LESSON-2_-RISK-MANAGEMENT-IN-THE-TOURISM-INDUSTRY.pptx

THC 2 Risk Management as Applied to Safety, Security, and Sanitation The student will develop knowledge, skills, and values on the basic principles of personal hygiene, food safety and sanitation, as applied in tourism and hospitality industry. RISK MANAGEMENT AND THE TOURISM INDUSTRY...

THC 2 Risk Management as Applied to Safety, Security, and Sanitation The student will develop knowledge, skills, and values on the basic principles of personal hygiene, food safety and sanitation, as applied in tourism and hospitality industry. RISK MANAGEMENT AND THE TOURISM INDUSTRY THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor GUIDELINES TO MANAGE RISKS IN THE TOURISM SECTOR 1. RisksIdentification 2.Determination or creation of a management plan to address risks that could affect the tourism business 3.Collaboration with the stakeholders 4.Provide training for the staff 5.Test the plan 6.Provide transparent and honest crisis communication 7.The revival of the business after a crisis 8.Reposition of the business after a crisis THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor 1.Risks Identification In most of the activities pertinent to tourism, the susceptibility of the risk harming people and damaging property varies, depending on the preparedness of the management in their encounter with the risks. Risk Identification could concern any of the following: 1. Natural Hazards (Typhoons, volcanic eruption, flood, etc) 2. Civil or Political Hazards (TRAIN Law, closure of Boracay Island, Mindanao under the state of Martial Law) 3. Technological Hazards (industrial pollution, nuclear radiation, toxic wastes, etc) 4. Biological Hazards (Swine Flu, Coronavirus) THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor Factors in the Identification of the Nature of Impending Risks 1. Reason for the happening of the risk 2. The frequency of the occurence of the risk 3. Duration of the Risk 4. Speed of onset 5. Scope and Impact 6. Potentialities to Destroy 7. Criteria for determining the necessity of risk treatment 8. Criteria which is acceptable and tolerable 9. Whether the combinations of the negative and positive risks will be considered 10.How the combinations of risks will be considered THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor  A good RISK MANAGER does not give an abrupt decision to solve a problem. Risk consequences, whether positive or negative, should be MEASURED first. THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor A good risk manager should address the following issues in the RISK IDENTIFICATION: 1. The Cause of the Event - Reason behind the event 2. Areas of Impact - Determination of Area or part where immediate action is needed 3. Enablers - Factors that would help the occurence of the risk event 4. Events - Occurrence of particular set of situations 5. Potential Consequences - Anticipate the potential consequences THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor Essential Risk Concepts: Refers to the Refers to the exposure arising exposure arising from a specific risk from a specific risk before an action after an action is is to be made by made by a risk a risk manager manager, and in case such action has proven useful INHERENT RISKS RESIDUAL RISKS THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor 2. Determination and creation of a RISK MANAGEMENT PLAN A good Risk Management Plan contains an analysis of the potential risks together with the possible impact (high and low) and strategies to mitigate the derailment of the project if the problems would arise. Plan and Strategies can be classified into two: 1. Preventive Strategy - designed to lessen the possibility of risk impact before the risk becomes realized 2. Contingency - address the issue of risk at the same time of the happening of the event THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor Plan and Strategies can be categorized into the following: A. Risk Avoidance B. Risk Reduction Risk Managers may C. Risk Transfer take any of the following EITHER as D. Risk Retention preventive or contingency to address the issue of risk concerning his/her business THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor A.RISK AVOIDANCE It is a common understanding in the tourism industry that it Refers to the complete elimination of risk would be hazardous on the merely by avoiding the activities with part of tourism operators to continue the conduct of their attaching potential risks. business even in the occasions of impending peril given the On October 24, 1988, MV Dona Marilyn, while poor weather conditions. sailing from Manila to Tacloban sank as it was caught in Typhoon Unsang. About 389 died, and There could have been losses only 147 survived. on account of the delay of transportation, but there could MV Dona Marilyn was a Philippine inter-island ferry have been more casualties if owned and operated by Sulficio Lines, Inc. the management would take the risk of transportation despite THC 2 - Risk Management the to as Applied weather forecast. Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor B. RISK REDUCTION Refers to the reduction of risk level through minimizing either the likelihood and consequence of a specific risk through the implementation of precautionary measures, risk controls or treatments. The exercise of risk reduction may consider the following: 1. Observance of the safety standards 2. Use of Safety Devices 3. Earthquake-proof building/proper water management system 4. Qualification requirements (qualified tour guide, adventure trek leaders, and drivers) THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor  Precautionary measures that accommodation establishments follow may The tourist include, but not limited to the following: accommodation providers 1. Removal of risks and obstructions that are duty bound to assure may cause the slipping, tripping, and the health and safety of falling of the guests (faulty electrical the guests while they are wiring, clutter on stairs, wet floor, and others) on their premises. The said 2. Assurance of the fitness of the obligation extend not only furnishings for guest accommodations to guests but as well as to 3. Making sure that the appliances are safe to use the staff and anyone on 4. Giving orientation to the guests about the premises. Cases of emergency procedures 5. Attendance to the needs of the guests negligence would amount THC 2 - Risk(PWD, children, Management VIPs,toand as Applied others) Safety, Security, and to both criminal and civil Sanitation Hanina Maruhom - BSTM Instructor  THC 2 - Risk Management as Applied to Safety, Security, and RISK REDUCTION Sanitation Hanina Maruhom - BSTM Instructor  RESEARCH Fire Code of the Philippines Implementing Rules and Regulations of the Sanitation Code of the Philippines THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor C. Risk Transfer Involves the contractual shifting of risk from one party to another. Burden is being shifted from individuals to another individual, from individuals to an insurance company, or from insurers to reinsurers. Risk Transfer may be accomplished through any of the following: 1. Outsourcing 2. Derivatives 3. Contracts 4. Insurance THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor What is Outsourcing? A process which commonly transfers a variety of risks to a partner. A contract is necessary between the management and the provider. Outsourcing may be considered as the cost-saving measure in the tourism and hospitality industries as it can help release capital for investment in some areas of his business. Outsourcing of human capital is the most practical way of dealing with the issue of tourist influx in the tourism industry (Seasonality) THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor What is Derivatives? Financial contracts whose value is derived from some underlying assets (bonds, loans, interest rates, exchange rates, commodities, residential, and commercial mortgages, etc.) ABC Inc is a manufacturer of various toiletries which Hotel 101 needs for its day to day hotel operations. The two parties came to an agreement that for six months, Hotel 101 is going to purchase sets of toiletries for a fixed price of Php75.00 each from ABC Inc. No matter the circumstances (financial market uncertainty, higher prices for ingredients/resources, higher wage for employees), that might affect the production of ABC Inc, Hotel 101 is THC 2 - Risk Management as Applied to Safety, Security, and obligated to pay only Php75.00/toiletries’ Sanitation set to ABC Inc. Hanina Maruhom - BSTM Instructor What is Contracts (Contractual Risk Transfer)? Non-insurance risk transfer mechanism that accomplishes the goals of risk financing and risk control. Stipulated under the contract are the penalty and indemnification caused by a contract breach. Breach of Contract occurs when one party breaks the terms established in an agreement such as making a late payment, or by failing to deliver goods or services by a specific date. Along with litigation, a breach of contract could also result in a fractured business relationship and THC 2a- Risk Management as Applied to Safety, Security, and Sanitation damaged reputation. Hanina Maruhom - BSTM Instructor What is an Insurance? A contract being represented by a policy in which an individual or entity received financial protection or reimbursement against losses from an insurance company. Examples: 1. Life Insurance 2. Health Insurance 3. Property Insurance 4. Travel Insurance THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor D. RISK RETENTION There are instances where the managers, instead of looking for somebody that could help them attend to issues of risk, would rather keep it and resolve them for themselves. The company would have to pay for the losses from the risk out of their own reserve fund should it decide to retain the risks at issue. In this case, the company should assure that they are financially capable in dealing with the retained risks. Companies would usually retain the risks if they would find it impractical to apply for insurance because of a relatively high amount of premium for such matter. THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor 3. Collaboration with the Stakeholders A stakeholder is anybody who can affect or be affected by the strategy or project of an organization. Those who have the power to impact an organization or project may also be considered as a stakeholder. All the preventive and contingency plan of the management to address risks would be considered as an exercise of futility if the stakeholders affected will not be involved. THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor 2 Classifications of Stakeholders 1. Internal Stakeholders Stakeholders who have direct relationship with the company such as employee, owners, and investors. 2. External Stakeholders Those who do not have a direct relationship but could be affected by the actions of the management are considered as external stakeholders. The local community, local government, tourists, andTHC guests may be as 2 - Risk Management considered asSecurity, Applied to Safety, one. and Sanitation Hanina Maruhom - BSTM Instructor Stakeholder’s Issues It must be noted that the various stakeholders in the tourism industry have their interests that are sometimes conflicting with each other. The risk managers must reconcile those differences or consider it in making the plan of action. THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor For Example: A private corporation who would like to build a theme park must do a series of consultations with the people that might be affected (positively and negatively) should the plan be executed. THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor 4. Provide Training for the Staff It is essential in the management of risks in the tourism and hospitality industry to provide training for the staff for them not to be caught unaware on the things that they have to do should the event happen. To wit: Safety Drill, Lockdown drill, Earthquake Drill, First Aid THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor THC 2 - Risk Management as Applied to Safety, Security, and Sanitation 5. Test the Plan for Risk Management The Risk Management Plan must be tested to determine its strengths and weaknesses to make sure that we could handle the risk and reduce losses. 3 Phases of Risk-Based Testing 1. Planning 2. Designing 3. Execution THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor 6. Provide Transparent and Honest Crisis Communication The management must keep the clientele posted about the different activities of the industry through an updated website and social media channels. The information must be neutral and factual. The staff must also be trained well to communicate appropriately with the customers on site. Crisis Communication is a crucial element of a good crisis management system. It helps limit the negative impact of a crisi by addressing the information needs of all industry stakeholders in an efficient, timely, and responsible manner. THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor What is Risk Communication? Defined as the information exchange involving risk-related factors among the assessors, managers, consumers, and other interested parties. It is an integrated process and procedure that: 1. Involves all the interested parties within the process of risk analysis 2. Assist in the development of the credible and transparent process of decision- making 3. Instill confidence in the risk management decision THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor Principles of Risk Communication 1. Know your Audience 2. Credibility of your source of information 3. Shared Responsibility 4. Transparency THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor 7. The Revival and Reposition of a Business after the Crisis THC 2 - Risk Management as Applied to Safety, Security, and Sanitation Hanina Maruhom - BSTM Instructor