2. Objectives: at the end of the chapter, the
students will be able to
•Identify the Concepts and Principles of Risk
Management
•Define Risk
•Differentiate between Risk to Hazard
•Explain the different sources of Risk
•Explain the strategies in Managing Threats
3. What is RISK?
•According to UNWTO, It is a situation that
exposes someone or something to danger
harm, or loss. Risk can be a physical safety
manner, a risk of property loss, a financial
business risk, and more.
•According to the business dictionary, Risk is
the probability of threat of damage, injury,
liability, or any other adverse occurrence that is
caused by external or internal variabilities, and
that may be avoided through preemptive
action.
4. What is RISK?
•Economics point of view, Risk implies future
uncertainty about deviation from expected
earnings or expected outcome.
5. RISK vs. HAZARD
•RISK is the chance or probability that a person will be
harmed or experience an adverse health effect if
exposed to a hazard.
•HAZARD pertains to any source of potential damage,
harm or adverse health effects on something or
someone.
6. RISK vs. 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
HAZARD
7. RISK MANAGEMENT
•According to ISO 31000, the identification, evaluation,
and prioritization of risk is followed by coordinated
and economical application of resources to minimize.
Monitor, and control the probability of unfortunate
events to achieve designed output (Hubbard, 2009).
8. SOURCES OF RISK
1. UNCERTAINTY IN FINANCIAL MARKETS
- According to Nick Bloom, an economist, uncertainty
can hit different groups in different ways.
- The primary source of market sources are considered
unknown factors. Unknown factors should be referred to
as market uncertainty, the perspective of market stability,
the most critical aspect is not the market risk but the
degree of market uncertainty embedded in different assets
or business models (slovik).
9. SOURCES OF RISK
2. Threats from project failures
- According to Taylor, Jr. (2014), compelling business
development requires taking on calculated risk. The
managers could direct their teams on the right actions
utilizing establishing the distinction between risk and
effects.
10. SOURCES OF RISK
3. Legal Liabilities
Risk management two-way process:
1. The safety of the guest and employees, which
includes avoidance of 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 failure litigation.
11. SOURCES OF RISK
4. Credit Risk: is the potential that a bank borrower or
counterparty will fail to meet the obligations following
agreed forms.
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.
12. SOURCES OF RISK
5. Accidents: are reactive while risk are preventive.
Accident Management is necessary to reduce the
costs pertaining to the accident, to wit: damage to
property. Costs of rental. Maximization of subrogation
recovery. It pertains to precautionary measures that a
manager should do to limit or avoid accidents.
13. Some common injuries in the hospitality
industry:
1. Slip-and-fall injuries
2. Musculoskeletal injuries
3. Skin reactions
4. Respiratory illness
5. Security-related accidents
6. Food Poisoning
7. Elevator and escalator accidents
14. Accidents in the Tourism Industry:
1. Accidents due to fortuitous events or acts of God
1.1. Earthquakes
1.2. Volcanic Eruption
1.3. Flood
1.4. Landslides
1.5. Erosion
1.6. Natural Fire
1.7. Storm
1.8. Typhoon
15. Accidents in the Tourism Industry:
2. Transportation Accidents
2.1. Air
2.2. Water
2.3. Land
16. Accidents in the Tourism Industry:
3. Accidents due to Activities
a. Pool Accident
b. Animal bites or attacks
c. Drowning
d. Electrocution
17. SOURCES OF RISK
6. Natural Causes and Disasters
Categorized into Three (3) broad groups:
1. Caused by movements of the earth
2. Disasters related to weather
3. Floods, mudslides, landslides, and famine
18. SOURCES OF RISK
7. Deliberate attack from an Adversary
The hotel industry has beefed up its security
departments, implementing a range of security
measures to protect guests at their properties, ranging
from armed guards to concrete barriers and metal
detectors.
Strengthening of security sectors in the affected
areas, review of domestic boarding policy, and strict
passenger control even the purpose of travel is for
tourism
19. SOURCES OF RISK
8. Events of Uncertain or Unpredictable Root-cause
Two types of Events in Risk Management
1. Negative events or risk
2. Positive events or opportunities
20. Strategies to Manage Threats (Uncertainties
with Negative Consequences)
1. Avoid the Threat
2. Reduction of the adverse effect or probability of
the threat
3. Transfer of all or part of the threat to another
party;
4. Retaining of some or all of the potential or actual
consequences of a particular threat, and the opposites
for opportunities.
21. 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. Risk management should become part of the
decision-making processes.
4. It should explicitly address uncertainty and
assumptions.
22. RISK MANAGEMENT PRINCIPLES
Enunciated by the International Organization for Standardization
5. It should be placed in a systematic and structured
process;
6. The best available information should be the bases
of risk management;
7. Risk management should be tailorable;
8. It should take human factors into account;
9. It should be transparent and inclusive;
10. The dynamism, interaction, and responsiveness to
change must be evident on the risk management;
23. RISK MANAGEMENT PRINCIPLES
Enunciated by the International Organization for Standardization
11. Risk management should be capable of continual
improvement and enhancement;
12. Here is a need for a continuous and periodic
re-assessment of risk management.
24. RISK MANAGEMENT PRINCIPLES
Enunciated by the International Organization for Standardization
11. Risk management should be capable of continual
improvement and enhancement;
12. Here is a need for a continuous and periodic
re-assessment of risk management.
