Risks are part of any business, even though they vary from activity to activity. It is therefore important to identify the types of risks to manage them and avoid any future complications. As the newly hired risk consultant for the resort, I have to determine the kinds of risks the establishment is prone to and come up with ways of managing them to minimize any potential future outcomes. Taking into consideration that the resort falls under the hospitality industry, several types of high risks are involved. The highest risks include operational risks, security risks, market risks, and social risks.
Operational risk is the prospect of loss that occurs as a result of failed or inadequate policies, systems, or procedures. An example of this type of risk is guest behavior. Considering that guests are the primary source of income for any hospitality company, such as the resort, they also pose to be the biggest threat. In cases where internal controls are not put into place, damages to the property or any lawsuits from guests can lead to unimaginable impacts that eventually cause the establishments profitability and reputation to be negatively affected, both directly and indirectly.
Security risks refer to someone or something with the ability to endanger or make things difficult. For instance, data privacy, which can also be categorized under cyber security, is a significant risk and especially for a resort. In the hospitality industry, organizations focus more on preventing identity and data theft. Likewise, cyber security is a huge potential risk for the resort since it collects vast amounts of information from their guests for insurance purposes among other safety reasons. For this reason, they are a target for hackers and cyber criminals, given that the information they have could lead to personal information and payment details belonging to their guests being compromised. In a case where a security breach occurs, there would be significant consequences that would have to be faced. First, the resort would have to contact all guests who have ever visited them informing them of the security breach, which would be both costly and highly likely to destroy their reputation within the industry.
Market risks refer to an investors possibility of experiencing loss as a result of factors, which affect the financial markets overall performance. An example of this risk is employees going on a strike or being poached by fellow competitors due to a national incident such as a recession. During this period, employers can fire numerous employees knowing that it would be difficult to get jobs elsewhere. However, as the economy gets better, the staff members who were fired get high employment opportunities from other establishments within the industry. Market risks have detrimental consequences given the fact that other institutions can poach these employees, and although hiring new staff and training them are options, they come with additional costs.
Social risk refers to a likely loss of a particular social group or status due to the adoption of a service or product that makes an establishment or someone to appear foolish or trendy. For instance, hospitality companies have to be socially active to both retain and attract guests from anywhere. To do this, the establishment has to brand itself for people to know it as a trusted name within the market. In cases where guests notice or hear strong public oppositions against the establishment, adverse impacts can be faced leaving a tarnished name for the hotel within the industry and its associations.
In conclusion, as the newly hired risk consultant, I have identified operational risks, security risks, market risks, and social risks to be the highest potential risks of the resort since the establishment fall under the hospitality industry. As a consultant, I also assessed the risks and found their impact detrimental and could result from the resorts downfall of an effective risk management program is not implemented.
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