Hazard and Risk Management - Great Northern Hotel - Case Study Example

HAZARDS AND RISK ASSESSMENT OF GREAT NORTHERN HOTEL Table of contents 1.0 Introduction...................................................................................................................3 2.0 Great Northern Hotel Overview....................................................................................4 3.0 SWOT analysis...............................................................................................................4-5 4.0 PESTEL analysis............................................................................................................5-7 5.0 Risk identification and Ranking....................................................................................7-9 5.1 Individual risks..................................................................................................8 5.2 Societal risks......................................................................................................8 6.0 Ticklist...........................................................................................................................10-12 7.0 Fault tree analysis using fault tree diagram...................................................................12-13 8.0 Reliability Block diagram............................................................................................13-14 9.0 Event tree analysis.......................................................................................................14-15 10.0 Cost Benefit Analysis............................................................................................16 11.0 Allocation of fixed budget.....................................................................................16 12.0 Comparison of the risk assessment techniques.......................................................17 13.0 Conclusion..............................................................................................................17 List of tables Table 1: SWOT analysis.....................................................................................................5 Table 2: PESTEL analysis.................................................................................................7 Table 3: ticlist.....................................................................................................................12 Table 4: Cost Benefit Analysis..........................................................................................16 Table 5: fixed allocation....................................................................................................17 List of figures Figure 1: A general F-N diagram........................................................................................9 Figure 2: F-N curve showing the ALARP concept............................................................9 Figure 3: a quantitative diagram of risk assessment………………………………………12 Figure 4: fault tree diagram of fire hazards.........................................................................13 Figure 5: event tree diagram................................................................................................15 1.0 Introduction Hotel business has been booming in the United Kingdom since the country has been considered as the best region in the European Union due its best facilities and infrastructure. The business focus United Kingdom is London City that houses many business facilities. Out of 1000 firms analysed in the UK’s hospitality sector shows that hotel industry is growing at 2.2% annually. The City has numerous hotel facilities that serve both the domestic and international customers. However, hotels house events and facilities that have substantive risks to human safety and health (Hotel News Now2011). Therefore, there is need to carry out a risk assessment on these business premises through a clear risk identification criteria that provides the incentive to evaluate and analyse the risk scenarios (IHG 2012). Every organisation has risk response team that responds to risk events thus managing risks is an integral part of hotels(Rushmore 2010, p.19) UK has various hotels but the focus of this paper is on Great Northern Hotel underwent recent renovations that means the team had identified certain risks that were worth mitigating through repair (Great Northern Hotel 2013). 1000 firms analysed in the UK in the past 2 years shows an average growth of 2.2 This report purposefully does a detailed assessment on the hazards and risks that may be present in Great Northern Hotel of UK. The report begins by present a brief overview of the Hotel that paints a clear picture on the business operations in the company and its scope of operations. Moreover, the overview provides the report with background information of assessing risks in the company. Afterwards, risk assessment commences by a premier inference into the SWOT analysis of this company which is also supported by its PESTEL analysis. The most important part of risk assessment is risk identification. In this case, the report explains the concept of risk identification and goes a head to define both individual as well as societal risk of the Great Northern Hotel. In the risk identification, an emphasis is made on the F-N diagram as tool of assessing risk in the company with the use of ALARP principle. On the other hand, the paper also uses other methodologies of risk assessment like fault tree analysis, event tree, Reliability block diagram and the common cause analysis in identifying and assessing risks in the company (Ahmed, Kayis B & Amornsawadwatana 2007, p.24). Besides, a cost benefit analysis also shows the benefit that a company gets when it allocates resources for risk mitigation. The above tools are just some of the tools or techniques of risk assessment that the report adopts. In summary, the paper presents a risk assessment of Great Northern Hotel using different techniques and tools that are both quantitative and qualitative. 2.0 Great Northern Hotel Overview The Hotel nestles in the Rathdowne Street in the North of Carlton, a strategic location that the company boasts of. It dates back to 1883 and has one of the largest hotel facilities in Melbourne with beer gardens that provide its esteemed customers with the opportunity to unwind and enjoy some of the exotic beers in the city (Great Northern Hotel 2014). The hotel was designed by Lewis Cubitt and has undergone recent refurbishment to become London’s finest boutique. It has been re-designed to portray elegant glamour in London city. The hotel has 91 luxury rooms, three departures that are rather breath-taking with windows from that run from the ceiling to floors. On the other hand, the hotel is well-lit with beautiful furniture that is hand crafted and its bathrooms are of Lefroy-Brooks in nature. Besides, there is free Wi-Fi in the premise with outstanding high speed. All of the above features make the hotel an outstanding boutique hotel within London city. The hotel also has an outstanding menu and the services may as well be described as friendly. The hotel has been in the limelight for its £40M refit that makes it a perfect choice for this report since the money was an input that may be instrumental for its Cost-Benefit Analysis. 3.0 SWOT analysis This tool explains internal factors pertaining to strengths, weaknesses, opportunities and threats of a particular organisation (Ahmed, Kayis & Amornsawadwatana 2007, p 29). However, the tool does not exclusively measure internal factors since a company’s strengths as well as its weaknesses are internal factors. In the contrary, opportunities and threats are external parameters that influence business operations. In this case, the Great Northern hotel faces both internal and external business factors are presented in the table below. Strengths Customer loyalty Strong management The brand name is strong A diversity of services Financial support for the private sector by the government Opportunities Online markets New services after renovation New technology like the wireless technology New markets. The Hotel has been operating at both the global and domestic level Weaknesses Stuff turn over since it is a private hotel Threats Intense completion from other 5 star hotels Substitute products Terrorism has been a big threat in the UK Bad economy or the financial recession that sometimes affects the Euro zone Table 1: SWOT analysis From the above SWOT analysis, the hotel has a strong customer loyalty with an effective management which is instrumental in implementing risk assessment. On the other hand, the new technological inventions also avails information thereby enabling the organisation to identify the origin of threats and hazards. A conclusion of this SWOT analysis is as below. Strengths + opportunities=9 Threats + weaknesses= 5 It is therefore evident that Great Northern Hotel has a perfect defence against its threats which helps in lowering risks. On the other hand, maintaining strengths helps the organisation in ensuring high profits but at low costs. 4.0 PESTEL analysis (external) This tool is applicable in evaluating how external environment affects a company’s performance. The external environment in particular, influences business model and strategies. As opposed to SWOT analysis, PESTEL draws a broader analysis of political, economic, social, technological, environmental as well as legal aspects of the external business environment(Ahmed, Kayis & Amornsawadwatana 2007, p 30). When the Great Northern Hotel was undergoing renovations, these factors had major impact in the way the organisation refurbished the premise since they were all put into consideration. The table below shows PESTEL analysis of a hotel which may as well be applicable in the case of Great Northern Hotel. It is usually carried out by the marketing executives or overall hotel management. Factors analysis Political These pertain to government’s regulations on health, hygiene, food standards and regulations Multinational National Enterprises that prefer EU as a global centre conference centre Terrorism threats also affect business operations of major hotels in the UK. Government also develops certain economic policies that are instrumental in running hotel industry like licences and frequent inspections carried out by the Health and Food Ministry. Economic factors Factors like interest rates that have impact on the capital costs. Interest rates are directly proportional to capital costs. UK has been enjoying a steady GDP thus the population is willing to spend on hotels and restaurants. Inflation rates also affects remuneration rate of companies. Thus inflation has direct on the product prices Economic trends determine the sustainability and profitability of any particular business since the trends are useful in designing marketing strategies. Social factors Societal factors like food preferences and taboos affect business operations of a hotel. The products must be culturally sensitive and diverse. Demographic changes both at the domestic and global level creating opportunity for business operations within hotels. Technological factors Better procurement, production and distribution requires proper technical infrastructure that will result in reduced costs. Emerging technologies has presented opportunities for online booking through the use of smart phones that enables esteemed customers make their reservations at the comfort of their homes. Environmental The increased public awareness on sustainability concept. The public has been putting pressure on large organisations to embrace green initiatives like waste management and reduction of green house effect. Legal Regulations on waste management within Hotels and hospitality industry Stringent regulations on HSE(safety and health) Table 2: PESTEL analysis The above analysis shows that all the factors of PESTEL enable Great Northern Hotel to assess and mitigate risks at low costs within a business friendly environment. 5.0 Risk identification and Ranking A risk is any haphazard event that possibly occurs and may cause harm to people working within an organisation thus affecting its goals and business operations (Cervone 2006, p.258). Risks have elements like the event, its chance of occurrence and its magnitude of impact. In the Great Northern Hotel for example, a risk may be an event that harms both workers and customers like fires, health issues from consumption of foods and drinks as well as other accidents that may occur in the premises (Roger 2007, p.613). However, risks are either categorised as individual or most cases societal as discussed below. 5.1 individual risks Individual risks or IR is basically the likeliness of incurring injury or death as well as ill health by a specific individual within a given area(Ahmed, Kayis & Amornsawadwatana 2007, p 29). For instance, it can be a possible of a passenger getting hurt onboard a ship or a staff working in a certain organisation. Basically, IR is usually death risk which is always determined for an individual who is maximally exposed to the causal factors. The following equation is a mathematical equation of individual risks. IR of person Y=F of undesired Event* P for Person Y * E of Person Y F is the frequency of event P is the resulting probability of casualty E is the fractional exposure to the risk. 5.2 Societal risks In the contrary, societal risk is basically an average risk that a group experiences when exposed to a particular accidental scenario (Ahmed, Kayis & Amornsawadwatana 2007, p 28). It is usually death risk and expressed using FN-diagrams. Besides, it is not location and person specific like individual risks. In addition, it considers multiple casualties that can arise from risk events whose presentation takes a form if F-N curves. The curve plots multiple casualties’ cumulative frequency against expected fatalities (N). Therefore, the curves give a useful analysis on risk magnitude resulting from the facility. Nonetheless, the F-N tool ranks events that are most likely to result in risks thus enabling the assessment process to identify failures that helps in preventing as well as mitigating such situations or scenarios. The figure below is an example of F-N diagram that can be used to rank risks in an organisation. The same can apply to the Great Northern Hotel where the diagram indicates sources of risks that are gotten from plotting F against N. From the figure below, it is evident that different colours represent the degree of risks that helps in identification of risks as well as the number of casualties that they result in. Figure 1: A general F-N diagram(Ahmed, Kayis B & Amornsawadwatana 2007, p.24) Figure 2: F-N curve showing the ALARP concept (Ahmed, Kayis B & Amornsawadwatana 2007, p.25) From the above F-N diagram, it is possible to find out its ALARP that is an abbreviation for As Low As Reasonably Practicable. It represents the level of risk that is seen as neither intolerable high or negligibly low. Risk should be low and reasonably practicable. This implies that scenarios that have their risks falling within the region must be mitigated at all costs. 6.0 Ticklist The technique checks existing conditions of a facility against certain criteria (Ahmed, Kayis & Amornsawadwatana 2007, p 29). It is usually carried out by experts whose level of analysis shows level of professionalism. The analysis is done using numerical that ranges from 1 to 9 thus giving the evaluator an easy time for exercising his level of analysis. On the other hand, the checklist has columns for either ticking YES or NO as a way of conforming to pre-set conditions or non-conformity to those conditions. The table below is a simple checklist for hotel facilities which is also applicable to the Great Northern Hotel and it also shows severity and frequency of such events. # Risk Yes No Risk assessment Washrooms 1. Are the floors having slip strips or other slip-proof measures?  Frequency Severity 1 2 3 4 1 2 3 4 2. Has the management fitted hand rails within the washrooms?  Frequency Severity 1 2 3 4 1 2 3 4 3. is the hot water outlets maintained within its maximum temperature of 55oC and does the design enable guests to modify it?  Frequency Severity 1 2 3 4 1 2 3 4 4. Does the hotel have soaps and shampoos that have least allergic effect on the guests or users?  Frequency Severity 1 2 3 4 1 2 3 4 5. Is there a provision of shaving materials like razors and are they checked against quality as per the agreement stipulated in equipment supply within the hotel?  Frequency Severity 1 2 3 4 1 2 3 4 6. Is there a remedy or an alternative to equipments that have defaults like mouthwash, toothpaste, shaving oils etc  Frequency Severity 1 2 3 4 1 2 3 4 Hair conditioners and hair dryers 7. Does the hotel supply hairdryer units within the bathrooms?  Frequency Severity 1 2 3 4 1 2 3 4 8. If present, do they move freely or they are hardwired?  Frequency Severity 1 2 3 4 1 2 3 4 9. Does the hardwired dryers’ location allow water to drop directly into baths or vanity basins?  Frequency Severity 1 2 3 4 1 2 3 4 10. Are these equipments checked regularly as a form of electrical inspection in the premise?  Frequency Severity 1 2 3 4 1 2 3 4 11. Do the inspectors label electrical appliances upon inspection?  Frequency Severity 1 2 3 4 1 2 3 4 Table 3: ticlist From the above ticklist, it can be noted that each event has its own degree of severity and frequency. The list simply checks against pre-set conditions in the bathrooms that may pose risks to guests in the facilities. The same can be performed in the Great Northern Hotel. 7.0 fault tree analysis using fault tree diagram The tool serves both purposes of risk identification and analysis. In hotels for instance, the FTA may be used to analyse and evaluate causes of fires in the hotel. Fires in facilities can either be haphazard or on purpose (Charters 2013). Accidental fires may originate from electronic defaults like faulty electrical connections or from anticipated gas leaks where cooking takes place using gas cylinders. Figure 3: a quantitative diagram of risk assessment (Cervone 2006, p.259) Figure 4: fault tree diagram of fire hazards (Charters 2013) 8.0 Reliability Block diagram RBD technique uses block diagrams for reflecting relationships on event reliability of events, processes and activities (SAS 2014). It shows how inputs affect outputs in risk assessment and management. On the other hand, the technique looks at success of events and processes of mitigating risks. Within hotel settings, all events that cause fire hazards are seen to be exclusive. For instance, there are deliberate or accidental events that have independent causal factors. Deliberate hazards may emanate from smokers while accidental events may be caused by poor electrical installations, equipment failures among others. 9.0 Event tree analysis The tool simply quantifies risks (Ahmed, Kayis & Amornsawadwatana 2007, p 29). The diagram is tree shaped whereby each branch is a representation of an event. The tool also shows how an event or a choice leads to the next. On the other hand, every branch depicts mutually independent choice (Ahmed, Kayis & Amornsawadwatana 2007, p 30). The tool may also be instrumental in assessing risks in the Great Northern Hotel where the event tree evaluates and analyses events for their likelihood of occurrence as well as a budget allocation for each risk mitigation measure. The figure below shows an event tree for assessing risks which the chosen company in this report adopts. Figure 5: event tree diagram (Ahmed, Kayis B & Amornsawadwatana 2007, p.25) 10.0 Cost Benefit Analysis It is the risk values or quantification or risks that an organisation undertakes (Cervone, H.F 2006, p.257). In the case of fire hazards in the Great Northern Hotel, the management will categorise its risks into various areas. For instance, costs will be allocated to immediate damage removal, penalties of breaking laws pertaining to HSE and environmental laws as well as medical coverage for the casualties (HSE 2014). In this boutique hotel in London, its management will thus invest in risk management team that has a team of consultants as well as experts, training of risk management and response team in the business premises. The other areas of investment that will benefit the hotel include interior design for reducing cases of fire spreads, fire alarms, extinguishers (IHG 2012). Most importantly, the company must invest most of its resources in employee training and fire exercises. This paper carries out the Cost Benefit Analysis of Great Northern Hotel by using some ideal values to explain how a cost benefit analysis can be carried out in a hotel premise. Costs and benefits per items Year Year Year   Benefit 1 2 3 Total Reducing personal injuries and fatalities(depending on their different levels of severity) 150,000 180,000 250,000   Reduction of emergency costs 30,000 40,000 67,000   Reduction of costs of the safety equipments 7,000 8,000 9,000   Saving brand image and corporate image of the company 200,000 350,000 380,000   Reduction in the cost of equipment costs 10,000 25,000 40,000   Total benefits 397,000 603,000 746,000 1,746,000 Table 4: Cost Benefit Analysis 11.0 Allocation of fixed budget Fixed budget may be allocated for each and every risk scenarios in the hotel. The table below shows an overview of fixed budget allocation for the Hotel. Associated risks Budget allocation(£) Reduction of personal injuries 150, 000 Improving equipment safety and maintenance 100, 000 Improving fire safety 200,000 Safety improvement in washrooms 150, 000 Compliance with HSE(monetary value payable to the department) 100,000 Table 5: fixed allocation 12.0 Comparison of the risk assessment techniques PESTEL and SWOT analysis tools are instrumental in assessing internal and external factors of business environment. However, both the tools are limited to specific business environments but do not take into account the dynamism of such environments (Ahmed, Kayis & Amornsawadwatana 2007, p24). Ticlist is a simple technique though it requires skilled personnel when it is used in business risk assessment for the first time. F-N tool gives probability of events’ occurrence but focusing on past events is a limitation for this tool since events may have different trends. Nonetheless, Fault Tree gives valuable information regarding occurrence of events but has a disadvantage of covering unimportant events. Common Cause Analysis covers major causes of the potential risks that may be the same to RBD technique which has a limitation of misinterpretation (SAS 2014). 13.0 Conclusion In summary, the report has given out a comprehensive risk and hazard assessment of Great Northern Hotel by using various risk assessment techniques. Among the tools that have been instrumental in assessing this company include SWOT analysis, PESTEL, fault tree diagram, event tree among others. In addition, the paper has carried out detailed risk identification by the use of F-N diagram that categorises risks as either individual or to some extent individual. Besides, risks have the cost aspect that the report has aspect has reviewed using cost benefit analysis that also provides the basis for allocating fixed budget. Finally, there has been a detailed contrast of the different risk assessment techniques. References Ahmed, Kayis B & Amornsawadwatana, S 2007, ‘A review of techniques for risk management in projects’, Benchmarking: an International Journal, vol. 14, no.1, pp.22 – 36. Cervone, H.F 2006, ‘Project risk management’, OCLC Systems & Services, vol. 22, no.4, pp.256 – 262 Charters,D. A July 1 2013, The application of fire risk assessment in building design and management, viewed from http://magazine.sfpe.org/content/application-fire-risk-assessments-building-design-and-management Great Northern Hotel 2014, viewed from http://www.gnhlondon.com/ Great Northern Hotel, March 2013, A great refurbishment for Great Northern Hotel, viewed from http://www.modbs.co.uk/news/archivestory.php/aid/11548/A_great_refurbishment__for_Great_Northern_Hotel.html Hotel News Now November 10 2011, Risk management: A hotelier’s guide, viewed from, http://www.hotelnewsnow.com/Article/6925/Risk-management-A-hoteliers-guide HSE 2014, five steps to risk assessment, viewed from IHG 2012, Manage Risks and Safe Hotels, viewed from http://www.ihgplc.com/index.asp?pageid=761 Perkins, C 16 January 2014, Confidence returns to UK hospitality sector http://www.bighospitality.co.uk/Business/Confidence-returns-to-UK-hospitality-sector Roger, L. K 2007, ‘Assessing the vulnerability of buildings", Disaster Prevention and Management’, vol. 16, no.4, pp.611 – 618. Rushmore, S 2010, ‘Managing Risks Part Of Managing Hotels’, Lodging Hospitality, vol. 66, no.3, 18-19. SAS 2014, reliability block diagram, viewed from http://www.jmp.com/support/help/Reliability_Block_Diagram.shtml Read More