Facility and Risk Management for Hospitality Operations

This workbook focuses on risk management in the hospitality industry, specifically in the context of a major renovation. It discusses stakeholder groups affected by the renovation, identifies potential risks, and explores strategies to reduce the likelihood and impact of these risks. The exercises provide practical examples and encourage critical thinking. Suitable for students studying facility and risk management in hospitality operations.

MNG01222
Facility and Risk Management for Hospitality Operations
Workbook 3
Assessment 3
Session 3, 2018
www.scu.edu.au 1

Table of Contents
Introduction................................................................................3
Exercise 1:....................................................................................................................................................... 3
Exercise 2:....................................................................................................................................................... 4
Exercise 3:....................................................................................................................................................... 6
Exercise 4:....................................................................................................................................................... 8
Exercise 5:....................................................................................................................................................... 8
Exercise 6:....................................................................................................................................................... 9
Exercise 7:.................................................................................................................................................... 10
Exercise 8:.................................................................................................................................................... 11
The completed risk register............................................................13
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Introduction
The last two assessments and workbooks were all about the design and condition of
your chosen venue. This workbook and assessment task now focusses upon risk
management, especially within a hospitality context. Let’s start with a scenario:
The Wooly Mammoth café and bar in Coolangatta has decided to undertake a major renovation.
Cash flow is tight, and they have decided that they need to keep trading during the renovation, even
though they know it is less than ideal, especially as the café is a favourite of a young parents and babies
group that meets there regularly. Their scope of work includes:
 Stripping the current interior cladding off the walls and replacing with rough-hewn timber
lining
 Stripping the floor and replacing with 600 x 600 stick-down concrete look vinyl tiles
 Repainting the ceiling
 Replacing all lights
 Replacing all the fridges
 Replacing the Bane Marie
 Replacing the oven
 New window signage
 New tables
 New bar and benches across the front windows
Exercise 1:
Within your class33
group (for on-campus students, off-campus students should perhaps undertake this
exercise with family or friends) conduct a brainstorming session to identify at least six
stakeholder groups that would be affected by this renovation. Again remember that
there are no silly ideas in a brainstorming session!
Stakeholder group How they are affected by the renovation
Customers Customers will be affected during and after the renovation. During
the renovation process the customers will not be able to access their
conventional premises. After the renovation they can have better
ambiance and more facilitated environment.
Employees During the renovation procedure the work process of the employees
will be affected by the new changes in the premises and by the
imposed temporary operations to continue the regular sales. After
the renovation procedure employees will have more safe and hazard
free environment.
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Stakeholder group How they are affected by the renovation
Owner of the café Because of the renovation the owner needs to arrange additional
funding over regular cash inflow. Decision making approach will also
be expected from the owner. After the renovation the owner will
improve the service quality even further.
Supplier of new
materials
Because of the renovation procedure the suppliers will be benefitted
through the purchasing and delivering operation. After providing the
raw materials they would have better recognition in competitive
market.
Human resource
department
The human resource department will be affected because of the new
workforce planning requirement and monitoring. Beside, after
renovation they need to ensure the occupational health and safety
regulatory compliances.
Contractors and
Engineers
The contractors and engineers will be financial benefitted in
exchange with the services they will be provided for the renovation
of the cafe. After providing the service they would have better
recognition in competitive market.
Application to assessment task:
Now that you have identified stakeholder groups for the Wooly Mammoth scenario,
think about the venue that you will use for your third assessment task. Conduct a
similar exercise for that. You can use the group to help with this exercise.
www.scu.edu.au 4

Exercise 2:
Staying with our Wooly Mammoth scenario, it is now time to brainstorm about
potential risks. What could go wrong?
Risk # What impact could it have?
Financial Risk The funding process will be affected that can temporarily or
permanently breach contractual clause in financial terms with the
Suppliers and contractors.
Operational
discrepancy
The operational discrepancy can cause delay in renovation
procedure. Apart from that, it can increase the overall financial
expenditure significantly.
Workplace
hazards
Workplace hazard will make the authority of the Wooly Mammoth a
subject of active violation of WHS and OHS policies and compliances.
Besides, the workforce could be injured and even dead.
Delay in
material
supply
The delayed material supply can cause delay in renovation
procedure. Besides, it can increase the overall costing by extending
the total time requirement for renovation.
Natural
Disaster
Natural disaster can weaken the workforce while making the work
process extremely time and cost consuming. Apart from that, natural
disaster could also lead to permanent termination of executing
renovation.
Internal or
External
Fraud
The case of fraud or any kind of corruption can permanently damage
the ethical values of the business operation. It can also cause
financial loss. Corruption in renovation work can cause further
inconveniences after finishing the renovation project.
Application to assessment task:
Now that you have identified risks for the Wooly Mammoth scenario, think about the
venue that you will use for your third assessment task. Conduct a similar exercise for
that. You can use the group to help with this exercise.
www.scu.edu.au 5

Exercise 3:
You will now be familiar with the idea of stakeholder groups being affected to different
degrees and by different elements of a venue. This next exercise requires you to
nominate the particular Wooly Mammoth stakeholder group to which the risk most
applies.
Risk # Stakeholder/s Why?
Financial Risk Owner, customers Owner is the investor as well, therefore
financial failure will impact the revenue of the
company to the highest margin. Customer will
be effected after permanent damage on the
renovation process
Operational
discrepancy
Employees, owner,
customer
Employees will be affected because of their
involvement in the work premises. Delay will
decrease the employee engagement as well.
Workplace
hazards
Employees, Owners The hazard will be occurred with the employee
while making the owner and organisational
authority an accusable subject.
Delay in
material
supply
Owners, Suppliers The delay will cost additional expense from
owner while decreasing the reputation of
suppliers to the owner.
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Risk # Stakeholder/s Why?
Natural
Disaster
Employees, Owners,
Suppliers, Contractors
Most of the stakeholder will not able to
communicate with each other and the integrity
of the renovation process will be disrupted
completely.
Internal or
External Fraud
Owners, Suppliers,
Contractors and
engineers
Any stakeholder who will commit any corrupt
act, will decline the personal and professional
reputation while making the future
development of the process unsafe.
Application to assessment task:
Now that you have identified how each risk will impact each stakeholder group for the
Wooly Mammoth scenario, think about the venue that you will use for your third
assessment task. Conduct a similar exercise for that. You can use the group to help with
this exercise.
www.scu.edu.au 7

Exercise 4:
OK, so now we know what the renovation entails, who the stakeholders are, what
some of the risks are, and how each stakeholder group will be affected by each risk.
Another question we need to examine is: how likely is it that the risk will occur?
Imagine that we have a scale of 1 (extremely unlikely) to 5 (almost certain). For each
risk, assign a number.
Risk # Short description Likelihood
(1 = unlikely, 5 = almost
certain)
1. Financial
Risk
The financial plan can be
failed or lack of funding
can occur
2
2. Operational
discrepancy
Poor communication and
mutual understanding can
reduce the efficiency of the
process
3
3. Workplace
hazards
Stakeholders can be
injured from various
physical or chemical
hazards
4
4. Delay in
material
supply
Because of the poor
communication and sense
of responsibility the
delivery system can be
failed
2
5. Natural
Disaster
High rainfall, earthquake
and other natural
catastrophes
1
6. Internal or
External Fraud
Faulding the product
quality and value
transaction
1
Exercise 5:
The next question we need to examine is: If the risk eventuates/occurs, what will be its
impact? Imagine that we have a scale of 1 (negligible impact) to 5 (catastrophic/death).
For each risk, assign a number. Then, in the right hand column, assign a risk rating
derived from multiplying the likelihood and impact columns.
www.scu.edu.au 8

Risk # Short description Likelihood
(1 = unlikely, 5 =
almost certain)
Impact
(1 = negligible, 5 =
catastrophic/death)
Risk rating
(multiply Likelihood
X Impact)
1. Financial
Risk
The financial plan can be
failed or lack of funding
can occur
2 5 10
2.
Operational
discrepancy
Poor communication and
mutual understanding can
reduce the efficiency of the
process
3 2 6
3.
Workplace
hazards
Stakeholders can be
injured from various
physical or chemical
hazards
4 2 8
4. Delay in
material
supply
Because of the poor
communication and sense
of responsibility the
delivery system can be
failed
2 2 4
5. Natural
Disaster
High rainfall, earthquake
and other natural
catastrophes
1 3 3
6. Internal
or External
Fraud
Faulding the product
quality and value
transaction
1 2 2
Application to assessment task:
So, now you have conducted a very basic risk analysis for the Wooly Mammoth café &
bar. It is now time to think about the venue you will use for your third assessment task.
Conduct a similar exercise for that venue.
But wait! We haven’t finished. There are a couple of other crucially important questions
to consider. Firstly, what can we do to prevent a risk from occurring – in other words
reduce the likelihood rating? And secondly, how can we minimise its impact if it does
occur – in other words, reduce its impact rating. By adjusting one or both of these, we
can reduce the overall risk rating for each risk.
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Exercise 6:
For each risk, think about a way that the likelihood of the risk occurring could be
reduced.
Risk # New rating
1 Effective communication while developing the budget and
arrangement enough funding can reduce the risk of Financial crisis
1
2 Workforce should be trained and informed properly regarding how to
avoid any hazardous situation.
2
3 Ensuring regular communication and firming the purpose of renovation
from stakeholder’s viewpoint
3
4 Ensuring the quality of logistics supply and amending the delivery terms
and conditions
1
5 Taking update of the weather forecast 1
6 Declaration of consequences of fraud and developing ethical values 0
Application to assessment task:
Once again, now undertake the same process for the risks you have identified in the
venue you will use for your third assessment task.
Exercise 7:
For each risk, think about a way that the impact of the risk, should it occur, could be
reduced.
Risk # New rating
1 Arrange a backup financial plan through involving additional
investors
4
2 Appropriate hazard reporting system and facilitation can be arranged for the
premise
1
3 In every operational plan the alternative of supplementary method can be plan to
handle any occasional discrepancy.
1
4 Additional materials can be arranged as back up stock for utilisation in any
delayed supply
1
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Risk # New rating
5 Alternative Pause and play project execution plan can be developed in order to
provisioning flexible approach in any natural disaster
2
6 Proper legal support and compliances of government regulation with legitimate
documentation
0
Application to assessment task:
Once again, now undertake the same process for the risks you have identified in the
venue you will use for your third assessment task.
Exercise 8:
Now that you have developed strategies to reduce the likelihood or impact (or both) for
each risk, it is time to review your initial risk analysis and assign new values
Risk # Short description Likelihood
(1 = unlikely, 5 =
almost certain)
Impact
(1 = negligible, 5 =
catastrophic/death)
Risk rating
(multiply Likelihood X
Impact)
Old New Old New Old New
1. Financial
Risk
The financial plan can be
failed or lack of funding
can occur
2 1 5 4 10 4
2.
Operational
discrepancy
Poor communication and
mutual understanding can
reduce the efficiency of the
process
3 2 2 1 6 2
3.
Workplace
hazards
Stakeholders can be
injured from various
physical or chemical
hazards
4 3 2 1 8 3
4. Delay in
material
supply
Because of the poor
communication and sense
of responsibility the
delivery system can be
failed
2 1 2 1 4 1
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Risk # Short description Likelihood
(1 = unlikely, 5 =
almost certain)
Impact
(1 = negligible, 5 =
catastrophic/death)
Risk rating
(multiply Likelihood X
Impact)
Old New Old New Old New
5. Natural
Disaster
High rainfall, earthquake
and other natural
catastrophes
1 1 3 2 3 2
6. Internal
or External
Fraud
Faulding the product
quality and value
transaction
1 0 2 0 2 0
Undertaking such a review allows you to easily see how the plans you make can address
risk associated with your venue. This method of developing a ‘risk register’ is
universally applicable: while it is appropriate for a hospitality enterprise, so too is it
useful across all types of situations.
But wait! There is still something missing, actually two things. The first is who will be
responsible for maintaining oversight over each risk. The second is the way in which
this document will be used.
Assigning a risk manager
It is important that someone maintains watch over the conditions that might enable
each risk to materialise. So an additional column is required: manager. By assigning
someone to be responsible, we hold them accountable for keeping an eye out for the
risk. Think about you’re the risks in the venue you will use for your third assessment
task. Among the venue staff, who will be responsible for each risk?
A living document
Too often, risk analyses are done once and then shelved or filed, never to be viewed
again until something bad happens. Rather than being a silent or dead document, a
meaningful risk register should be a ‘living document’ that is regularly revisited to
assess if the risk rating for each identified risk remains valid, or needs to be adjusted up
or down. Secondly, are there new risks that have been identified through visual
inspection, desktop audits, or near misses? In this way, our living document is amended
and added to as time passes.
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www.scu.edu.au 13

The completed risk register
Risk # Short description Likelihood
(1 = unlikely, 5 =
almost certain)
Impact
(1 = negligible, 5 =
catastrophic/death)
Risk rating
(multiply Likelihood X
Impact)
Responsible staff
member
Last review
date
Next
review due
Old New Old New Old New
1. Financial
Risk
The financial plan can be
failed or lack of funding
can occur
2 1 5 4 10 4 Accounts manager 02/02/19 10/03/19
2.
Operational
discrepancy
Poor communication and
mutual understanding can
reduce the efficiency of the
process
3 2 2 1 6 2 Operational Manager 05/02/19 15/03/19
3.
Workplace
hazards
Stakeholders can be injured
from various physical or
chemical hazards
4 3 2 1 8 3 Facility Manger 07/02/19 12/03/19
4. Delay in
material
supply
Because of the poor
communication and sense
of responsibility the
delivery system can be
failed
2 1 2 1 4 1 Logistics and
procurement manager
13/02/19 19/03/19
5. Natural
Disaster
High rainfall, earthquake
and other natural
catastrophes
1 1 3 2 3 2 Facility and
administration
18/02/19 20/03/19
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Risk # Short description Likelihood
(1 = unlikely, 5 =
almost certain)
Impact
(1 = negligible, 5 =
catastrophic/death)
Risk rating
(multiply Likelihood X
Impact)
Responsible staff
member
Last review
date
Next
review due
Old New Old New Old New
6. Internal
or External
Fraud
Faulding the product
quality and value
transaction
1 0 2 0 2 0 Human Resource
Executive
16/02/19 25/03/19
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