Risk Assessment in Hospitality Management

This study focuses on the risk assessment process in hospitality management, specifically in the context of a hotel project. It discusses the risks facing the project, such as economy risk, consumer interest risk, longevity risk, legal risk, and management risk. The study also explores various methods for risk identification and analyzes the probability and impact of each risk on project goals. Finally, it provides a risk action plan to mitigate potential risks.

Risk Assessment

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
(a) Identify the risk facing by the project and what methods could use for identification along
with justification.........................................................................................................................1
(b) Analysing every risk giving key indication about probability/likelihood as well as
impacts/consequences of such risk on project’ goals:.................................................................4
(c) Each risk onto a risk matrix which indicates the risk appetite of the project owners...........5
(d) Produce a risk action plan....................................................................................................7
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Risk Assessment implies to structured set of processes mainly includes effectively
recognising, critically evaluating and optimising all the all the potential and existing risks to an
acceptable manner. Vulnerabilities or risks from various sources that involve legal obligations,
policy mistakes, natural catastrophes and financial instability are established. It exists in the
corporation when investor establishes and tries to identify prospective investment deficit This is
crucial for any organization to handle risk properly as well as to take appropriate decisions for
attracting more investors for further investment (Handfield, Jeong and Choi, 2019). This study is
centred on project of Yawn sing hotel, UK. The key target of this hotel project, which has been
shuttered by critics, was reopened. This study contains and justifies the option of various risk
styles in hospitality management. Set out how profitability can be influenced and how costs and
benefit are measured. Further, the study covers a comprehensive risk index at end of this project
that provides risk appetite for stakeholders and draw up effective risk action plan.
MAIN BODY
(a) Identify the risk facing by the project and what methods could use for identification along
with justification
Risk is very often common to all kinds of organizations and must be properly managed
such that risk factor is reduced. There are some key risks involved in Yang Sing project that is
apparent and that must be adequately assessed in attempt to efficiently handle the venture. This
project here is exposed to the following risks-
 Economy risk- As, some considerations, including political, socioeconomic, legal and
technical variables, are involved throughout the economy which influence the
operations of companies of any kind. These are exacerbated by various economic
transitions in nations which have to be efficiently addressed. Newer developments can
emerge from the requirements for an analysis for Yang Sing Oriental project, in
variables available such as the organization of technical factors. This may be threatened
by such variables, such as policy and law, requiring an effective risk analysis (Hong,
Lee and Zhang. 2018).
 Consumer interest risk- This kind of risk is quite significant for the business to be
measured in the modern global economy in terms of the preferences and attitudes of
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customers and hospitality industry. The danger in the consumption demands for Yang
sing venture will rapidly shift and the corporation, which has a detrimental effect on the
sector, cannot meet this. For project, these may be opportunities because they can
analyse/evaluate and offer services to the potential customer demand.
 Longevity risk- There is a possibility of lacking of experience, expertise and also well
skilled employees in hospitality field as they interact directly with client. This is the
biggest challenge many hoteliers and restaurants had faced. This is project threat,
because as problem with the supply of customer support would arise. In order to turn
this threat into incentives for project, they should include the best preparation and
diverse development programs to boost the efficiency of hotel and customers' workers
(Khalifa and Ali, 2017).
 Legal risk- This is massive risk variable that must be carefully managed by each
organization to ensure its functional performance is smoother and efficient. In order that
the project can resolve this risk, such risk needs to be adequately defined This risk easily
shifts the laws and the compliance in economy as a result of threats. In order to address
potential challenges, they should recognize opportunities for project, like
implementation and the proper application of all existing rules and regulations.
 Management risk- They serve a crucial role in every hospitality industry and change
their desire for the project as major danger. This is a hazard because the corporation's
electricity is major issue. This will create benefits for project, as the atmosphere could
be pleasant and innovative practices and guidelines could be introduced to attract
tourists.
For the effective risk assessment, management need certain effective kind of methods or
technique for quicker risk identification as well as to support risk optimisation that are described
here:
 SWOT analysis: This risk identification approach identifies both positive side
of risks and adverse effects of risks in order to recognize corporation strengths, weakness
factors, opportunities and threats This is employed for determining the company 's
strategic threat. This methodology evaluates the Yawn Sing Hotel Initiative's advanced
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technologies, software and customer experience facilities. This identifies the technical
risks in the project that impacts the corporation 's growth. Weaknesses and threats are
assessed to transform them into resources and their performance is reviewed and
expanded in this strengths and opportunity. It's being used to take policy decisions in
connection with its micro and macro environmental settings (Alfonso-de, Silvero and
Aguilera, 2020).
 Assumption analysis: It identified a method that recognizes several presumptions and
distinguishes the lot of initiatives that contribute to risk evaluation. This demonstrates
that the project's lack of accuracy, ambiguity and inconsistency which affect the project
target This is the study to reduce the likelihood of assumptions whenever a particular
object operations are underway.
 Brainstorming: This is people's innovative thought to enable them to react to addressing
a specific issue without a turmoil of retribution that inspire individuals to come up with
new concepts and proposals. It proposes solutions for a particular project to handle time
threat. At the beginning of respective Yawn Sing Hotel ventures, a brainstorming
workshop with team will be conducted with the aim of determining risk assessment. A
large number of threats need to be analyzed and the full analysis solved in project. This
is group study for participants' involvement in the project.
 Documentation reviews: Data to develop the schedule, project documentation to assess
risk factors or to clarify project goals need to be determined. The threat of inconsistency,
uncertainty and insufficient project schedule is assessed. These indicate the danger
of project Yawn Sing Hotel. Most other records, like project declaration, schedules and
business reports must be updated for this (Tsai, 2018).
Justification: According to the aforementioned review, investors faced several issues
before the beginning of the Yawn Sing's venture. Such challenges, market risk is risk to end
users and much more directly affect company. If a hotel is working on new technologies, and
investors cannot develop new technologies it will affect and become crucial risk for business
operations. As the business dynamics shift, this will affect the trustee & expectations of the
customer and thus establish consumer interest threat.
For this require to apply new innovation in hotel to attract customers. Legal risk is most
important risk that face by the investor when set up hotel as per the rules and regulations but
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government change their policies of hospitality sector so it impacts on this project negatively.
Moreover, poor management is reflecting on the products & services of business. As a result,
consumer do not take interest and impact on the sales volume. Thus, it is considering as
management risk. New developments in the hotel need to be introduced to draw clients. Legal
threat is the biggest risk facing the entrepreneur when opening a hotel, according to laws and
legislation but government actions modify their hospitality industry regulations, which have a
detrimental impact on project. In addition, bad administration focuses on company goods and
services. Consumers are also not involved in and influence sales volumes. It is therefore regarded
as risk for administration (DeFranco and Morosan, 2017).
(b) Analysing every risk giving key indication about probability/likelihood as well as
impacts/consequences of such risk on project’ goals:
The major aim of respective project here is to open and promote hotel with luxury and
innovative facilities in UK. To do this, all recognised risk needs to be assessed correctly. In this
regard different risks are identified that specifically affect project goals, as discussed below:
Management risk: The ineffective hotel management has a substantial effect on the aims
and targets, as the possibility of risk will be high as many customers are visited. These risk
affect sales of the corporation and investors/shareholders holding shares in company.
Technological risk: When hotel seeks to increase its business operations, it decides to
employ a new approach in hotel business to attract more customers, but to adversely affect the
company through changes in regulatory oversight. This threat is unlikely as the investor
developed new modern technologies for visitor at the beginning of hotel business, but it has a
detrimental effect on the overall objectivity (Nguyen, Imamura and Iuchi, 2017).
Legal risk: This risk is linked to the deficit in economic and infrastructural resources that
investors could even face because of scarcity of awareness incomprehension and disparities. The
threat is of moderate probability and has a reduced effect on the corporate goal. Even if investors
retrieve all of relevant information and organise all monetary funds within a given time frame
before starting the project.
Longevity risk: The likelihood of such risk is limited because investors do not employ
employees with insufficient experience in profession. However, this risk has a higher impact
on project goal because staff personnel are stakeholders who handle business efficiently. It is
therefore necessary to hire qualified personnel who manage various activities appropriately.
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Economy risk: The likelihood of occurrence of threat is lesser, because investors are
willing to setup hotel venture in UK, and investors are well aware of all reforms. In the event of
any financial risk occurring in the project, this affects the target margin because objective
entrepreneur defines all business models.
Consumer interest risk: Consumers often modify their viewpoint about the hotel with
such risk's medium likelihood. It affects the targets, primarily premised on consumer visitation,
directly through the marketing of hotel. In order for it to be able to entice visitors and boost sales
revenue various creative policies are required (Ghadban, Shames and Abou Mayaleh, 2017).
Risk score: Every risk related to respective project of new hotel are rated here, by the consulting
firm as described below:
Risks
Management Risk 6
Technological risk 7
Longevity risk 9
Economy risk 8
Legal risk 5
(c) Each risk onto a risk matrix which indicates the risk appetite of the project owners
A project's risk matrix is matrix which the corporation uses to evaluate risk to
demonstrate the risk threshold that focuses on the likelihood segment against the intensity of the
impact categories. This is a straightforward framework for enhancing risk exposure and
managing decision-making efficiently.
Risks Negligible Minor Moderate Significant Severe
Management Risk Very likely Medium Medium Medium High High High
Technological risk Likely Low Low Medium Medium Medium High High
Longevity risk Possible Low Low Medium Medium Medium High Medium High
Economy risk Unlikely Low Low Medium Low Medium Medium Medium High
Legal risk Very Unlikely Low Low Low Medium Medium Medium
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Based on the risk matrix this is evaluated that management risk’s impact with respect to
project is lower-medium in negligible manner, the minor-medium, at the moderate scale
recognise as the mid-high as well as significant. Although likelihood of this project is quite
likely.
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(d) Produce a risk action plan
Risk Action plan: This plan in context of a project is collection of tasks which
corporations seek to support future risks to be resolved and aim to minimize the possibility that
these risks occur and minimize those consequences when they arise. This strategy ensures the
correct steps are undertaken by the organization in the defined timeframe. Project’s risk-action
plan formed created by Yawn sing project to handle potential risks and the implications on the
project targets.
Item 1
Risk Economy risk
Summary (Recommended
response & impact)
This kind of risk has moderate/medium scale threat for Yawn
Sing Hotel project as well as it is advisable for managers to
effectively follow latest and relevant economics policies.
Further this is significant here to assess the effects of all the
changes occurred due to latest economic events.
Proposed actions  Most relevant action herein this scenario is to effectively
gather all key relevant information and facts related to
economics policies which can affect entire project as well
as formulate strategies.
 Make a checklist and form mechanism to minimise
economic risk effect.
 Form a skilled team to adhere and monitor economic
changes.
Resource requirements  Skilled and expert employee personnel.
 Effectively deal with risk consequences and dealing with
relevant authorities.
Responsibilities The primary responsibility here of owner and investors is to keep
update themselves with latest relevant economic rules, policies,
reforms and legislations.
Timing The entire risk managing process with respect to this risk would
take around 5 months.
Reporting/Monitoring Continuous updating the check list and monitor relevant
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activities to report project managers.
Item 1
Risk Legal risk
Summary (Recommended
response & impact)
Whenever project ignore and concerned people or activities are
not aligning with political agenda, political relations and
operations in effective manner as this will not affect in adverse
way. Therefore, this is advisable here that project manager
should follow all applicable laws, legislations and regulations for
hospitality industry.
Proposed actions  Formulate a comprehensive compliance procedure to
ensure that all the regulations and laws.
 Manage all the legal formalities compliance in efficient
manner.
 Form a new special task unit to govern the compliance
and actions for legal formalities.
Resource requirements This risk’s management requires action plan for handling dis-
compliance with as well as to take appropriate decisions for legal
framework.
Responsibilities  To formulate effective action plan for mitigating legal
risks.
 Make legal documentation within relevant time-frame.
Timing Around 2.5 months
Reporting/Monitoring Reporting to compliance managers with completed check-list on
timely manner.
Item 1
Risk Technological risk
Summary (Suggested
response & key impact)
Emergence of all the key technological advances at the
beginning of hotel is crucial but regular updating in technologies
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can affect entire project objectives. Thus, escalation funds for
upgrading technologies in business is most advisable here.
Proposed actions  Creation of emergency fund for technological advances.
 Through research about procedures to adapt new
technologies.
 Recruiting skilled and experienced staff personnel to deal
with technological changes as well as to conduct training
sessions for staff members.
Resource requirements Selection of skilled staff and technicians who have detailed
knowledge and awareness of new technologies and organising
proper training sessions to staff-personnel accordingly.
Responsibilities  Make an organised team for IT surveys and research with
recruited skilled staff.
 Incorporating latest technological changes in project.
Timing 5.5 months
Reporting/Monitoring For this kind of risk, initially reporting is to made to IT managers
which have capabilities to handle IT challenges. Further, survey
reports relevant for technological advances should also be made.
Item 1
Risk Management risk
Summary (Suggested
response & key impact)
This kind of risk has impact on hotel operations directly as
inefficiency in handling managerial tasks can lead to adverse
situation for survival of business. In hotel business, there are
massive range of personnel thus it is advisable for top managers
to make effective coordination and communication with all staff
(Sunariani, Maheswari and Pemayun, 2019).
Proposed actions  Form a proper management hierarchy for efficient
controlling over managerial tasks.
 Organize periodical management training sessions for
team leader and managers by experts.
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 Make and adopt formal and effective manner for
communication.
Resource Requirements  Recruit experienced personnel in this profession with
higher educational qualifications.
 Effective and comprehensive managerial strategies are
required to deal with managerial conflicts.
Responsibilities  Application and adoption of multiple techniques and
tactics of management in practical life.
 Communication control and resolving managerial
conflicts.
Timing 4 Months
Reporting/Monitoring To minimize this kind of risks, it's indeed crucial to collaborate
with a top executive and implement effective actions
within reasonable time.
Item 1
Risk Longevity risk
Summary (Recommended
response & impact)
If staff personnel are not qualified in the hotel management, this
can lead to negative adverse impact on longevity and being the
cause for that too. For this, requisite training is required in
accordance with the modifications that enable to perform various
operational tasks.
Proposed actions  Providing individuals with professional development
training and expert knowledge
 Hold career advancement sessions.
Resource requirements For this risk require resources of various leadership skills based
people who have ability to influence people to fulfil
organisational goals & objectives.
Responsibilities Implementation of proposed managerial strategies and actions
within stipulated time-frame.
Timing 4.5 months
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Reporting/Monitoring Reporting here is based on formed hierarchy structure as well as
key focus here is towards communication skills while making
reporting.
The concept of the risk management consists of creating models within body of following
theories wherein different theories are used like the:
 Financial theory: One such theory laid the established the ground for various issues that
misalignment involvement among stockholders and debt/bond holders owing to
allocation of profits.
 Agency theory: Agency theory: Such theory expands the corporation's commitment, that
also consists of estrangement of shareholdings control and encouragement for mangers.
In terms of risk grabbing as well as hedging, risk assessment theory and managers
influence are used for proper planning risks management in organisation (Toyosada,
Otani, Shimizu and Managi, 2017).
CONCLUSION
As per aforementioned report, it has been ascertained that in hotel project, risk
management framework help to analyzes, prioritizes and controls risks. This is an integrated
component of both excellent leadership and policymaking. This concept is used in both rational
and systematic ways to reduce failures and enhance opportunities. Recognize types of risks, such
as economic risks, legal risks and several others, for hotel projects. It is suggested that new hotel
project should be set up appropriately after an extensive assessment.
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REFERENCES
Books and Journals:
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review. Industrial Management & Data Systems.
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technology risk management (ITRM) to increase Egyptian hotels market
share. International Journal on Recent Trends in Business and Tourism (IJRTBT), 1(1),
pp.12-31.
Alfonso-de Silvero, M. and Aguilera, P.S., 2020. Fire risk assessment in hotels in San
Bernardino, Paraguay. Población y Desarrollo, 26(51), pp.26-36.
Tsai, C.H., 2018. Seismic risk assessment and design of tourism buildings using probability
analysis. International journal of emergency management, 14(1), pp.90-106.
DeFranco, A. and Morosan, C., 2017. Coping with the risk of internet connectivity in hotels:
Perspectives from American consumers traveling internationally. Tourism
Management, 61, pp.380-393.
Nguyen, D.N., Imamura, F. and Iuchi, K., 2017. Public-private collaboration for disaster risk
management: A case study of hotels in Matsushima, Japan. Tourism Management, 61,
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Ghadban, S., Shames, M. and Abou Mayaleh, H., 2017. Trash crisis and solid waste management
in Lebanon-Analyzing Hotels’ commitment and guests’ preferences. Journal of Tourism
Research & Hospitality, 6(3), p.1000169.
Toyosada, K., Otani, T., Shimizu, Y. and Managi, S., 2017. Water quality study on the hot and
cold water supply systems at Vietnamese Hotels. Water, 9(4), p.251.
Sunariani, N.N., Maheswari, A.I.A. and Pemayun, A.G.P., 2019. Grand investment of tourism
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budgeting. International research journal of management, IT and social sciences, 6(6),
pp.43-49.
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