- Tourism is one of major generators of social and

economic growth in the world and one of the

leading drivers of international trade.

- It generates income, creates and sustain jobs,

encourages foreign investment and facilitates
trade for all economies
RISK MANAGEMENT
 Risk management is an invaluable tool for the visitor
industry and the communities it supports as it provides the
means by which risk can be identified and treated,
preventing or minimizing the effects of crises and disasters
upon this vital industry
Defining RISK?
….….is essentially the likelihood or probability of
negative events and subsequent loss to a tourism business
or destination arising from a negative event. Sometimes,
this can be measured statistically. Risk also factors in the
consequence of a given risk occurring.

……..most commonly refers to the prospect of loss.

This loss is usually some form of unwanted outcome or
undesirable consequence from a specific action or
consequence (Cunliffe, 2006)
Risk Management Process (Cunliffe, Gurtner & Morgan, 2006)
 Step 1 Establish the context

- Understand the context and define the relationship between your organization and
environment so the boundaries for dealing with the risk are clear
- Align objectives, core activities and operational activities

 Step 2 Identify Risk

- Identify what could go wrong and what is the consequence (loss or damage) of it
occurring
- List risks, incident that might happen by systematically working through each
competition
- List possible causes and scenarios
- What is the likelihood of them happening?
- Risks can be financial (Freud, Insurance, damages), ethical or legal (laws)Physical
(property damage)
 Step 3 Analyze the Risk & Evaluate

- Involves analyzing the consequences of each identified risk and

deciding which risk factors will potentially have the greatest effect
and should receive priority
- Determine the priority level of risk
Table 1: Likelihood What is the likelihood of the risk to occur in a year?
Scale LIKELIHOOD

5 ALMOST CERTAIN: will probably occur, could occur

several times per year

4 LIKELY: High probability, likely to arise once per year

3 POSSIBLE: reasonable likelihood that it may arise over 5

year period

2 UNLIKELY: plausible, could occur over 5-10 year period

1 RARE: very unlikely but not impossible, unlikely over 10

year period

CRITERIA for
EVALUATING RISK
LOSS or POTENTIAL IMPACT
DAMAGE What is the damage impact if the risk event occurred?
SCALE
5 CATASTROPIC: Most objectives may not be achieved or several
severely affected
4 MAJOR: most objectives threatened or one severely affected

3 MODERATE: some objectives affected, considerable effort to

rectify i.e. sport, injury and some impact on participation in sports
and other activity
2 MINOR: Easily remedied, with some effort the objectives ca be
achieved i.e. first aid treatment and prevents immediate
participation in sport or other activities
1 NEGLIGIBLE: very small impact, rectified by normal processes i.e.
sport injury but does not prevent participation
 IMPACT 5 4 3 2 1

5 Extreme (1) Extreme (1) Major (2) Major (2) Medium

Almost (3)
certain
L
I Minr4 Extreme (1) Extreme Major Medium Minor
K Likely
E
L 3 Extreme Major Major Medium Minor
I Possible
H
O 2 Major Major Medium Minor Minor
O Unlikely
D
1 Medium Medium Minor Minor Minor
Rare
EXTREME Extreme risk that are likely to arise and have potentially
serious consequences requiring urgent attention

MAJOR Major risks that are likely to arise and have potentially serious
consequences requiring urgent attention or investigation

MEDIUM Medium risks that are likely to arise or have serious

consequences requiring attention

MINOR Minor risks and low consequences that may be managed by

routine procedures
 Step 4: Treat the Risks

 Risk treatment involves identifying the range of option for treating the risk,
evaluating and preparation for the risk treatment plans and implementing
those plans.
 According to standards, treatment option include:
• Accepting risk – Consider minor injuries in participating the sport event
• Avoiding the risk – Choosing an activity with acceptable risk which meet the
objective
• Reducing the risk – use of mouth guards etc.
• Transferring the risk – Waiver, agreements, disclaimers and warning signs
• Retaining the risk – Acknowledging the risk is an important part of the event
because of the inherent of the said event (sport) and acceptable
• Financing the risk –Allotted fund for the consequences of the risk
 Step 5: Monitor & review

 It is on on-going part of the risk management that is integral

to every step of the process
Function of RISK MANAGEMENT
 Identify – Identify risk before it become realities
 Analyze – Transform risk into decision-making information
 Plan – Use decision making to formulate plans and contingency
 Track – Monitor the effectiveness of the plan
 Control – Correct deviation
 Treat – Transfer the risk through insurance cover or design operational
measures to manage negative events that may occur
 Communicate- Provide internal and external information (feedback loops)
to monitor changes in the risk environment
Significance of Insurance Coverage

 Insurance companies provide coverage and charge premiums based

on the statistical calculation of risk
 Tour operators take special care in ensuring they financially covered to
loss and damages which could arise these include; public liability and
professional liability cover.
 Traveler – Travel insurance for tourism business need to purchase
insurance coverage with care
Resilience on TOURISM

 Resilience is the ability of a system to reduce the chances of a crisis

occurring, mitigating impacts of a crisis and recover its essential structure
and functions quickly.

 Cochrane (2010) developed the concept as ‘the sphere of tourism

resilience’ with the core features:
- Ability to understand and harness the market force
- Collaboration with stakeholders to create strong connection
- Good leadership by public sector
- Flexibility to adapt change
Types and Impact of Crises in Tourism

 UNWTO (2011) Five crises categories:

1. Environmental – Geological, Extreme weather, climate change &
deforestations
2. Societal and political – Riots, crimes, terrorism, human rights abuses, coup
attempts, violently contested election
3. Technological – Transportation accidents, and IT system failure ( hacking)
4. Health- related – Disease epidemics
5. Economics – Major currency fluctuations and financial crises
Reasons that affect tourism businesses’ ability to
operate, perceived as unsafe destination

 Physical damage to infrastructure

 Terrorist attacks
 Decision by tourists to cancel trips
 Removal of tour operators in their brochures as
destination
 Airlines’ decision to reduce flights to affected
destination
HAZARD & RISK

 Hazard – A potentially damaging physical

event, phenomenon or human activity, that
may cause the loss of life or injury, property
damage, social, economic disruption or
environment degradation

 Risks – The probability of harmful

consequences or expected losses resulting
from interaction between natural or human-
induced hazard and vulnerable conditions
 HAZARDS FOR TOURISM
ATMOSPHERIC EARTH BIOLOGIC HUMAN
(GEOLOGICAL)

Cyclones Earthquakes Human Epidemics Industrial accidents

Tornadoes Tsunamis Plant Epidemics Traffic Accidents

Storms Landslides Animal Epidemics Crime; terrorism

Floods Volcanoes Plagues Economic

Frosts Erosion Fires Political conflict

RISKS FOR TOURISTS

ENVIRONMENTAL

DISEASES

FINANCIAL

SOCIO-CULTURAL

PRODUCT LIABILITY

PROPERTY DAMAGE

SECURITY
IMPACTS OF HAZARDS AND RISKS ON TOURISM

 Damage of tourism specific assets : Human,

Environmental & Social
 Degradation of destination’s image ( Decrease
of income & Substitution by other destination)
 Indirect damage ( Macroeconomic effect)
Source: Walker and Page, 2003
Why tourism destination is a special
case of Risk Management

 Natural disaster in a tourism destination : Local people &

Tourist
 The distribution of tourism in time and space is the crucial
factors for risk management in tourism destinations
 As a general rule more tourists: Increase the vulnerability
and decrease the capacity
 During a natural disaster, tourists are a ‘threat’ for the
local community
 They can become an advantage if they are properly
informed
What we should assess?
 Seasonality of tourism
• Load of tourists as an absolute number during different seasons
• Load of tourism in relation to seasons with higher exposure to natural hazard
 Special Events
• National Holidays
• Religious event
• Cultural event
 Composition of tourism load
• Nationalities
• Age groups with special needs
• People with disabilities
• Tourist with specific interest and capacities
• Landmarks and pilgrimage
• Restaurant and entertainment
• Beaches ( open areas)
Create simple tools to assess these specificities

 Historical data on tourism arrivals

 Historical data on natural hazards
 Maps or graphs showing the distribution of
tourists: various season, during the day,
special events
FOCUS ON SECURITY in TOURISM
 Guarantee the safest way for their clients
 Terrorists see great value in the publicity their
cause or their organization receives from
attacks which target tourist from many
nationalities
 Wholesalers need to understand that tour
groups are prime targets for terrorist
 Key security issues to address in a security audit for
tour operators
 The state of security for the property of the business or event venue
 Prioritization and coded identification of key assets
 Effective screening of people, goods, vehicle, baggage & post
 Data protection including backup
 Threat assessment of organization who may be hostile to the enterprise
 Fire protection and fire drills
 Security and financial resources
 Protective clothing and equipment
 Protection of computer and IT equipment
 Legally binding contracts for employment
 Protection of sensitive company information
 Surveillance of entrances, public areas and key assets
 Security audits of hotels, attractions and transport used
 Emergency evacuation routes and procedures
 Periodic drills
 Balance between visible and discrete security presence
 Contact with police and emergency services
 Maximization of insurance coverage
 Clear of internal lines of security responsibility and roles
 Media and PR spokesperson to deal with reputation issues
 Next of kin or emergency external contacts for staff members
 IT and Phone Security Audit items
 Computer and network password with log of
holders
 Physical asset
 Record of physical asset
 Data back up storage
 Logging of data access
 Access to sensitive customer data and credit
card information
 Access to client data
 Access to financial and banking data
 Email protection from spam and internal misuse
 Anti virus and Trojan security, firewalls
 Data defense measures
 Website security
Tourism and Terrorism
 Risk management a difficult term to define, and in the age of terrorism is almost beyond
the scope of definability. The term terrorism is not easy to define.
 “There is no general consensus as to who is a terrorist or what the definition of terrorism”
(Tarlow, 2006)
 Their advantages
• A willingness to seek publicity and create fear among public
• Element of surprise
• Willing to sacrifice their lives for their cause
• Contrary to the belief, terrorism is less about murdering the people than it is about
destroying economies
• A form of violent nostalgia in which the terrorist organization seeks to restore that which
either once was or never was (Boym, 2002)
• It may come in any formats, attacking food supplies, mass murder, introduction of drugs
• A modern ideological creation that seeks to destroy modernity: women are used as
instrument, anti- capitalist, based on principle of non-compromise, judges people by the
group.
Basic assumption in tourism risk management
program in age of terrorism
 There is no event that is 100% free of risk
 Travelers are more likely to be risk oriented that when they stay at home. Today, terrorist
choose to stay in a hotel as a guest. Terrorist during 9/11 first acted as tourists, before
committing their acts
 Stan Plog, outlines that not all travelers have the same psychographic tendencies,
allocentric traveler will have a proclivity to place themselves in more dangerous situation
while psychocentric travelers need a greater amount of caring and assurances
 Never forget that risk managers have to handle risk at the same time as providing excellent
customer service
 The public is also aware of the world tension too. The traveling public will seek assurances
for its safety
 Risk managers must worry about both safety and security issues
 Often efficiency levels rise so does the risk. With the rise of electronic and computerized
technology some risks are reduced, but at the same time new risks develop
The Food Supply and Delivery system

 Assignment: Submit an article about food safety issue ( tourism

destination) in the tourism industry
 Synthesize and submit a journal regarding the issue