Risk Management Concepts & Principles PDF

Risk Management Concepts & Principles 1 Risk Management as Applied to Safety, Security and Chapter Sanitation - THMN04H  Risk, according to UNWTO, is a situa...

Risk Management Concepts & Principles 1 Risk Management as Applied to Safety, Security and Chapter Sanitation - THMN04H  Risk, according to UNWTO, is a situation that exposes someone or something to danger or loss. Risk can be a physical safety matter , a risk of property loss or a financial business risk. From the moment a person engages himself in the business of tourism and hospitality, whether a sole proprietorship, partnership, or corporation, the risk immediately attaches. Risk Management as Applied to Safety, Security and Sanitation - THMN04H  The business dictionary has defined risk as the probability of threat of damage, injury, liability, or any other adverse occurrence that is caused by external or internal vulnerabilities, and that may be avoided through 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 that an investor is willing to take to realize a gain from an investment. Risk Management as Applied to Safety, Security and Sanitation - THMN04H Risk vs hazard Hazard pertains to any source of potential damage, harm or adverse health effects on something or someone, while risk is the chance or probability that a person will be harmed or experience an adverse health effect if exposed to a hazard. According to workSMARK, a hazard is something that can cause harm while risk is a chance that any hazard will cause harm to somebody. Risk Management as Applied to Safety, Security and Sanitation - THMN04H Risk management Risk Management, (as defined in ISO3100), 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 to achieve the desired output. Risk Management as Applied to Safety, Security and Sanitation - THMN04H Sources of risks Risk can come from different sources like the following: 1. Uncertainty in financial markets; 2. Threats from project failures (at any phase in design, development, production, or sustainment life-cycles); 3. Legal liabilities; 4. Credit risk; 5. Accidents; 6. Natural causes and disasters; 7. Deliberate attack from an adversary; or 8. Events of uncertain or unpredictable root cause Risk Management as Applied to Safety, Security and Sanitation - THMN04H Uncertainty in financial markets Risk Management as Applied to Safety, Security and Sanitation - THMN04H Threats from project failures Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Legal liabilities Risk Management in tourism and hospitality industry is a two-way process: 1. The safety of the guests and employees, which includes avoidance to emotional and physical harm is a moral and ethical responsibility of the operators; 2. Protection to business operations which includes protection against damage to property persons and property and future litigation. Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Credit risk Credit is another source of risk that could impact the tourism and hospitality industries. Credit Risk is the potential that a bank borrower or counterparty will fail to meet its obligation following agreed terms. (As defined in Principles for the Management of Credit Risk) The goal of credit risk management is to maximize a bank’s risk- adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Accidents Risks and accidents are sometimes being used interchangeably, but they are different, though they complement each other. Accidents are reactive while risks are preventive. Accident management is necessary to reduce costs pertinent to the accident, to wit: damage to property, costs of rental, maximization of subrogation recovery. Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Common injuries in the hospitality industries 1. Slip-and-fall injuries; 2. Musculoskeletal injuries; 3. Skin reactions. 4. Respiratory illnesses 5. Security-related accidents 6. Food Poisoning 7. Elevator and escalator accidents Risk Management as Applied to Safety, Security and Sanitation - THMN04H Slip-and-fall injuries Risk Management as Applied to Safety, Security and Sanitation - THMN04H Musculoskeletal injuries Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Skin reactions Risk Management as Applied to Safety, Security and Sanitation - THMN04H Respiratory illness Risk Management as Applied to Safety, Security and Sanitation - THMN04H Security-related accidents Risk Management as Applied to Safety, Security and Sanitation - THMN04H Food poisoning Risk Management as Applied to Safety, Security and Sanitation - THMN04H Elevator & escalator accidents Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Accidents in the Tourism Industry 1. Accidents due to fortuitous events or acts of God - Earthquakes - Volcanic eruption - Flood - Landslides - Erosion - Fire - Storm - Typhoon Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Earthquakes Risk Management as Applied to Safety, Security and Sanitation - THMN04H Volcanic eruption Risk Management as Applied to Safety, Security and Sanitation - THMN04H  flood Risk Management as Applied to Safety, Security and Sanitation - THMN04H  landslide Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Erosion Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Fire Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Storm Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Typhoon Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Accidents in the Tourism Industry 2. Transportation accidents - Air; - Water; - Land Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Accidents in the Tourism Industry 3. Accidents due to Activities - Pool accident - Animal bites or attack - Drowning - Electrocution Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Natural causes and disasters The natural disasters maybe categorized into three broad groups; 1. Caused by movements of the Earth 2. Disasters related to weather 3. Floods, mudslides, landslides, and famine Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Deliberate attack from an adversary Terrorism has become one of the more and more active and threatening calamities that affect the international community. It is the use of violence or threat of violence in the pursuit of political, religious, ideological or social objectives. It can be committed by governments, non-state actors, or undercover personnel serving on the behalf of their respective governments. It reaches more than the immediate target victims and is also directed at targets consisting of a larger spectrum of society. Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Events of uncertain or unpredictable root- cause Two Types of Events in Risk Management 1. Negative events or risks; 2. Positive events opportunities Risk Management as Applied to Safety, Security and Sanitation - THMN04H Strategies to manage threats The following are some strategies that can be of help to manage threats: 1. Avoid the threat; 2. Reduction of the adverse effect or probability of the threat; 3. Transfer of all part of the threat to another party; 4. Retaining some or all part of the potential or actual consequences of a particular threat, and the opposites for opportunities. Risk Management as Applied to Safety, Security and Sanitation - THMN04H How to implement the strategies to manage uncertainties (Method) The different strategies of managing uncertainties can be dealt with using the following elements in order: 1. Threat identification or characterization; 2. Assessment of the vulnerability of critical assets to specific threats; 3. Risk determination; 4. Identification of the techniques to reduce those risks; 5. Prioritization of the measures Risk Management as Applied to Safety, Security and Sanitation - THMN04H Risk management principles The following are some of the risk management principles enunciated by the International Organization for Standardization: 1. Risk management should create a value wherein the resources expended to mitigate risk should be less than the consequences of inaction; 2. It should be an integral part of the organizational processes; 3. The risk management should become part of the decision-making process; 4. It should explicitly address uncertainty and assumptions; 5. It should be placed in a systematic and structured process; Risk Management as Applied to Safety, Security and Sanitation - THMN04H Risk management principles 7. The best available information should be the bases of risk management; 8. Risk management should be tailorable; 9. It should take human factors into account; 10. It should be transparent and inclusive; 11. The dynamism, interactivity, and responsiveness to change must be evident on the risk management; 12. Risk Management should be capable of continual improvement and enhancement 13. There is a need for continuous and periodic re-assessment of the risk management. Risk Management as Applied to Safety, Security and Sanitation - THMN04H Steps on Risk management process The following are the steps for the implementation of the risk management process based on ISO 31000: 1. Context establishment; 2. Identification of the potential risk; 3. Risk assessment; 4. Creation of risk options; 5. Identification of potential risk management treatments; 6. Make a risk management plan; 7. Execute the plan Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Identification of the potential risk Classification of Risk Sources; 1. Internal; and 2. External The following factors could be considered as determinants in choosing a method of identifying risks; 1. Culture 2. Industry practice 3. Compliance Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Risk assessment Risk assessment is the stage wherein the severity of the impact of the said risk is being weighed to make the most intelligent decisions for the full implementation of the risk management plan. Risk assessment is the determination of a quantitative or qualitative estimate of risk related to a clear situation and recognized threat (also called as hazard). Risk Management as Applied to Safety, Security and Sanitation - THMN04H The techniques in managing risk may be categorized into the following; 1. Avoidance (eliminate, withdraw from or not become involved) 2. Reduction (optimize –mitigate) 3. Sharing (transfer – outsource or insure) 4. Retention ( accept and budget) Risk Management as Applied to Safety, Security and Sanitation - THMN04H  Thank you! Risk Management as Applied to Safety, Security and Sanitation - THMN04H