Evaluating Risk and Decisions

CONTENTS
1.0 INTRODUCTION...........................................................................................................................1
2.0 OCCURRENCE OF RISK IN RELATION TO ECONOMIC AND LEGAL IMPLICATIONS....1
Definition of risk and uncertainty......................................................................................................1
Origin and nature of risk that can arise in The Ritz-Carlton..............................................................1
Impact of risks on business of hotel from economic and legal perspective........................................2
RISK MANAGEMENT PLAN.............................................................................................................3
Mitigation of risks.............................................................................................................................3
Corrective actions to be taken............................................................................................................4
Record and review of occurrence of risks..........................................................................................5
SUMMARY..........................................................................................................................................6
REFERENCES......................................................................................................................................7
1.0 INTRODUCTION
The main aim of the present research work is to analyse the risk along with the
contributory factor for the occurrence of risk in an organizational setting. For this, The Ritz-
Carlton, Russia hotel is selected for the further studies. It is a luxury 5 star hotel in the centre
of Moscow and is one of the most expensive hotel across the world. The report will
encompass designing of risk management plan and mitigation strategies.

2.0 OCCURRENCE OF RISK IN RELATION TO ECONOMIC AND

LEGAL IMPLICATIONS
Definition of risk and uncertainty
Organizations which are achieving growth, develops only through adapting and
evolving with its surroundings environment based on the evaluation of risks and reactions to
the risks that come along. Consequently, it is important to understand the difference between
risks as well as uncertainty before analysing the performance of the business and variations
which are beneficial for the organization. As indicated by Holton (2004), stabilizing the
difference between calculable uncertainty and non-calculable uncertainty is defined as risk
and uncertainty. As far as risk is concerned, the resultant probable impacts can be calculated
whereas, in uncertainty, it is not possible. This is due to the fact that the resultant influence
cannot be measured and recognized effortlessly (Crouhy, Galai and Robert, 2006).

Origin and nature of risk that can arise in The Ritz-Carlton

Speaking about the Ritz-Carlton Hotel Company, it is one of the leading hotel across
the word in the hotel industry and is giving high competition in the market. The strategies and
principles followed by the hotel for satisfying the needs of the customers and responding to
the expectation of the workers helped in attaining progress and growth (Tschankova, 2002).
Therefore, it can be said that the enunciations are being made on the orientation in the
direction of the clients and the particular needs of any individual on offering the service of
the highest quality along with effective leadership. Ritz-Carlton Hotel, Moscow is located in
the city which is ranked ninth as the most expensive city around the globe and is also
regarded as the city with major political, economic, cultural and scientific centre in Russia
(Ritz-Carlton Hotel Moscow, 2021). In addition to this, it is situated on the Moskva River in
the Central Federal District of European Russia and most of the land is covered with vast
plains where no trees can grow. Moreover, most part of Moscow consists of permafrost that
sometimes causes floods in spring and forest fires in summers. Considering this, it can be

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said that there are different kinds of risks that might occur at Ritz-Carlton Hotel such as
hazard risks, opportunity risks and control risks. Talking in relation with the hazard risk,
these are being referred as the risks which includes slips, injury, fires, falls, infectious agents,
natural disasters and current pandemic known as COVID19. The probability of happening of
these types of risks is relatively medium to high. In addition to this, there influence on the
business is also moderate in nature (Number of natural disasters in Russia in 2019, 2020).
Whereas, opportunity risks refers to failure of the hotel in grabbing the opportunity through
digitalizing earlier. Finally, control risk are that risk which takes place due to error in human
judgement which leads to control failures.

Impact of risks on business of hotel from economic and legal perspective

As discussed above, there are three types of risks which can influence the business of
Ritz-Carlton Hotel both economically as well as legally. Articulating first in relation with the
economic impact of hazard risks, these are the risks that are related with natural disasters and
pandemic such as COVID 19. The reputation of the hotel can be slightly impacted by such
risks. However, the amount of losses to the hotel and profitability level can be influenced up
to $100 to $100000. Bearing in intellect, the area of the hotel in which it is situated, it is a
flood plain which has no planation (Tschankova, 2002). These areas are not free from natural
disaster. There might be chances of flood and strong storm as it is near the banks of river
Moskva. In addition to this, risks pertaining to criminal activities can also take place in the
southern area of the hotel. This might result into physical damage to the property of the hotel
which might lead to monetary losses and reduces profitability of the concern. The other risk
is opportunity risk which is referred as risk with optimistic influence. Such type of risks can
occur in hotel in some years (Harwani and Mathews, 2012). The economic impact of such
risk might be quite high ranging from $1000 to $10000. All these can take place due to varied
security problems around the globe pertaining to the current pandemic COVID19 and
different terrorist attacks. This might result into monetary losses to Ritz-Carlton Hotel
(Vaughan, 2017). The last and final risk that might impact the business of the hotel is control
risk. Different workers are employed in the hotel for performing assortment of tasks and
sometimes due to error in human judgement, failure in control might take place. Therefore,
control risks are very uncertain. Ritz-Carlton Hotel might come across with the control risk
related to fraud as well as non-compliance of legal procedures. The likelihood of taking place
of such event is very rare. Nevertheless, at times when such risks happen, they will certainly
have enormous effect on the cost-effectiveness of the hotel. Therefore, it is crucial for the

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hotel to make sure that they have updated security solutions which again will cost high to the
firm and can heavily effect the profits (Aven, 2016).
Other than all these hazards, opportunity and control risks, there are many risks which
indicates legal implications for the Ritz-Carlton Hotel, for instance physical crime, hygiene of
the hotel, in-house theft along with general maintenance as well as identity theft. All these
danger can place the hotel in such a situation where they can be sued unto $100 to & 100000.
Accordingly, legal protection is very essential which can be performed through instituting
legal standards and appropriate defined regulations. In addition to this, it is also equally vital
for the hotel to remain updated with their security system being demanded by the laws and
regulations of the hospitality industry of Russia (Harwani and Mathews, 2012). For example,
the labour laws in Russia are more complex and extensive than other countries. Overall, the
hotel industry is Russia have many freedom but there are some issues that might take place
due to unfettered freedom such as unnecessary administrative procedurals and radical
behaviour. Moreover, the surroundings and the environment under which the hotel function
also plays a crucial part in influencing the methodologies of the business, management of the
risks and circumventing undesirable outcomes. In order to evade exposure to the legal
lawsuit, it is essential for the Ritz-Carlton Hotel to meet all the needed compliances. In any
case, if laws are not well-thought-out, they can get repeated lawsuit which might lead to
bankruptcy or insolvency of the hotel (Pritchard, 2016).

RISK MANAGEMENT PLAN

Mitigation of risks
As elaborated in the previous section that Ritz-Carlton Hotel is exposed to different
types of risks which can impact their business significantly. Thus, all these risks needs to be
mitigated through designing a risk management plan. First of all, for responding in relation
with the hazard risks being faced by the hotel, it is crucial for the management of the hotel to
implement different security as well as safety policies considering the norms of the
hospitality industry of Russia. Other than this, standards should also meet the requirements of
security and safety measures followed throughout the world. Moreover, for determining the
hazardous risk, security manager should be hired by the hotel who can identify the risk and
decrease its impact to some extent (Abbas and et.al, 2016). As the Ritz-Carlton Hotel,
Moscow, is situated near the river Moskva, there are chances of torrential rain being caused
due to cyclone. Consequently, for mitigating this risk, the site of the hotel should be boundary
walled from all sides using cemented blocks of minimum 1.7 m high. Additionally, regular

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chopping of branches of trees should be done for avoiding physical damage to the building in
case of high tornado or cyclone. Proper sanitization system and machines should be installed
for protecting employees and guest from infectious disease and pandemic such as COVID19.
In regards with the opportunity risks, the hotel is facing this risk at the global level
due to insufficient research and development and technology advancement. Thus, for
reducing such type of risks, awareness about the alteration occurring in the environment
should be there. Other than this, if the hotel want a response strategy for the opportunity risk
than it is necessary to adopt share response strategy in order to realize the opportunity on
own. In this, managers need to team up with the other company or group and work together
for realizing it. For instance, due to lack of technical abilities, Ritz-Carlton Hotel is not in a
position to open a different project (Malhotra and Venkatesh, 2009). Thus, management can
team up with another hotel or company who are capable of performing the same job and
mutually attempt for that project. In the present situation where the world is suffering a lot
from the pandemic and attacks, the overall economic growth of the nation is also not
favourable. This gave rise to fraudulent activities with each passing day such as money
laundering and scandals etc. All these kinds of risks can be mitigated through broadening the
categorization of accountabilities amidst the workers through performing job rotation.
Auxiliary to this, due to the increasing cases of terrorist attacks like attack on Saint
Petersburg Metro using explosive device and disintegration of flight Metrojet above the
northern Sinai, the economic condition of the hotels in the nation is worsening as people
avoid visiting these places due to fear (Faulkner, 2001). This can be mitigated by
implementing accurate and reasonable means of promotion as well as advertisement.

Corrective actions to be taken

Underpinning the discussion further, if it is considered that the above mentioned risks
have occurred in hotel, it is important for the management to adopt different corrective
actions in order to eliminate and treating the same to an adequate level. It is crucial on the
part of Ritz-Carlton Hotel to first evaluate the nature of the risks, determining them and
afterwards managing them successfully. Further, each and every actions should be taken at
operational, business as well as strategic level. Firstly, for mitigating hazard risk, the hotel is
required to establish some safety regulations and policies and employ a manager for security.
In this regards, it is crucial for the hotel to make arrangement for training courses to the
safety managers along with the employees in order to make them aware and prevent mishaps
or calamities at workstation (AlBattat and Mat Som, 2013). Additionally, at the time of any

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natural calamity such as flood or earthquake, it is important for the hotel to make sure that
water, food plus resources at the disposal of the hotel should be available to the employees
and visitor.
Likewise, in case if control risks have occurred in the hotel, the management of the
hotel should manage this risk by proactive risk management capabilities and culture. There
should be development of varied regulation and support materials by the Ritz-Carlton Hotel
and execution of training and control systems and toolkits. All these should be presented to
the staff members in diverse languages in order to create effective risk management
environment and culture. Last but not the least, in the context of the opportunity risks, hotel
should remain acknowledged towards the development of technologies in the hospitality
industry across the globe and altering needs of the clientele. More investment on reservation
channels and systems should be done by the hotel. Besides, it is also crucial that a multi-
channel management strategy should be industrialised that pays attention towards
management of entire expedition of visitors (Jurowski, 2010). Furthermore, with the
changing scenario in the present time where hospitality industry is becoming very
competitive in nature, acquiescent with payment card industry is also very essential. In other
words, information and personal details should be secured by using tools or services from
third party supplier for handling of payments via cards.

Record and review of occurrence of risks

It is quite crucial to record the occurrence of risks by the hotel as it helps in analysing
the risk in a better manner and supports in implementing changes. The recordings of the
findings i.e. occurrences of risks can be done by Ritz-Carlton Hotel through risk assessment
form which includes sections such as type of hazard found, date of occurrence, groups or
persons affected, mitigation strategy adopted and timing of assessment. Through keeping a
record of happening of risks, risks can be tracked and control measures can be easily put up
in place for determining dangers. Speaking in relation with the opportunity risk, it take place
once in years and thus, it is not crucial for the management to spent huge time in reviewing
such risks again and again (Tierney and Bruneau, 2007). Their impact on profitability of the
business is also not high. Thus, they must be review in every two years for necessary
technological developments with the changing environment. In addition to this, as far as
hazard risks are concerned, they can take place within the hotel more frequently compared
with the opportunity risk. Therefore, proper record of such hazard should be done by the
hotel on a weekly basis. Moreover, the recordings should be reviewed in one or two months

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by the safety instruction board of the hotel. Along with this, the operational activities of the
hotel should also be reviewed by the safety manager on a weekly basis for preventing the risk
to transpire again. Finally, focusing towards the control risks, such kind of risks happens in
hotel frequently and can influence the business of the hotel highly. Consequently, it becomes
obligatory on the part of the hotel to keep a record of these risks. Additionally, varied sort of
controls like common plus particular should be exercised on a daily basis for keeping a track
of risks (Curtis and Carey, 2012). Further, investment must be done by the hotel every quarter
towards research and development in order to identity novel strategies for increasing
effectiveness. It is fundamental for the managers of the Ritz-Carlton Hotel to make sure that
they record important findings effectively for understanding risks more fully.

SUMMARY
Therefore, from the analysis it can be said that there are varied nature of risks that can
occur and impact the business of the hotel both economically and legally. From all the risk
being identified in the research, hazard risks are the most common risks that might happen
anywhere at any time in the hotel. In regards with the management of such risk, the research
report has included different mitigation strategies such as continuous review of risk by the
management and many more. Through mitigating risk effectively, hotel can attain a
competitive edge in the market.

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REFERENCES
Books and journals
Abbas, A., Amjath-Babu, T.S., Kächele, H., Usman, M. and Müller, K., 2016. An overview
of flood mitigation strategy and research support in South Asia: Implications for
sustainable flood risk management. International Journal of Sustainable Development
& World Ecology, 23(1), pp.98-111.
AlBattat, A.R. and Mat Som, A.P., 2013. Emergency preparedness for disasters and crises in
the hotel industry. Sage Open, 3(3), pp.1-10.
Aven, T., 2016. Risk assessment and risk management: Review of recent advances on their
foundation. European Journal of Operational Research, 253(1), pp.1-13.
Crouhy, M., Galai, D. and Robert, M., 2006. The Essentials of Risk Management. McGraw-
Hill.
Curtis, P. and Carey, M., 2012. Risk Assessment in Practice. Deloitte & Touche LLP.
Faulkner, B., 2001. Towards a framework for tourism disaster management. Tourism
Management, 22, pp.135–147.
Harwani, S. and Mathews, D., 2012. Risk identification and analysis in the hospitality
industry: Practitioners' perspectives from India. Worldwide Hospitality and Tourism
Themes, 4(5), pp.410-427.
Holtan, G., 2004. Defining risk. Financial analysis journal, 60(6), pp.19-25.

Jurowski, C., 2010. Crisis Management in the Tourism Industry. Annals of Tourism
Research, 37(1), pp.274-276.
Malhotra, R. and Venkatesh, U., 2009. Pre-crisis period planning: lessons for hospitality and
tourism. World Hospitality and Tourism Theme, 1(1), pp.66-74.
Pritchard, C.L., 2016. Risk Management – Concepts and Guidance. Virginia: ESI
International.
Tierney, K. and Bruneau, M., 2007. Conceptualizing and measuring resilience: A key to
disaster loss reduction. TR news.
Tschankova, L., 2002. Risk Identification – Basic Stage in Risk Management. Environmental
Management and Health, 13(3), pp.290-297.
Vaughan, E.J., 2017. Risk Management. New York: John Wiley & Sons, Inc.
Online references

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Number of natural disasters in Russia in 2019. 2020. [Online]. Available through:
<https://www.statista.com/statistics/1048904/russia-number-of-natural-disasters-by-
type/>. [Accessed on 14thMarch 2021].
Ritz-Carlton Hotel Moscow. 2021. [Online]. Available through:
<https://www.ritzcarlton.com/en/hotels/europe/moscow#HOTEL>. [Accessed on
14thMarch 2021].