Emerging Risk Issues for This industry - Case Study Example

Running Header: Risk Management Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction Risk management in the recent past, has come a very sensitive issue not only in the hospitality industry but almost every industry. Perhaps this is because of the way they affect the business. Risk is simple terms can be described as an occurrence that in one way or the other can interrupt the normal operation of the business. Risk issue in the hospitality industry can be internal or external depending on the company’s operations and the context in which it operates. Risk is especially becoming a very emergent issue in the hospitality industry because of the effect it bears to the industry (PKF 2006). Risk especially becomes very critical not only in the hospitality industry but in many sectors when it tends to impact negatively on the profit margins of the business. In essence the identification of risk in the hospitality industry requires proactive strategies in order to provide lasting solutions to the situations. In the hospitality area, risk become of essence especially when the security of both the employees and the customers is threatened, the space available is limited and even when the competition is very stiff following the globalization of the world market (Charles 2006). Based on these facts therefore, it’s expected that precautionary measures need to be taken address all risks before they become catastrophic events for the business. Literature Review Based on the recent on the recent report by the International Society of Hospitality Consultants (ISHC) in 2005 Annual Conference in 2005, it was identified that the hospitality industry is facing a number of risks which need to be addressed to ensure sustainability of businesses that operate industry. The particular focus was on the hotel industry and the risks that were being discussed. This follows the numerous changes that were taking place in the global market that various businesses were operating in. In general, the risks emerge from health and security at workplace and escalation of operational costs of the business. In the recent past it has been established that in the hospitality industry security concerns are becoming more sensitive after the global terrorism threats (PKF 2006). Further, it is evident that in the hospitality industry, risks are becoming more common after the globalization and liberalization of trade world over. As a recap of what highlighted in the introduction, risk in the hospitality industry, has come into being after a number of issues such as globalization, change in technology and high cost of doing business. Risk issues such as competition, have come as a result of globalization and becoming aware of the consumers of what they expect from the entrepreneurs and the liberalization of the global labor market. According to Erfurt-Cooper and Cooper (2009), alongside stiff competition as a result of globalization, the other risks such as health and security are becoming of concern. Risk management is especially important in this case because it addresses issues related both the employee and well being. Emerging risk issues for this industry To start with, health issue is becoming very critical for many businesses that are operating in the hospitality industry. This is because of the businesses they operate. Take the example of the hotels that operate in the hospitality industry. Some of these hotels have a global picture and they serve quite a number of people from different parts of the word. Intermingling in this case is very possible and that health of individual customers has become very critical (Jim B 2007). This is an important risk that needs to be managed to ensure continuity in growth and development of the business. It’s expected that contagious diseases are very common especially when people from diverse background come together. Just to world over, a number of diseases are emerging including Ebola and Swine Flu. Among many others, these diseases are likely to affect business operating in the affected regions. On the same line, security threats are very common in many parts of the world. This is because of the increased number of acts of terrorism that target individuals from certain quotas. Ideally, this has become a very major challenge for many of the businesses in the hospitality industry especially hotels since they risk being attacked by bombers and other terrorist oriented individuals (European Commission, 2010). Specific risk issue Take the case of health concerns. It is expected that all individual persons entering a certain region need to be screened and adhere to the required health standards of a given country. This is to mean that no single individual is expected to enter a particular region if they are suspected to be infected by certain diseases. The most recent examples of infections that have called for thorough screening include Ebola and Swine Flu as well as SARS. However, even though this is seen is as an approach to safeguard and protect the majority from infections from these very live threatening diseases, it’s expected that individual rights may be denied. According to Tracey and Hinkin (2006), screening individuals to determine their health status may be very risk as not all customers will take this positively. This may have a long-lasting and negative effect to the businesses. This is because not all individuals could like to be screened always as this may interfere with their personal life. The ultimate effect is the decline in business following the move by many customers to be served from different facilities where they think that their rights will be observed. According, many of the customers could like to have their personal privacy and secrecy whenever they travel. This may impact negatively on business as people will prefer to have good experiences from their travel or access to various services (Beddoe 2004). Managing the Risk Issue As identified earlier, security and health concerns are the emerging risk issues in the hospitality risk. Both risks can be managed using different ways. First and foremost, in the case of health, it’s expected that persistent employees’ checks and screening be done to ensure that all the employees are safe from any kind of infection. However, this as outlined earlier might not work well with the visitors because of their personal privacy (Aurelio GM 2007). However, important to deal with this problem is to assign personal facilities to individual visitors to make sure that contamination is not easy. On the other hand, security is not a personal issue but a state and global issue. This is to mean that available global standards have to be followed and applied equally irrespective of the individual status or origin. This is especially important in harmful and dangerous weapons are not smuggled across borders with people of bad motives (Beddoe 2004). Ground for risk management approach In the case of the security risk, it has been identified as a global issue where the standards that have to be applied have to be uniform across all borders. This approach is particularly important in making sure that all borders are secure and that no illegal business involving dangerous weapons is being carried out. Standardization is not only a global security issue but a domestic issue where local businesses and hotels are not seen as security soft spots by the majority of the visitors. With this regard therefore screening of the immigrants is important in ensuring that both visitors and employees are protected from all forms of attack. This approach is perhaps preferred since it allows for collaborative effort for all stakeholders to take part in ensuring safety for all (The Globe and Mail Report on Business Magazine 2007). Implementation of the approach This approach can be applied at different levels both externally and internally. To establish that security is kept at the maximum, it’s very important the checking and screening be done from the top downwards. That is from the country entry points to local airports. This can be extended further to individual businesses where individuals who have to be accommodated have to be established their character and their operations. To ensure that security is stable and continuous, it’s important to make sure that this security checks are done at all points and at every time. To ensure that this approach is well implemented, partnering and accessibility to various devices help detect those individuals with bad motives and are out to attack social and public places (Foster 2010). To make sure that this approach is made a success, it’s increasingly becoming very clear that some resources have to be consumed. First and foremost, there is need to have people who have rich experience in dealing with issues related to security. However, for the business will mean more cost. The people likely to be most affected include the business owners and the governments from declining revenues, the employees, the customers and the suppliers. This is because every aspect of this approach must affect each and every one of them by Foster (2010). While dealing with security risks in the hospitality industry, it’s expected that some challenges are very eminent. For instance it’s very likely that some stakeholders may not be willing to adhere to local policies and regulations regarding security management in the hospitality industry. This may be as a result of lack of agreement when to start implementing the approach and at what point. Further, the cost and unavailability of resources is expected to be a very big issue in implementing this approach. This is because enormous resources in terms of finances and manpower have to be acquired for the implementation of the approach (Aurelio GM 2007). Conclusion and Recommendation Based on the analysis of risk management and the risk of risk of management it has become very clear that risk is very eminent in the hospitality industry. This in particular has been accelerated by the change in the operating environment both internally and externally. As a recap, issues such as health and security are major sources of concern to the industry. However, more worrying trend is the process of managing these risks and the risks associated in managing them. First and foremost while ensuring that these risks are managed, individual rights may be infringed. Second, the cost incurred in managing them is enormous and may deny the business the chance to break-even and consequently collapse of the business operations. As part of the recommendation to improve on the process of managing risks in the hospitality industry, it is now advisable that all stakeholders starting with respective governments, business owners, employees and customers have to work as a team. This is particularly important that risk management strategies are not sabotaged. Further, this has to be reflected in the allocation of adequate resources in terms of finance and manpower to deal with the emerging issues. References Accor, 2010, Accor‘s strategic vision, viewed 26 May 2012 http://www.accor.com. Adler, PA and Adler, P 2004, Paradise Labourers: Hotel Work in the Global Economy, New York, Cornell University Press. Aurelio GM 2007, Yield Management and Perceptions of Fairness in the Hospitality Business, International Review of Economics, October, 2007 Beddoe, C 2004, Labour standards, social responsibility and tourism, Tourism Concern, London. Charles S 2006, The Top Ten Issues for 2007, Fort Quarter 2006 edition, viewed 26 May 2012 http://www.colliershospitalitys.com/innvestment. Erfurt-Cooper, P and Cooper, M 2009, Health and Wellness Tourism: Spas and Hotsprings, in Aspects of Tourism, No. 40, Channel View Publications, Bristol. European Commission, 2010, Supporting European tourism, Commission communication 2010, available at: http://ec.europa.eu. Foster, S 2010, Overview of the Asia-Pacific Spa Industry, in ITB Experts Forum Wellness 2010. Jim B 2007, Green Hospitality Development Gaining In Popularity, viewed 26 May 2012 http://www.hospitality-online.com/News/PR2007_4th/Oct07l The Globe and Mail Report on Business Magazine 2007, 50 Best Employers in Canada 2007. January 3, 2007 Tracey, JB and Hinkin T. R 2006, The costs of employee turnover: when the devil is in the detail, Cornell Hospitality Report, Vol. 6, No. 15, pp. 145-157. PKF 2006, Hospitality Research, Hospitality Labor - Big Cost, Big Issues, viewed 26 May 2012, http://www.workpermit.com/news/2006_01_05/us/global_hospitality_industry_needs_wo rkers. Read More