Risk Management Report Strategies for Hospitality

Question: Describe about the Risk Management Report for Strategies for Hospitality. Answer: Introduction Businesses operate in an environment where sometimes uncertainty is very high. This uncertainty can have a significant impact on the operations of the business such as financial losses, low productivity among others. These uncertain events can be natural occurrences such as floods or events created by human actions such as oil spillage. The loss caused by such unpredictable events can cause loss of property, affect credibility and reputation of a business or cause financial loss directly to the business. Therefore, businesses have always to be prepared for these uncertainties by conducting risk management. Risk management refers to the allocation of resources in a coordinated manner with the purpose of being able to monitor and minimize the impact of events likely to cause harm to an organization (Hubbard Douglas, 2009, p.46).There are various standards and regulations which have been put in place to facilitate management of risks(Heinz,2010,p.79). The purpose of this report is to conduct a risk management analysis and come up with a plan a swimming and leisure center where the management has not be able to identify and manage risks in preparation for an external audit. Risk Identification Identification of risks is the first step in being able to manage risks. The majority of the risks occur because they were not identified early enough or they were not correctly identified. If a risk has been wrongly identified, the mitigations for such a risk may also be wrong and hence ineffective. There are various methods and techniques of identifying risks but the most common method is brains-storming. Other methods of identifying risks include conducting risk surveys and questions, using flowcharts and SWOT analysis(Maria,2012,p.70)For an organization to ensure risks are correctly identified there should be a risk register put in place. In relation to our case study of the swimming and leisure center, the following risks were identified; Low level of turnout whereby there are very few people who are attending the leisure center Canceled programs and activities at a short notice Chemical spills Compliance issues According to the US Occupational Safety and Health Administration (2012), toxic chemicals should be carefully stored to avoid spillage which can cause injuries to those handling them. It is aimed to avoid spillage and cause accidents which can lead the leisure center to be legally penalized due to the violation of the Occupational Safety and Health Administration Act. Risk responsibilities Managing risks is not a one person responsibility. All stakeholders of a business are responsible for the task of identifying and managing risks (Williams, 2004, p.16). However, the manager is responsible for creating a risk register. The compliance officer of the business will be responsible for monitoring and evaluation of the risk management plan. The process of mitigating risks will be conducted by all the stakeholders. Risk assessment After a risk has been identified, risk assessment is conducted in order to determine the impact of the risk on the organization. The sole purpose of conducting a risk assessment is to determine the probability of uncertain event occurring and its impact. A risk can occur frequently, occasionally, likely to occur, seldom or highly improbable. The impact of a certain risk on an organization can either be critical, catastrophic or moderate impact. Chemical spills due to the fact that they cause injuries to the staff have a critical impact on the organization. The organization will, however to spend more in the treatment of affected workers which will drive up the expenditure. The impact of low- level turnout means that an organization will incur fewer sales which may, in turn, affect the profits. The leisure center is canceling programs on short notice; hence inconveniencing customers. This hurts the public image and reputation of the leisure center which may soon lose its customers to other entities offering similar services. The management of the organization faces compliance issues because of not submitting annual risk management reports. This is catastrophic to the center because it risks closure. The table below summarizes the risk assessment for the leisure center Risk Probability of occurrence Impact Chemical spills Occasionally Critical Cancelled programs Likely Critical Compliance issues Seldom Catastrophic Low level of turnout Frequent Critical Risk response When the management of an organization has identified a risk, there must be a response to the effect. The ability of an organization to effectively respond to a risk will determine the success of their risk management initiatives (Williams, 2004, p.6).The various responses to risk include acceptance, mitigation, avoidance, and deferments. An organization can choose to change its policies so as to be able to avoid the occurrence of a certain risk. For instance, the management of the leisure center can align its compliance policies and regulations to avoid the risk of compliance issues arising in future. Risk communication Some of the risks occur because of poor communication between the various stakeholders. Therefore, there is need to establish a proper method of communication to coordinate the risk management activities between the stakeholders. This means that there should be a communication system whereby when a risk is identified; it is communicated to the relevant parties for responses. This means establishing a channel of communication following the channel of command. The business website and company brochures are some of the effective methods of communicating risk. Risk mitigation Risk mitigation is one of the ways of responding to risks. It involves creating activities to reduce the impact of a particular risk or preventing the probability of a risk occurring. Risk mitigation is the most important part of risk of management. Therefore, risk mitigation should be carefully planned and executed. One essential aspect of mitigating risk is creating a contingency plan which can be used in case activities of mitigating risks do not work (Rausand, 2011). Spillage of chemicals was identified as one of the risks. The business will draw up proper guidelines for handling and storing chemicals. Then the staff will undergo training on how to safely handle and store chemicals to prevent injuries. Improving services together with good advertising strategy will mitigate the risk of a low number of customers visiting the swimming and leisure resort. Creating a compliance policy framework will also help to reduce the impact of non-compliance. Monitoring and evaluation Monitoring and evaluation are important to ensure that the objectives of risk management are achieved. Organizations can choose to select a monitoring and evaluation team or use the compliance office of the organization to carry out monitoring and evaluation of the risk management. The evaluation will schedule evaluation activities and come up with recommendations every six months. Key Performance Indicators will be used to measure the success of the risk management programs. Below are the key performance indicators for the Leisure and swimming center in the case study; Increase in number of customers attending the leisure center High compliance rating No incidents of chemical spills Increase in customer satisfaction Conclusion and recommendation The hospitality industry has a lot of risks, some which can be foreseen while others cannot. Risk management plan is an integral part of achieving the organizational goals and objectives of the business. There should be guidelines put in place on how staff will be able to handle and store chemicals so as to prevent chemical spills. There should be also an occupational safety and health policy to cater for the staff and establish an injury register where injuries sustained by workers in the course of executing their duties are recorded. The center should embark on an aggressive advertising and public relations campaign to improve its image and credibility which has been tarnished by problems emerging due to lack of a risk management plan. This will be able to attract more customers to the swimming and leisure center and increase revenues. The management should consider employing full- time employees to improve consistency in delivery of service. References Dorfman, Mark S. (2007).Introduction to Risk Management and Insurance(9 ed.). Englewood Cliffs, N.J: Prentice Hal, 7(5), 100-115. Heinz, P. (2010). Risk Management: Procedures. Methods and Experiences, p.79-93 Haimes,Y. (2004). Risk Modeling, Assessment, and Management: Englewood Cliffs, N.J: Prentice Hal, 12(4), 212-245 Hubbard, D. (2009).The Failure of Risk Management: Why It's Broken and How to Fix It. John Wiley Sons, p. 46 Lev, V and Michael, T.(2012).Project Decisions: The Art and Science. Management Concepts. Vienna. Oxford: Oxford University Press, p.123-130 Matins, C., Garrido, M., Cassia, A. R., Fereira, M., Luiz, R. (2011). Risk Identification Techniques Knowledge and Application. Brazilian Construction, 11(7), 23-27 Rausand, M. (2011). Risk Assessment: Theory, Methods, and Applications. Harvard Printing Press, 56-73 Maria, A. (2012). Modern Methods of Risk Identification in Risk Management: International Journal of Academic Research in Economics and Management Sciences, Vol. 1, No. 6, p.67-70 Opran, C., Paraipan, L., Stan, S. (2004). Risk management: Bucharest: Communicare, p.189-200 Queiroz, Leonard (2002). "Risk Management Strategies for the Hospitality Industry," Hospitality Review: Vol. 20: Iss. 1, Article 3 Stephen, G., Hexter, E. (2005). From Risk Management to Risk Strategy: The Conference Board. New York, 18(12), 87-91 Sonia, B., David, M. (2012). Risk identification and analysis in the hospitality industry: Practitioners' perspectives from India. Worldwide Hospitality and Tourism Themes, Vol. 4 Iss: 5, pp.410 - 427