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Risk Management in Tourism & Hospitality

The document discusses risk management as applied to safety, security, and sanitation. It defines risk and differentiates between risks and hazards. Risk management involves identifying, evaluating, and prioritizing risks to minimize potential negative events. Food handling, guest information collection, and event organizing are provided as examples of risks and hazards in tourism and hospitality industries.

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224 views4 pages

Risk Management in Tourism & Hospitality

The document discusses risk management as applied to safety, security, and sanitation. It defines risk and differentiates between risks and hazards. Risk management involves identifying, evaluating, and prioritizing risks to minimize potential negative events. Food handling, guest information collection, and event organizing are provided as examples of risks and hazards in tourism and hospitality industries.

Uploaded by

Jan Jan
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© All Rights Reserved
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THC 001 – RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITY, & SANITATION

Let's start our discussion.

DEFINITION OF RISKS

The definition of risk here implies an awareness that risk is something foreseeable
in every kind of business, even in the tourism and hospitality world. The exposure to
something that we do not desire should not be a barrier for us to execute what is being
expected and demanded. Our knowledge of risk should be considered a better opportunity
for us to plan and mitigate its adverse effect in our undertakings.

Risk, according to UNWTO, is a situation that exposes someone or something to


danger harm, or loss. Risk can be a physical safety matter, a risk of property loss, a
financial business risk, and more. From the moment a person engages himself in tourism
and hospitality, whether a sole proprietorship, partnership, or corporation, the risk
immediately attaches.

Examples:

1. Food handling is one issue that must be adequately addressed whenever someone
prepares food for the customers. The danger of food poisoning due to the
contamination of food is high if the necessary precaution based on standards will not

The module is for the ex clusiv e use of the Univ ersity of La Salette, Inc. Any form of reproduction, distribution, uploading, or
posting online in any form or by any means w ithout the w ritten permission of the Univ ersity is strictly prohibited. 1
THC 001 – RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITY, & SANITATION

be followed. The government has provided regulations that must be complied with by
any business venture to make sure that the danger of harm is mitigated. A food
sanitation permit is a mandatory requirement for businesses in the food industry.

2. It is an inevitable practice in both tourism and hospitality businesses to get the


necessary information about their guests and clientele for security reasons, not only
on the part of the guests but also on the part of the management. The giving and
obtaining information per se is considered a risk in itself that must be safeguarded
accordingly.

The business dictionary defines risk as to the probability or threat of damage,


injury, liability, or any other adverse occurrence caused by external or internal
vulnerabilities, which may be avoided through preemptive action (http://
[Link]/definition/[Link]). The same has stressed the
definition of risk as applied to the food industry: the possibility that there will be an
adverse effect on absolute magnitude due to a particular hazard in food.

Tourism, like hospitality, is a trade or a business. It may sometimes reach its


desired outcome, but the possibility of not realizing it should not be set aside. Engaging
in business-like tourism and hospitality has a probability of threat or damage as there are
events beyond the contemplation of man. The weather as of the time of entering an
agreement with clientele may be entirely different from the actual day of the event. Those
actual occurrences must have a preemptive action.

In the point of view of economics, risk implies future uncertainty about deviation
from expected earnings or expected outcome. Risk measures the uncertainty an investor
is willing to take to realize a gain from an inv estment ([Link]
[Link]/definition/risk). The very reason why people engage themselves in
business is to realize gains that could address their respective economic interests.
However, realizing gain is not an easy thing because of the hazards and risks attaching to
it.

There is a need to plan on time and think of the best possible means to address the
risks and hazards barring the full implementation of the desired plan of the business.
When one is in a simple sari-sari store, there is a hazard of the proliferation of minor and
major competitors.

The same would make one realize the need to deviate from the usual strategy of
capturing the market to a more relevant and significant strategy. When a person is in
the business of transportation, they have to think of the erratic prices of the
oil in the market. When a person is in the business of a travel agency, there
is a chance to deviate the tour packages as an effect of the peso equivalency
in the foreign exchange.

The module is for the ex clusiv e use of the Univ ersity of La Salette, Inc. Any form of reproduction, distribution, uploading, or
posting online in any form or by any means w ithout the w ritten permission of the Univ ersity is strictly prohibited. 2
THC 001 – RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITY, & SANITATION

Risk vs. Hazard

There are instances wherein risk and hazard are being used interchangeably as
they thought they were the same, but the Canadian Center for Occupational Health and
Safety gave a concrete definition to distinguish the two. Accordingly, hazard pertains to
any source of potential damage, harm, or adverse health effects on something or someone,
while the risk is the chance or probability that a person will be harmed or experience an
adverse health effect if exposed to a hazard. It may also apply to situations with property
or equipment loss or harmful effects on the environment.
According to work SMARK (n.d.), a hazard is something that can cause harm, while
a risk is a chance that any hazard will cause harm to somebody.

HAZARD Risk
Anything that can cause harm How great the chance that
(eg. A chemical, electricity, someone will be harmed by
Ladders, etc.). the hazard.

Let us explain further the distinction between the risk and hazard using the
hospitality and tourism industry-related activities as the framework.

Event organizing is effective in boosting the economy of both industries, tourism


and hospitality. One cannot accomplish it in just a wink of an eye. It must undergo a
tedious study and planning because some risks and hazards are attached to it. Guest
performers are considered a hazard as they may cause commotion and stampede because
of the unruly people. Unruly people are also considered a hazard as they can cause chaos
to the whole event process. The overwhelming attendance of guests might also be
considered a hazard as it can cause traffic congestion and noise nuisance to the nearby
establishments. There is a hazard of terrorist attack and robbery as bad elements would
love to take chances of executing an evil design in populated and busy areas. On the other
hand, the risks that those hazards can cause damage to property and injury to people are
very high should the management ignore the essence of risk management in the design of
their event.

There is also a hazard in the food preparation in the hotel industry. The people
preparing might be a factor of hazard as their knowledge, training, and skills are needed
to make sure the foods are adequately prepared. Thus, food contamination is avoided.
The risk of food contamination vis-à-vis with food poisoning is imminent if the one
handling the food has done no precautionary measure. The supplier of the ingredients is
also a factor of hazard. The trouble will come in even if the one preparing the food is
careful in food handling or if the ingredients per se are contaminated.

The module is for the ex clusiv e use of the Univ ersity of La Salette, Inc. Any form of reproduction, distribution, uploading, or
posting online in any form or by any means w ithout the w ritten permission of the Univ ersity is strictly prohibited. 3
THC 001 – RISK MANAGEMENT AS APPLIED TO SAFETY, SECURITY, & SANITATION

As defined in ISO 31000, risk management is the identification, evaluation, and


prioritization of risks. It is followed by coordinated and economical application of
resources to minimize, monitor, and control the probability of unfortunate events
(Hubbard, 2009) to achieve the desired output.

To address the issue of risk, which is inevitable but foreseeable in any business
venture, circumstances must be studied carefully to identify all the risks involved,
followed by an intense evaluation of the same to determine which among those risks
should be addressed first and which should be treated lastly. Risk management, based on
the definition of ISO 31000 and Hubbard, follows a systematic approach to mitigating, if
not eradicating, the risks. Close coordination with the key people in an organization is
something essential to the control of unfortunate events.

The module is for the ex clusiv e use of the Univ ersity of La Salette, Inc. Any form of reproduction, distribution, uploading, or
posting online in any form or by any means w ithout the w ritten permission of the Univ ersity is strictly prohibited. 4

Common questions

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Failing to implement proper risk management strategies can lead to severe impacts such as increased likelihood of safety incidents, financial losses, property damage, and degradation of reputation. In the tourism and hospitality sectors, unmitigated risks can result in food safety violations, inadequate data protection, and unmanaged economic shifts impacting profitability. This failure can ultimately lead to a loss of customer trust and legal repercussions for businesses .

Specific risks in food handling include the potential for food poisoning due to food contamination if standards are not followed. Measures to mitigate these risks include ensuring employees handling food have proper training and skills, maintaining sanitation permits, and adhering to government regulations. Additionally, careful selection of ingredient suppliers is crucial, as contamination can be introduced at this stage despite cautious handling during food preparation .

Differentiating between risk and hazard is necessary for designing effective risk management procedures because it allows organizations to identify each potential source of harm (the hazard) and understand the probability of these hazards causing actual harm (the risk). This understanding enables more precise allocation of resources to manage hazards foremost with a higher likelihood of occurring and strategically framing mitigation efforts towards reducing the subsequent risks, thereby protecting both business assets and consumer safety effectively .

Risk management in the tourism and hospitality industry involves identifying, evaluating, and prioritizing risks with the aim of minimizing and controlling the probability of unfortunate events. In this context, risk is defined as a situation exposing someone or something to danger, harm, or loss. It includes physical safety risks, property loss risks, and financial business risks. This understanding of risk emphasizes the need for businesses to plan and implement measures to mitigate adverse effects .

Hazards and risks are often confused but differ significantly: a hazard is anything with the potential to cause damage, harm, or adverse health effects, whereas a risk is the probability or chance that this hazard will cause harm. In tourism and hospitality, examples of hazards include guest performers who might cause commotions or the overwhelming attendance of guests creating congestion. The risk in these instances is the likelihood of property damage or personal injury resulting from these hazards .

Preemptive actions can mitigate risks associated with unpredictable events like weather changes by implementing contingency plans, such as flexible event schedules and backup venues. Using advanced weather forecasting systems to inform decision-making and maintain open communication with clients and suppliers to manage expectations allows for swift adjustments. Training staff in emergency preparedness and ensuring insurance covers potential weather-related disruptions also significantly reduce the impact of such unpredictable occurrences .

Coordination with key personnel is crucial for effective risk management, as it ensures a systematic approach in identifying, evaluating, and mitigating risks. Having a coordinated effort allows for comprehensive risk assessment and the prioritization of resources in handling the most significant risks first. This approach not only minimizes potential disruptions but also optimizes resource allocation, enhancing the organization's ability to achieve desired outcomes while minimizing unforeseen failures .

Economic uncertainty complicates risk management strategies as it impacts expected earnings and outcomes, influencing investor decisions on risk-taking. In tourism and hospitality, economic fluctuations such as erratic oil prices affect transportation costs, and currency exchange rates shift the viability of international tour packages. These variables necessitate adaptive risk management strategies to secure economic interests by deviating from standard market capture strategies and addressing macroeconomic conditions through careful planning .

The UNWTO defines risk as a situation that exposes someone or something to danger, harm, or loss, and this concept applies broadly across tourism and hospitality ventures by identifying the inherent dangers present in operations, such as service failures, financial exposure, or environmental threats. This definition guides businesses in considering potential adverse outcomes and the need for strategies to predict and mitigate these risks through informed planning and risk management procedures .

An effective risk management framework for hospitality event planning includes identifying potential hazards such as overcrowding, security threats, and food safety issues, followed by evaluating the probability and impact of these risks. This is accompanied by the prioritization of risk management activities, implementation of preventive measures, and continuous monitoring for adjustments as necessary. Critical components include comprehensive impact analysis, coordinated team efforts, contingency plans, and stakeholder communication to ensure that events are executed safely and efficiently .

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