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Nearly all decisions involve taking risk. Sometimes taking a risk can lead to reward – such as deciding to invest in a start-up business – and the decision making process will involve weighing up the potential reward against the potential loss. If the reward significantly outweighs the risk, it is likely the decision will be taken to proceed.

In circumstances where taking a risk presents a very limited (or very short term) reward, and the probability of negative consequences is high – the decision to proceed is unlikely. Low upside, high downside risks should be avoided, and if they cannot be avoided, it is important to understand how these risks occur and what can be done to manage them.

It is unlikely that a business would deliberately choose to expose themselves to a low upside, high downside risk. However, many businesses unknowingly increase their risk exposure by participating in transactions outside of their sphere of experience and knowledge, and without proper assistance. This is particularly true where a specialist asset is involved, there are tight timeframes, and the team has little understanding or knowhow of the asset – there is an increased chance that something will go wrong.

Business aviation is just like any other specialist industry; it has its own language, nuances and ‘way of doing things’ which would not be obvious to an outside observer. It is also a ‘hands on’ industry with no formal route to education – education is by way of experience. As a result, if a business makes the decision to buy a business aircraft but neglects to engage specialist assistance for the purchase, it has just exposed itself to the first low upside, high downside decision.

This e-book will provide a simple, high-level overview of risk and risk management in business aircraft transactions from hands on and practical experience. The e-book will identify key areas in transactions where risk is amplified, how to reduce risk exposure and when it is possible to plan for risks that are unknown in advance.

We are all aware of the complexity around Customs and VAT when it comes to business aviation. The terminology is confusing and it can be difficult to understand the principles involved or how they may impact your aircraft. That’s why we have taken this opportunity to explain some of the most commonly used terms in the EU and the UK.

Check out our Glossary of Customs and VAT terms used in business aviation here.