Manage Risk: Midlands Hotel - Case Study Example

Manage Risk: Midlands Hotel Name Institution Name Course Name and Code Date Table of Contents Introduction 2 PART 1: PLAN FOR MIDLANDS HOTEL RISK MANAGEMENT 3 Overview Midlands Hotel Risk Management Approach 3 The Scope for Risk Management Process 3 Factors Affecting Organization’s Approach to Risk 4 Objectives for Different Areas at Midlands Hotel 5 The Internal and External Stakeholder Groups and Issues 6 The Stakeholder Groups Communication Plan 7 Level and Type of Support and Obtaining Support 7 PART 2: IDENTIFY THE RISKS 7 SWOT Diagram: Risks that Face the Organization 7 Analysis of Risks and Background Information/Further Information 8 Tools and Techniques Used in Identification of Risks 10 PART 3: ANALYZE THE RISKS 12 Likelihood of the risks occurring 12 Impact or Consequence if risks occur 13 The risks on a risk matrix 14 Evaluate and prioritize risks for treatment 16 PART 4: SELECT AND IMPLEMENT TREATMENTS: 17 Appropriate Action for Treating the Top Three Identified Risks 17 Action plan for implementing identified risk treatments 17 Communicating the action plan to relevant parties 18 Documentation and Filling of the Documents 19 Steps in implementing strategic risks management plan 19 Monitoring the action plan 19 Evaluation of the risk management action plan 20 Reference 20 Introduction Midlands Hotel is a hotel located in Canberra region. Midlands Hotel offers numerous product and services including accommodation, conference facilities, food, beverages, and entertainment activities. Even though it is a small hotel, Midlands Hotel attracts customer from different regions across the world in addition to the local populations. To fulfill the objectives and aims, Midlands Hotel utilizes different resources and have to upload legislative requirements in place. The aim of the paper is planning, conducting and evaluating a risk management program for Midlands Hotel. PART 1: PLAN FOR MIDLANDS HOTEL RISK MANAGEMENT Overview Midlands Hotel Risk Management Approach Midlands Hotel does not have clear current risk management policies, procedures, and processes. Organizational culture is integral in preventing risks and also the experiences and skills of the employees. For example, the employees understand the importance of personal safety and health consideration, and the employees achieve this requirement through appreciating safety requirements. The basics components of Midlands Hotel imaginary plan is providing quality food, informing the customers of risks and effective utilization of equipment and tools, safety and awareness when it comes to using the swimming pool, and seeking assistance when needed. The strength of the framework is understanding and appreciating risks and some mitigation processes, but the lack of evaluation and provision of countermeasures in instances of accidents is lacking. Thus, an effective risk management framework is required to address the problem. The Scope for Risk Management Process The scope for the current risk management process targets different sectors with the hotel. Some of the focus would be in the kitchen, the dining areas, the conference areas, swimming pool and outdoor areas, administrative requirements such as accounting and procurement, and overall management of the hotel (Boella & Goss-Turner, 2013). The decision to incorporate the identified scope is to ensure the different facets that form the hotel are integrated into preventing and mitigating risks. The scope also ensures the different entities and stakeholders are informed of their roles and responsibilities in averting risks (Ransley & Ingram, 2012). For example, the procurement department can engage with the food suppliers on the importance of high-quality food stuff. Factors Affecting Organization’s Approach to Risk The following factors influences the risk management approach of Midlands Hotel: Political environment – the government and local agencies require any adjustment or manipulation of current systems has to seek appropriate permits. Politics can be from the outside and inside. The external political environment may change the current legislative and institute measures to improve the risk requirements while engaging and informing the employees can adjust the internal processes to reflect the requirements of change. Economic climate – costs are unavoidable in decisions to change policies and strategies of doing things. However, the funding to any risk management change should originate from Midlands Hotel. Positive economic outcomes mean Midlands Hotel can fund the activities easily and goodwill of proceeding with the policy change. Social factors – the employees, suppliers, customers and other stakeholders have to embrace any risk management changes. Since the risk management is targeted to different stakeholders, it means that the success of the risk management plan lies on the decision of stakeholders embracing the changes. Legal factors – in the decision to draft and implement any policy, it has to adhere to the legal framework in place. It includes informing the stakeholders of the procedural changes and other changes that affects the implementation of contracts and inconveniences caused while implementing the plan. Other factors such as omission, and personal liability has to be integrated into the risk management plan. Technological advancements – reliance on the implementation of the risk management plan is in technological use. It means that technology will be used and the changes will affect the current technology (Boella & Goss-Turner, 2013). For example, the electrical systems have to be updated, and newer technologies are required to ensure the entire process becomes effective. Policy context – the policy will change to reflect the risk management proposals. Any risk management update will require similar changes in other sectors of the organization. Therefore, the decision to proceed with risk management plan requires a collective approach especially on individuals’ liability and need of upholding risk-averse strategies. Objectives for Different Areas at Midlands Hotel The following are the objectives or goals of each of the areas included in the scope: The kitchen – accidents such as injuries from tools and equipment and fire hazards have to be avoided. In addition, the customer orders including allergic problems and balancing the ingredients are other objectives. Waste management and having appropriate stock are also crucial. The dining areas – the waiters, have to appreciate the importance of effective communication and engage with the customers appropriately. Safety measures such as slippery floors, the stability of the furniture such as tables, and ambiance at the restaurant are also important, and high-quality standards are required throughout these phases/stages. The conference areas – the areas have to be clear, appropriate tools and equipment provided, ensure these tools and equipment operate effectively, and the clients are not exposed to any threats or safety issues. Swimming pool and outdoor areas – safety gears and safety personnel should be around the swimming areas (Ransley & Ingram, 2012). These individuals have to have the skills and expertise to provide first aid and clear communication through strategic posters, and signage should advise the customers/clients and other stakeholders on threats and risks. Administrative areas such as accounting and procurement – it incorporates the overall roles and responsibilities of different stakeholders. For example, the security team have to ensure the entire place is secure; the accounting team has to record and provide appropriate information; the procurement department has to ensure quality and right levels of stock are provided, while the management supports the overall requirements of risk management plans (Ransley & Ingram, 2012). Overall management of the hotel – the management has to appreciate the importance of the risk management strategy and provide support and goodwill to further the aims and objectives of the risk management plan. The Internal and External Stakeholder Groups and Issues The following are the internal stakeholders: Employees – the employees may resist changes and may not embrace the new policies and approaches to address risk issues Management – the management may not provide the funding and other goodwill requirements The following are the external stakeholders: Customers – the customers wants quality services and products, and may oppose stringent measures to uphold the risk requirements. It may be associated with ignorance and sometimes arrogance (Boella & Goss-Turner, 2013). Suppliers – the suppliers may increase the costs and change the methods of supplier and other engagements raising issues associated with contractual agreements Government and government agencies – the government, may oppose some risk measures or require validation and determination of the reliability of any risk measure. Community – the community may oppose some measures such as providing fencing and other support because of misinformation and vested interests Contractors – these includes electricians, plumbers and other individuals providing support to effective management and operations of the hotel. Changes in risk appraisal and implementation plans may face resistance, which may result in increased costs. The Stakeholder Groups Communication Plan The internal stakeholders will be communicated through email and other communication platforms. These stakeholders will be informed about the importance of the risk management plans and their role in ensuring the objectives are achieved (Ransley & Ingram, 2012). The engagement also provides a platform for encouraging participation through collaboration and provision of alternative approaches to address any risk complications. For the external stakeholders, communication through different platforms will be used. For example, the customers will be required to read the signage and posters to appreciate the risk levels (Ransley & Ingram, 2012). The suppliers and other contractual stakeholders will be informed and updated during the contracts renewal period. Effective communication will also be embraced to ensure the risk management policies are received in a positive manner. Level and Type of Support and Obtaining Support The support depends on the targeted stakeholders. However, effective communication is required to ensure the different stakeholders appreciates their roles and responsibilities in advancing risk management strategies. Through collaboration, participation, and engagement, the stakeholders are involved in the formulation and implementation of the risk management plan. The purpose is to ensure the stakeholders owns the risk management plan, and purpose to implement its contents. PART 2: IDENTIFY THE RISKS SWOT Diagram: Risks that Face the Organization The following table summarizes the SWOT analysis of Midlands Hotel. SWOT analysis incorporates strengths, weaknesses, opportunities and threats: Strength Understanding of different types of risks The employees are skilled and have experiences in addressing risks The management is supportive of any risk management strategy (Boella & Goss-Turner, 2013) Weaknesses Lack of tools and equipment to support the risk management plan Lack of awareness of modern risks and strategies to address these risks The stakeholders may inhibit effective implementation of the program/plan Organizational culture and change resistance may inhibit the implementation of the plan Customer satisfaction and quality issues Opportunities Numerous tools and techniques to identify and quantify the risks People continue to understand risks and are ready to embrace risk management strategies Threats Different types of risks such as terrorism continues to become a problem Frequent update of risk management policies may affect the overall implementation of activities at the hotel and other establishments Analysis of Risks and Background Information/Further Information Awareness of Modern Risks The world is changing, and numerous risks are emerging every day. Midlands Hotel has to understand these risks and think of strategies and approaches to addressing the problem. For example, the continued use of computers and related technological equipment and tools creates risks. For instance, cyber-attacks can retrieve customer information while these systems are vulnerable to failures. The equipment and tools used in the kitchen and other areas also possess risks. The radicalization and terrorism activities are also new and continuous to affect the hospitality industry meaning effective measure have to be embraced by different stakeholders to upload the safety and security requirements. Utilization of Tools and Equipment Risks Different tools and equipment are used in different sectors at Midlands Hotel and create numerous risks. For example, knives and forks are used in the kitchen, which can create accidents. The fire used can create different types of hazards while the fixtures and furniture may be poorly maintained. The utilization of this equipment and tools creates health and safety concerns, which may result in more hazards such as unattended fires. In addition, the swimming pools and playgrounds also create other problems because of lack of experiences in its usage. Resistance to Change and Organization Culture To improve the safety and health of different stakeholders, the resistance to change attitude is common. It may be integrated into the organizational culture, and such ideological perspectives create a major risk situation (Ransley & Ingram, 2012). For example, the chefs and waiters may be advanced on appropriate strategies for maintaining safety and health considerations such as wearing chef-hats while cooking or storing the utensils in appropriate manner. The waiters may be tasked with checking the chairs while the housekeeping department required updating about safety and conditions within the rooms (Ransley & Ingram, 2012). The lack of following these directives creates more problems because a culture of adhering to risks mitigation and prevention strategies. Customer Satisfaction and Quality Assurance Risks The needs and requirements of customers and their preferences may create risks and dissatisfaction. For example, the quality of the food and the customer engagement contributes to the image of the establishment. The quality of the services and products may be poor, and effective communication is important to solve (Davis et al. 2013). However, the conflict may degenerate because of the perceptions and understanding of the waiters and customers. The suppliers may also supply poor quality products, affecting the entire business operations of the organization. The success of any hospitality facility lies on the effectiveness of the service, and the quality of the service meaning satisfaction is integral and upholding high-quality standards is important. The absence of quality assurance and customer satisfactions reduces the number of customers and negative communication about the establishment and may dent the goals and objectives of the company. Tools and Techniques Used in Identification of Risks The following are other tools and techniques that can be utilized in generating a list of risks in Midlands Hotel: Information gathering techniques and interviews – the strategy involves collecting information from different stakeholders to understand the nature of the risks and the overall impact of the risks to an organization (Jang & Park, 2011). In the case of Midlands Hotel, the different employees can be asked about the risks or the nature of accidents they have encountered at the workplace (Boella & Goss-Turner, 2013). Collecting the information results in creating themes to understand the different risks. Brainstorming – different employees and stakeholders are brought together to discusses the sources of risks, accidents and other hazards (Jang & Park, 2011). Each individual is required to present their respective views and provide a preview of causative agents or reasons contributing to the occurrence of the problem. Root cause analysis – the strategy is applicable to the identifiable risks, which may have occurred. The approach entails identification of the problem, discussing the causative agents, and proposing prevention activities (Boella & Goss-Turner, 2013). The information can also be achieved through case studies and analyzing incidents that have occurred in similar establishments. Diagramming techniques such as cause and effect diagrams, process or system flow charts and influence diagrams can be used to collect the information (Su, Hall & Ozanne, 2013). These graphs provide a representation of situations that indicates the influences or relationship among outcomes and variables (Sloan, Legrand & Chen, 2013). For example, an individual can fall on the floor of the restaurant, and through a graphical representation, it is possible to create an image of numerous errors and related errors contributing to the occurrence of the problem. Expert judgment – the strategy involves bringing persons with experiences with a similar project and determine the vulnerability of the facility to risk (Davis et al. 2013). The experts may utilize their respective judgment through risk facilitation workshops and interviews to determine the potential risks and advise on measures to address the problems (Sloan, Legrand & Chen, 2013). These experts are usually important in technical areas or areas which are difficult to quantify the risks and nature of outcomes. The Midlands Hotel establishments have numerous options, tools, and techniques, which may be utilized in documenting the risks. For example, the expert judgment analyses the problem and proposes the solution to the problem. However, an establishment has to acknowledge the requirements of the risks management plan enabling identification of an appropriate strategy to address risks and complications. PART 3: ANALYZE THE RISKS Likelihood of the risks occurring The following table summarizes the likelihood of the risks occurring: Rating Likelihood of occurrence Almost certain 5 Customer preference in ordering, conflicts and misunderstandings with the customer, and poorly delivered services. These problems are common because of the diversity of the customers, and the needs and preferences of the customers. It means that an effective system should be in place, which integrates the different customer requirements and appreciating the diversity of these customers and other stakeholders such as suppliers. Likely 4 It indicates there is a possibility of the incident occurring. It includes falls in the restaurant, delivery of the wrong order, poor quality of supplies, ineffective managers and employees, and unsatisfied customer. Possible 3 It means that there is a possibility of the incident occurring because of prior information. It includes food poisoning and drowning in the pool. Analysis of other establishments indicates these problems usually occur even though chances are slim, it is imperative to take preventive measures. Other examples include petty theft and related white collar crimes. Unlikely 2 These are incidents that may occur, but the possibility of occurrence are slim. These problems are commonly associated with the security requirements and may include poisoning of the food and other catastrophic events affecting the establishment Rare 1 The incident can occur, but the chances of occurrence are highly unlikely. It means the incident may occur, but chances are slim such as terrorism incident. Midlands Hotel is susceptible to terrorist attacks, wars, and other criminal activities but the chance of occurrence are minimal. Impact or Consequence if risks occur The following table summarizes the impact if the risks occur: Rating Description Financial Impact Customers and staff health and safety Business interruption Reputation and image Corporate objectives 1 Insignificant The financial loss is less than $100,000 First aid required, minor personal injury and no lost days The incident affects the business for a short period of time: negligible The issue can fizzle without comment on the media and other conversation circles The management can solve the problem easily 2 Minor The loss is between $500,000 and $100,000, and the financial institutions do not cover it Some days are lost, medical treatment and minor injuries The services and products are unavailable and create inconveniences Negative local media coverage and negative communication among the customers Minor impact to the operations of the organization; the management can solve the problem easily 3 Moderate The cost of the damage is between $500,000 and $1 million, and it is not covered by insurance agencies Possible hospitalization, injuries and absence in numerous days, and problems in fulfilling socio-economic objective The services may be absent for more than one day, and the customers may be dissatisfied Regional media coverage and negative impact on the capital Significant impact on the objectives 4 Major The damages are between $1 and $5 million and not covered by insurance agencies Multiple serious injuries, long term illness and sometimes a single death The systems at the hotel may not be available for more than two days Extended and adverse national media coverage Major impact on the objectives of the organization 5 Catastrophic The damages caused is more than $5 million, and the insurance institutions do not cover It results in permanent ill-health or disability. It may also affect the community through pollution and similar problems The services and products are affected and last more than a week The government may pursue the issue and demand for an inquiry The occurrence of the incident affects the entire organization: disastrous impact The risks on a risk matrix The following risk matrix summarizes the impact and likelihood of the incidents occurring: Likelihood of Occurrence Rare (1) Unlikely (2) Possible (3) Likely (4) Almost certain (5) Impact of occurrence of incident Catastrophic (5) 5 10 15 20 25 Major (4) 4 8 12 16 20 Moderate (3) 3 6 9 12 15 Minor (2) 2 4 6 8 10 Insignificant (1) 1 2 3 4 5 Evaluate and prioritize risks for treatment The following are some of the risks, which may occur and requires appropriate treatment: Safety and health issues – chances of safety and health issues are high. For example, the foods may be contaminated and infect people with diseases. The employees may be exposed to diseases, and the use of the equipment and tools exposes the employees to risks (Jang & Park, 2011). The environmental concerns including pollution and safety standards create treats to the community. In addition, other stakeholders are vulnerable to safety and health issues meaning these factors influences the health and safety requirements of these different stakeholders. Administrative issues – each individual at the organization has a duty and adhering to the requirements, and legislations are important (Boella & Goss-Turner, 2013). It means that processes and procedures such as procurement, accounting, and human resource among other activities have to follow a specific framework. Scheduling, provision of services and other activities have to consider the requirements and expectations of other stakeholders to ensure risks does not occur or risks are mitigated. Tools and equipment usage – in the hotel, tools, and equipment possess numerous risks and threats. For example, inappropriate use of equipment and tools may create injuries (Ransley & Ingram, 2012). It includes storage, maintenance and appropriateness of the tools to tasks in place. Poor maintenance of the tools and equipment raises levels of risks, and continuous management of the tools and equipment is important (Boella & Goss-Turner, 2013). The equipment and tools extend to fixtures and fittings such as beds and beddings. Tables, chairs, and utensils also contribute to the problems especially when it is not in the right conditions. Quality issues and customer satisfaction– the food and other services have to be high quality. The poor quality product creates problems and may result in ligation especially on stale food (Davis et al. 2013). The organization has to ensure the services and products offered are of high quality and within the limits of quality standards. Customer satisfaction is also important since the unsatisfied customer may affect the overall business operations. PART 4: SELECT AND IMPLEMENT TREATMENTS: Appropriate Action for Treating the Top Three Identified Risks The top three risks are: Safety and health issues – training and developing the employees and informing the customers and other stakeholders are important in addressing the safety and health issues (Ransley & Ingram, 2012). Each of these stakeholders has to be informed of their overall objectives in improving the safety and health requirements to addressing to the directives whether in terms of posters or contained in the contract agreements (Su, Hall & Ozanne, 2013). Tools and equipment – the employees have to be trained in the effective use of the tools and equipment (Ransley & Ingram, 2012). Scheduled maintenance system and frequent checks on the equipment, furniture, beds and other fittings provide a mechanism of repairing before the occurrence of the problem (Su, Hall & Ozanne, 2013). Quality Issues and Customer satisfaction – the employees and supplier have to understand the importance of quality services (Ransley & Ingram, 2012). The supplier has to supply quality provides that meets the quality standards. The employee has to appreciate the importance of effective communication, and conflict resolution mechanism (Su, Hall & Ozanne, 2013). Action plan for implementing identified risk treatments The following are some of the components that contribute to the effective implementation of the action plan: Consultative meetings Frequent meetings will be done to engage the affected entities and strategies proposed on the way forward (Davis et al. 2013). Views are also collected to improve the implementation of the action plan. Collecting and aligning different resources The resources such as balancing the budgeting requirements and financial aims since the risk rely on the effectiveness of the provision of funds (Davis et al. 2013). Tool and equipment are brought together while maintenance and repair team also requires financial resources. Creating teams and appropriate human resource The human resource component is brought together to support the implementation of the plan (Ransley & Ingram, 2012). The team has to understand the expected roles and responsibilities, and have the capacity to implement the action plan effectively. Implementing the actual components of the plan Each of the components of the action plan is implemented in phases based on the objectives (Boella & Goss-Turner, 2013). For example, the implementation may start with the similar tasks such as posting messages on risks associated with swimming without guidance and indicating other potential risks (Tsai & Chen, 2011). Evaluation and monitoring After completion of each of the milestone, the effectiveness of the process is analyzed to determine whether the milestones and goals have been achieved. Communicating the action plan to relevant parties The strategy is engaging the different stakeholders during the formulation of the action plan. The collaboration and partnership are aimed at creating goodwill and owning the plan (Davis et al. 2013). Different channels of communication will be used such as emails to the suppliers, meetings and seminars to the employees, team meetings with the management, and filing appropriate reports to government agencies (Tsai & Chen, 2011). Documentation and Filling of the Documents Different documentations are required depending on the risks and expected the outcome. The maintenance documents have to be kept and frequently updated based on the services provided (Ong, 2012). For example, the fire extinguisher should have a clear documentation indicating when it was tested and determined effective. The information technology should also have documentation when it comes to servicing the different parts (Davis et al. 2013). The development of checklist is also crucial to indicate continuous monitoring of the processes, and identification of areas where maintenance and updates are required. Hence, each sector that forms the hotel should have documentation to inform on risks management and other operational requirements (Ransley & Ingram, 2012). The people working in these areas and the superiors have to fill the documents, and within a given period, the documents are filled. Steps in implementing strategic risks management plan The following are the steps: evaluation of the strategic plans creation and implementation of the strategic plan (Ransley & Ingram, 2012) selecting the appropriate team to assist in implementing the strategic plan Collecting and aligning different resources based on objectives of the action plan (Davis et al. 2013) Frequent scheduling of the meetings and discussions of the progress reports, and weighed against the objectives and goals of the action plans (Riley, 2014) Involvement of the management of the organization in implementation of the strategic plans Evaluation and monitoring the implementation (Davis et al. 2013) Closing and continuous review of implementation of different strategies in advancing risk management requirements (Tsai & Chen, 2011) Monitoring the action plan These are some of the approaches to monitoring implementation of the action plan: Analyzing the documentation and determining whether the documentations reflects the original objectives of the action plan (Tsai & Chen, 2011) Reviewing occurrence of risks relative to historical data: the implementation of the risk action plan requires reduction of accidents and incidents (Boella & Goss-Turner, 2013) Communication with the employees through interviews would be commissioned to determine whether the objectives have been achieved During the process, corrective proposals and similar actions are introduced to improve the risk management strategy Evaluation of the risk management action plan The statistical analysis and qualitative analysis can be employed in determining the effectiveness of the strategies. Complaints and views can be collected from the customers and other stakeholders to acknowledge the changes made and other improvements (Boella & Goss-Turner, 2013). It may include documenting the number of accidents, the reasons of occurrences, whether measures are in place to address the issues, and overall contribution of the employees in supporting the action management plans (Tsai & Chen, 2011). A checklist is created to frequently document the roles that different individuals play and the wider impact on the management of the organization. Therefore, numerous processes and approaches will be employed in ensuring the overall objectives of the organization are achieved. Reference Boella, M., & Goss-Turner, S. (2013). Human resource management in the hospitality industry: A guide to best practice. Routledge. Davis, B., Lockwood, A., Pantelidis, I., & Alcott, P. (2013). Food and beverage management. Routledge. Jang, S., & Park, K. (2011). 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Development of a Mechanism for Typhoon-and Flood-risk Assessment and Disaster Management in the Hotel Industry–A Case Study of the Hualien Area. Scandinavian Journal of Hospitality and Tourism, 11(3), 324-341. Read More