Case Study: Analyzing Risk Management at Shangri-La Hotels & Resorts

This report provides a comprehensive analysis of risk management at Shangri-La Hotels & Resorts. It begins with a case study focusing on the risks faced by "Meals on Wheels", identifying revenue, legal, human resource, natural disaster, and cyber theft risks, and proposing mitigation strategies. The report then shifts to a broader assessment of Shangri-La's operations, examining its background, market position, and organizational processes for risk management. It highlights the importance of stakeholder involvement and explores various internal and external stakeholders and their roles in the risk management process. The report concludes with a discussion of the strategic risk management policies adopted by Shangri-La, and the challenges faced by the hotel chain in a competitive market. The document uses comparisons with competitors like Hilton Worldwide to showcase the risks and opportunities in the global hospitality market.

Running head: RISK MANAGEMENT
Risk Management at Shangri-La
Name of the student
Name of the university
Author Note:

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Assessment 1-Case study analysis:
Risks of Meals on Wheels
Risk
no
Risk
Category Description of the risks identified Impact of the risks
Probability
of the
occurrence
Impact
of
risks
Responsible
person
Strategies to mitigate the
risks
Risk
score
Time
Frame
(months)
1 Revenue
risks
Meals on Wheels did not deliver food
products to the customers in
appropriate ways. For example,
delivery personnel delivered food
products in bags and not in sealed
containers which increased scope of
food poisoning .Moreover, the
delivery boys did not contact the
patrons of the houses prior to arriving
to deliver the food products and left
the food outside the houses of the
patrons or consumers which further
escalated the chances of food
poisoning. The food poisoning owing
to irresponsible handling of the food
products by the delivery harmed the
consumers. The consumers were as a
result dissatisfied. This would lead to
Meals on Wheel lose customers which
would result in loss of revenue.
1. Fall in revenue
and ceding of
consumers.(short
term impact)
2. Losing investors,
and supply chains
due to dwindling
capacity to give
positive ROI.
(medium term)
3. Goodwill risk and
difficulty in
acquisition of new
customers (long
term loss)
3 3
Finance
department,
Marketing
department,
Risk
manager,
Engineer
1. The management of the
company should form
strict risk management
policies which would
comply with food safety
standards in Australia and
New Zealand and
consumer laws in
Australia
(Foodstandards.gov.au.
2020).
2. The management of the
company should form
policies which would
govern food packaging.
The food products should
be delivered in sealed
packages.
3. The management of the
company should adapt app
which would enable the
consumers place the
orders and track the
delivery personnel.
9 2
2 Legal
risks
The consumers who suffered owing to
delivery of low quality food products
delivered by Meals on Wheels would
lodge complaints against the firm. For
example, 87CB Application of Part of
Competition and Consumer Act 2010,
Australia mentions that consumers can
The Australian
Competiton &
Consumer
Commission would
take legal steps
against the firm. The
commission may
2 2 Management
1. The management of the
company should form
strict risk management
policies which would
encompass food safety in
compliant with the
consumer laws in
4 6

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take legal steps like approaching the
Australian Competiton & Consumer
Commission if they suffer losses
owing to deceptive conduct of the firm
(Legislation.gov.au, 2020). The
delivery personnel in the case study
delivered food products in
inappropriate ways to consumers like
not delivering the food products in
sealed packages. These inappropriate
methods of food delivery led to
poisoning of the food products which
led to illness of the consumers which
were largely senior consumers. Thus,
this misconduct and deceptive
business conduct of Meals on Wheels
made the consumers affected eligible
for lodging complaints with the
commission.
impose penal
charges on the
company which
would increase its
cost of operations.
Australia.
2. The management of the
company should form
policies which would
govern food packaging.
The food products should
be delivered in sealed
packages.
3. The management of the
company should adapt app
which would enable the
consumers place the
orders and track the
delivery personnel.

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3
Human
resource
risks
Meals on Wheels did not train the
employees to deliver the food products
on time.
The company did
not train the
employees and
hence had no say on
the standard of
delivery of food
products to
consumers.
3 2
Apex
management
and HR
department
1. Training of employees.
2. The consumers would
be asked to rate the
delivery agents. 6 1
4 Natural
disasters
Natural disasters results in loss of
resources, inventory and assets
Depends on the
seriousness and
intensity of natural
calamities
1 3
Government,
security
personnel
etc
Evacuation 3 6
5
Cyber
theft
risks
The hackers may hack the systems of
Meals on Wheels. They may gain
access to the confidential business
data of the company like consumer
data and financial data.
1. Losing of
confidential data like
consumer data and
financial data.
2. Consumers may
suffer further
financial losses due
to online theft of
money.
3. Consumers
suffering losses may
lodge complaints
2 3
Apex
management
and all the
departmental
heads
1. The management of the
firm should form strict
data usage policies in
compliance to the IT laws
prevalent in Australia.
2. The management
should form strict data
usage policies which
would embrace all the
employees, departments
and customers.
3. All the systems would
6 2

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against the
company.
4. The Government
of Australia would
take stern steps like
imposing of penal
charges.
5. The publishing of
the information
about the
government
penalizing the
company in the
media would
damage the goodwill
of the company.
require the employees to
login using individual
passwords.
Consequence
s
Catastrophi
c
Tolerabl
e High Very high Very high Very high
Major Low
Tolerabl
e High (Political risks) Very high
Very high(Data theft
risks)
Moderate Low Low Tolerable (Political risks) High High
Minor Very low Low Tolerable Tolerable High
Insignifican
t
Very low Very low Low Tolerable Tolerable

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Rare Unlikely Possible Likely Almost certain
Likelihood

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Assessment 2. Project:
Introduction:
The operations of the leading hotel chains are subject to immense level of market influences. Favourable changes in the
macroeconomic conditions results in business opportunities like market expansions. Hostile or unfavourable changes in the external
environmental factors like emergence of new competitors result in market risks. The international hotel chains have to deal with the
market risks in order to mitigate them or at least reduce their intensity. This enables the hotel chains to boost their profits by lowering
the impacts of the risks so as to sustain in the market. The international chains of hotels in order to mitigate risks form risk
management strategies which they adopt to deal with the market risks. The aim of the report would assessing the risk faced by an
international hotel chain and the strategies which the chain can adopt to manage the risks. The international hotel organisation which
would form the crux of the study would be Shangri-La (Shangri-la.com. 2020). The report would lead to recognition of the strategies
which Shangri-La can take to mitigate or at least reduce the risks. The researcher in order to bring out that risks which the Chinese
hotel chain faces in the host markets like Australia, would compare its aspects like share prices against its competitors like the Hilton
Worldwide Inc.
Part 1. Background of Shangri-La:
Shangri-La Hotels and Resorts is a global hotel chain based in Hong Kong. The hotel chain is one of the largest chain of
premium hotels in the hospitality industry with its presence in over twenty countries in the world. The chain of hotels operates under

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the leadership of Mr. Lim Beng Chee, its present CEO. Mr Bonke Oliver operates as the president and the chief operating officer of
the hotel group. The product line of the hotel consists of hotels and resorts, restaurants and bars, wedding venues and corporate event
venues. The main markets in which the hotel operates are Mainland China, Hong Kong, India, Indonesia, Japan, Malaysia, Maldives,
Mongolia, Myanmar, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Middle East, France, Turkey, the United Kingdom,
Canada, Oceania, Fiji, Australia and Mauritius (Shangri-la.com. 2020). Shangri-La owns a number of properties in these markets
which provides premium accommodation services to its target segments of customers. The main target segment of customers which
the hotel chain targets consists of upper class customers who are able to afford the premium accommodation services. The company
also targets big corporate companies which are able to afford its expensive venues to hold their corporate meetings. The brands which
Shangri-La Hotels and Resort owns include Shangri-La Hotels, Shangri-La Resorts, Traders Hotels, Kerry Hotels and Hotel Jen. The
hotel chain is a listed company listed on several top stock exchanges like the Stock Exchange of Hong Kong Limited and the
Singapore Exchange. The main competitors of Shangri-La are international chains of hotels like Four Seasons Hotels and Resorts and
Hilton Group.
Findings from the discussion of the background of Shangri-La:
The analysis of the background of international hotel chain brings into the light several aspects about its operations which
could lead to risks. First, the hotel chain is located in more than ten markets like the UK besides its home country, Hong Kong. This
means that country is subject to risks like political risks and legal risks owing to hostile market conditions in these markets.
Secondly, the chain of hotel suffers from several defects in its marketing strategies which would culminate into revenue risks. The

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properties owned by the chain of hotel is largely restricted to Hong Kong and China. The chain have very few properties in other
profitable hospitality markets like India and UK. Moreover, it has no direct presence in booming international hospitality markets like
the United States. The major competitors of Shangri-La like Hilton Group on the other hand have strong presence in both developed
markets like the US and emerging markets like India (Hilton.com. 2020). These competitors have stronger competitive advantages in
the market compared to Shangri-La and can poach international customers from it. This situation creates revenue risks for Shangri-
La. In fact, one can point out that the share prices of Shangri-La are lower compared to its competitors like Hilton Worldwide
Holdings Inc. (Bloomberg.com. 2020). This means that the company faces capital generation risks in the capital market. The third
aspect which comes to the light upon analysis of background of Shangri-La is that the hotel chain is liable to face revenue risks from
local chains of the hotels in different markets as well. Several important markets like Europe are facing economic crises. This means
that a large numbers of consumers in these markets are not ready to spend huge amount money to avail expensive accommodations
like Shangri-La. These customers prefer more cost effective hotels which means that Shangri-La is losing its customers to local chains
of hotels which provide superior accommodation services at lower rates (Rahimi and Kozak 2017). This again creates revenue risks
for Shangri-La. Thus, it transpires from the discussion that Shangri-La faces several risks while operating in the market and should
take steps to mitigate them.

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Figure 1. Graph comparing between share prices of Shangri-La and Hilton Worldwide
(Source: Bloomberg.com. 2020)

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Part 2. Contexts of risk:
Part 2.1. Organisational processes, procedures and requirements for undertaking risk management in accordance with
current risks management standards:
The management of Shangri-La in order to manage the market risks has very strong risk management policies in place. The
‘Putting people first’ page on the official website of the Shangri-La mentions that global chain of hotel holds risk management in
high importance. For example, the hotel chain has a strict health and safety standards which ensures reduction of work, health and
safety risks to a great extent. The hotel chain also has a strong ‘zero tolerance’ policy to deal with infringement of risks by
stakeholders like staff members. The properties of owned by the hotel chain are certified under OHSA 18001 (Shangri-la.com. 2020).
Part 2.2. Internal and external stakeholders involved:
Position Stakeholders Role of the stakeholders Interests of stakeholders in the risk
management of
Inviting and communicating
risk management processes
Internal
Management of the
Shangri-La based in Hong
Kong and divisional
management boards
operating in the different
nations
Make strategic decisions like
marketing strategies and
risk management strategies.
The divisional management
bodies implement decisions
in the host market levels
Profits, stronger goodwill and
enhancement in the market position
of Shangri-La Meetings, emails
Internal
Management of the
subsidiaries companies
Make decisions on the
subsidiaries under their
command as per the
decisions made by the top
management
Profits, stronger goodwill and
enhancement in the market position
of Shangri-La Meetings, emails

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Internal Employees
1. Executes the risk
management strategies
made by the apex
management.
2. Communicates with
external stakeholders like
customers and obtain
bodies of data from them
regarding innovations in
management of wastes.
3. Communicates the
feedback gained from
external stakeholders to
managers regarding risk
management.
Increment in the salaries, performance
appraisal, promotions, work-life-
balance
Meetings, emails
External
Government of the
countries like UK at Union
level
1. Enters into bilateral
agreements with other
countries which allows
companies get access to
advanced waste
management techniques.
2. Makes intellectual
property right laws which
enable companies protect
their innovations from
infringements.
3. Supports innovation in
sustainable manufacturing
of products by providing
facilities like tax rebates and
awards.
Higher tax generation, creation of
employment opportunities
Holding meetings and
sending letters on the
leadheads of the company
External Government of Hong Kong 1. Enters into bilateral
agreements with other
Higher tax generation, creation of
employment opportunities Holding meetings and
sending letters on the