Risk Management in the Hotel Industry: Types of Risk, Business Continuity, and Innovative Mitigation Strategies

REPORT CA

Contents
INTRODUCTION...........................................................................................................................2
TASK...............................................................................................................................................2
1.Outlining the two risk models and theories relating to risk:...............................................2
2.Rule of tort relating to risk management along with examples:..........................................3
3.What is business continuity and why it is necessary using examples:................................4
4.Five types of risk relevant to the industry along with justification:....................................5
5.Innovative ways that helps in mitigating the above risk:....................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Risk management is a tool to manage risk within the organisation so that any disruption in
the operational activities can be mitigated. Risk differs from industry to industry and this report
covers the hotel industry and their associated risk they are facing in the changing world. This
report outlines about the types of risk an hotel is facing and explain some innovative ways
through which such risk can be reduced. Further in this report business continuity planning has
been outlines along with its salient features to business and explains to importance of such plan
to business in today changing environment and technology (Bhattacharyya and Jha, 2018).
TASK
1.Outlining the two risk models and theories relating to risk:
Risk related to business is broadly classified into various categories such as strategic risk,
compliance risk, operational risk, reputational risk and so on. From this risk the two risks have
been explained below: -
 Strategic Risk: -
Such risk arises when the entity does not perform their business activity according to
their business model or the plan they have made. When an organisation does not carry the
business according to their model then the strategy, they have made becomes less
effective over the period of time and they have to struggle a lot in achieving their goals
and objectives. One of the examples can be that Walmart strategically position itself as
low-cost provider in the market and reduce their price accordingly but it will create
strategic risk for them in order to survive their business (Chen, 2020).
 Compliance Risk: -
Such risk arises on those sectors where requirement of laws and regulation is higher and
very strict too. The example can be the wine industry which involves three tier system in
its distribution process in the US to sell wine to retailers. This system will restrict the
winegrowers to sell their goods in some states in retail outlets. However, such system of
distribution in not followed in all the other states in US and such risk arises the individual
requirement and needs are not fulfilled and it ultimately leads to failure of brand
(DePaula, 2018)

.
2.Rule of tort relating to risk management along with examples:
The tort may be defined as mental or physical harm to any person or group of people or
damage to physical or tangible property belong to any person. Such harm can be compensated by
the court of law with the help of grant of compensation to those parties who faces such harm. In
rule of tort the liability may arise due to negligence made by persons involved or failure at
international level where individual has the responsibility to act but they make failure on their
part (Kavanagh, 2021).
Risk management is the practice which involves various policies and procedures which are
incorporated to minimise or mitigate risk to acceptable level. The risk management process
various from industry to industry and business to business. Risk management practice can be
undertaken at any scale and any company, society, communities’ regions or even the government
can practice the same so that they can protect themselves from the unwanted risk they undertake.
Some of the risk management initiatives are easier as compare to others as they are required by
law and enforced by government agencies.
One of the best examples can be that in case of public transportation business the travel operator
needs to follow the guidelines provided by the government such as bus driver must carry the
driving license, the operator must have the license to carry out such travelling business, they
must have vehicle inspection certificate from the approved authority with respect to condition of
vehicle etc and if they don’t follow the same then their license will get suspended for the defined
period. Not only this they have to pay fine or imprisonment or both for their noncompliance.
Further there are also some concepts relating to risk such as real risk, perceived risk and inherent
risk that is broadly explained as under:
 Real Risk: It can be defined as the actual arithmetical probability of the occurrence of
incident and it is established through reviews come from the statistics and other relevant