the risk occurring. For
the major risks of each stage the following is recommended;

Phase 1 - Ensure the analysis of each design feature is thoroughly reviewed by experts
Phase 2 - Ensure the required capital is being funded by reliable investors before the implementation of the
project.
Phase 3 - Ensure a standard safety procedure is being strictly conducted within the work space.
Phase 3 - Ensure proper safety equipment is given prior to work and have a strict policy about safety.
Phase 4 - Regular maintenance schedules
Phase 4 - Ensure worker hired is qualified for the position
Phase 4 - Ensuring a quality check after the regular maintenance
Phase 5 - Using quality parts with reasonable prices that is easily available in the market.
Phase 6 - Implement quartely meetings with department heads to discuss about performance.

It is expected that though following the aforementioned risk management strategies that likelihood of Aerion
Corporations AS2 project being successful will be improved.

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References

[1] Aerion Corporation. Aerion history.

https://www.aerionsupersonic.com/history/.
[2] BBC. Concorde grounded for good.
http://news.bbc.co.uk/2/hi/uk news/2934257.stm.
[3] Boom Supersonic. Boom supersonic.
https://boomsupersonic.com/.
[4] Aerion Corporation. Aerion leadership.
https://www.aerionsupersonic.com/leadership/.
[5] Aerion Corporation. Airbus group and aerion announce technology collaboration.
https://www.aerionsupersonic.com/wp-content/uploads/2017/02/Airbus Group Aerion announce collaboration 92214.pdf.
[6] Aerion Corporation. Aerion and ge aviation launch joint engine study for as2 supersonic powerplant.
https://www.aerionsupersonic.com/wp-content/uploads/2017/10/Aerion GE-Partnership.pdf.
[7] Aerion Corporation. Aerion corporation - about.
http://dev.rpcreativegroup.com/aerioncorp/about/.

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