• Sharebar
Risk Management
Thursday, May 1, 2008
Reputation travels well

The hospitality industry is increasingly being exposed to a number of new risks which fall out of the ambit of the traditional risk pool.

The ‘traditional’ types of risks, such as high energy costs, threats of power failures and non-delivery by suppliers, all have a direct impact on customer service, food and beverage operations and safety. But hotel owners and managers also need to re-evaluate their broader risk management strategies.
Some of these include risks related to mixed-use construction, medical spas (spas within hotels that offer botox, laser resurfacing, for example) and privacy/cyber risks dealing with credit card data and personal information held on hotel key cards. Product liability risks stemming from the sales of branded products, such as bedding and spa items, are also considered to be growing exposures.
At the moment, the threat of pandemic to the hospitality industry is top of mind for most risk managers, even though experts are uncertain as to when or if a pandemic will actually occur. But if a pandemic does strike, it will seriously affect the hospitality industry more than others, as this market clearly relies on travellers, either on holiday or on business.
However, changes in the insurance market’s perception of risk in recent years mean that, outside the life assurance and sickness markets, there is often very limited or no protection against many of the risks that come with a pandemic. Traditionally, cover for loss of business is related to a material or tangible event, such as fire. The illness or absence of staff usually falls outside the ambit of this type of insurance – which leaves business continuity management as the first and only line of defence.
Fortunately there are alternative risk financing or mitigation solutions that can be utilised. Examples include accessing capital markets, using captive solutions and performing pandemic assessments, which involves an operations/risk transfer audit, impact quantification and mitigation strategy assessment.
Aside from pandemics, additional concerns for hospitality risk managers are: property risks, reputation risk/brand management, terrorism and political risk.
Evaluating the risks faced by the hospitality industry are particularly relevant as South Africa gears up with its preparations for the 2010 Soccer World Cup.
 

Copyright © Insurance Times and Investments® Vol:21.4 1st May, 2008
487 views, page last viewed on November 30, 2019