DYCHMpt123 – Micro Perspective in

Tourism and Hospitality

Risk Management and Legal Liability
Risk is defined as the potential for loss or harm (Canadian
Tourism Commission [CTC], 2003a). This could be a financial
loss, damage to property, or injury to workers or guests.
Understandably, most tourism operators are interested in
avoiding these impacts to their operation, which is why risk
management is needed.
 
Risk management refers to the practices, policies, and
procedures designed to minimize or eliminate unacceptable
risks (Cloutier, 2000; CTC, 2003a; Heshka & Jackson,
2011). Depending on the type of operation and the industry
undertaking the risk management process, these may vary
greatly.
Concept of Risk
 
Three theoretical concepts of risk: real risk, perceived risk, and inherent risk.
 
Real risk is the actual statistical likelihood of an incident occurring. This is
established through reviews of statistics and other relevant data, and by an
analytical process and use of expertise in the field.
 
Perceived risk 
 is the perception of risk by those undertaking or evaluating something;
 it may vary greatly based on their level of apprehension, anxiety, or experience
with the specific risk.
 Perceived risk can also vary greatly from the real risk of an activity; it can be
higher or lower than the actual risk.
 
Inherent risk 
 is the risk that must exist for the activity to occur; examples include the risk of
drowning when swimming and the risk of falling during skiing. 
 It is impossible to eliminate inherent risk from these activities because it would
preclude participating in them. 
Risk Management Process
 
A variety of risk management models exist, all of them generally a variation on the
same theme, with each having a slightly different analytical approach. Here we
outline the model from the Canadian Tourism Commission for small and medium
enterprises. It has four stages: risk identification, risk analysis, risk control, and
risk treatment (CTC, 2003a).

Risk Identification
 
The first stage of the risk management process is systematically identifying risks
facing the organization. This step is often referred to as risk assessment. An
organization can identify risks in the following ways (CTC, 2003a, p. 6):
 On-site inspections and discussions with management and staff
 Review of products, services, processes, and contracts
 Review of historical activities and losses
 Identification of possible risk scenarios
Risk Analysis
 
A typical risk analysis compares the probability (frequency) of any risks occurring
by the consequence (severity) if they do occur. This can be done either in a
qualitative or quantitative manner, with either numerical values or descriptors
applied.
 
Risk Control
 
Once the risks are identified and analyzed, the next step is implementing
mitigation strategies for any unacceptable risks. This step is risk control, and it
comprises two primary concepts: exposure avoidance and loss reduction.

Exposure avoidance involves any mitigation strategies used to avoid the

exposure to the risks. Examples are eliminating particularly hazardous activities
or services, avoiding certain areas due to environmental threats, or changing a
tour destination due to political unrest.
Loss reduction is slightly different; it assumes that you have acknowledged the
risk of a particular activity or service, and choose to continue to offer it, but will take
steps to mitigate the severity of damage that may occur (CCTT, 2003a). An
example is requiring all participants in a ski lesson to wear helmets; the risk of
falling still exists, but you have taken action to reduce the severity of any fall.
 
Risk Treatment
 
Failing the ability to control all risks identified, the next step in the process is risk
treatment. This includes the concept of risk transfer and risk retention. 
 
Risk transfer refers to the transfer of responsibility to another party, either
contractually or by insurance.
 
Risk retention refers to the level of risk that is retained by the company through a
conscious decision-making process.
Law and Negligence
 
Tort law in Canada refers to the “body of the law which will allow an injured
person to obtain compensation from the person who caused the injury” (Tort Law,
n.d.,1). Two categories of torts exist: intentional and unintentional.
 
Intentional torts consist of assault, battery, trespass, false imprisonment,
nuisance, and defamation. 
 
Unintentional torts primarily consist of negligence (Tort Law, n.d.). In tourism,
most lawsuits involve negligence, with one party seeking financial compensation.
 
Negligence can be defined as “the omission to do something which a
reasonable man, guided upon those considerations which ordinarily regulate the
conduct of human affairs, would do, or doing something a prudent and
reasonable man would not do” (Cloutier, 2000, p. 13).
Statutory Requirements for Tourism and Hospitality
 
 
All tourism companies must adhere to the laws in the jurisdiction in which they
operate. In BC there are certain statutes (laws) that are particularly relevant to
tourism and hospitality. These are outlined in brief below.
 
Hotel Keepers Act
 
The Hotel Keepers Act allows an accommodation provider to place a lien on
guest property for unpaid bills, limits the liability of the hotel keeper when guest
property is stolen and/or damaged, and gives the provider the authority to require
guests to leave in the event of a disturbance (Hotel Keepers Act, 1996).

Hotel Guest Registration Act

 
The Hotel Guest Registration Act requires hotel keepers to register guests
appropriately, which includes noting a guest’s arrival and departure dates, home
address, and type and licence number of any vehicle (Hotel Guest Registration
Act, 1996).
Statutory Requirements for Tourism and Hospitality

Liquor Control and Licensing Act

 
The sales and service of alcohol in BC hospitality establishments is highly regulated by the
provincial government through the Liquor Control and Licensing Branch (LCLB).
 
Hospitality operators and their staff must be aware of fundamental requirements of
the Liquor Control and Licensing Act, which defines the ways in which alcohol can be
made, imported, purchased, and consumed in BC. These include (British Columbia Ministry
of Justice, 2015):
• The legal drinking age in BC (19 years of age)
• Identification requirements (one piece of government-issued I.D. and a supplementary
I.D. with photo or signature)
• Restrictions on minors: entering pubs and bars (not permitted; exceptions in certain
circumstances)
• Serving alcohol in a restaurant (permitted as of age 16 provided they do not mix drinks or
open bottles)
• Consumption of alcohol in public places such as parks and beaches (not permitted unless
specified as part of an event or festival)
• Bringing a bottle of wine to a restaurant (permitted, with restrictions)
 
As these requirements change frequently, it is the responsibility of operators and staff to
keep up-to-date on the particulars of liquor legislation.
Statutory Requirements for Tourism and Hospitality

Travel Industry Regulation

 
As part of the Business Practices and Consumer Protection Act, the Travel
Industry Regulation outlines the requirements for licensing, financial reporting,
and the provision of financial security for travel sales.
 
Occupiers Liability Act
 
The Occupiers Liability Act specifies the responsibilities of those that occupy a
premise such as a house, building, resort, or property to others on their property. It
includes a definition of a premise, as well as the duty of care the occupier has to
care for the condition of the premises, activities on the premises, and the conduct
of other people (third parties) on the premises.
Statutory Requirements for Tourism and Hospitality

Resort Associations Act

 
The Resort Associations Act was developed to provide opportunities to fund a variety of
promotional services for a resort community. It outlines the organizational structure for the
community and allows funding through member fees for activities such as marketing, planning
special events, developing signage, and acting as a central booking agency (Resort
Associations Act, 1996). 
 
Insurance
 
Obtaining and maintaining appropriate insurance coverage is an important part of the risk
management process. Insurance transfers the financial risks to a third party — the insurance
company. Operators pay premiums that are established by the insurer based on the risk of the
coverage. If the likelihood of claims is high, the premiums will be higher.
 
Common types of insurance policies required by tourism operators include commercial
general liability (CGL), property insurance, and accounts receivable insurance. CGL
insurance can be one of the most important coverages, but unfortunately it can also be one of
the most difficult and expensive to obtain.
 
Self insuring is the practice of an operation retaining the risk rather than transferring through
insurance; it may be a conscious choice or a necessity based on lack of available coverage.
Occupational Health and Safety
 
So far we have primarily discussed risk management from a client/guest
perspective. However, substantial effort in a tourism and hospitality operation must
be put into managing worker safety as well. Responsibilities for worker safety are
generally legislated by occupational health and safety laws, which clearly dictate
safety standards. Employers who fail to adhere to these standards may be
penalized or fined (WorkSafeBC, 2015a).
 
WorkSafeBC is the provincial organization for occupational health and safety in
BC. It is an independent agency managed by a board of directors who are
appointed by government.
 
In addition to concerns about safety, employers and employees must be aware of
the Employment Standards Act. This act defines the legal requirements around employment
such as minimum wage, breaks, meal times, vacation pay, statutory holidays, age of employment, and
leave from work (British Columbia Ministry of Labour, 2015)
 Assignment:
• Express in your own words the best thoughts you have as answer for the
following questions or statements.

https://www.youtube.com/watch?v=AayoUvEuJ80

• Make a Reflective Journal about the topic discuss

 References:

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House
6. Luo, W. (2018). Evaluating tourist destination performance: Expanding the
sustainability concept. Sustainability 10,(2): 516,
End of Week 13