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Risk Management in the Hospitality Industry

Risk Management in the Hospitality Industry
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  • 0:03 Managing Risks
  • 1:11 Hospitality's Big Threats
  • 1:52 Food, Drink, Bugs, & Cars
  • 3:48 Accessibility & Security Risks
  • 5:57 Mitigating Risk
  • 6:46 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Hospitality providers face a unique set of risks to their daily operations. In this lesson, you'll learn more about specific risks and steps for implementing a risk management plan to mitigate them.

Managing Risks

Staff and employees of a downtown Atlanta hotel are looking to implement new safety measures following the death of one of their colleagues onsite in 2016. The employee was trapped in a walk-in freezer at the hotel, prompting calls from other workers for enhanced safety measures to prevent another tragedy. It's an extreme example, but it's one of many risks faced by businesses operating in the hospitality industry, a service profession where the business is all about people and customer service.

An effective risk management strategy is essential for members of the hospitality industry. Risk management helps employees to identify, analyze, assess, and hopefully, avoid or mitigate risks coming from a variety of sources, such as financial upset, legal ramifications, accidents, natural disasters, data or cyber security breaches, and many more. In this lesson, we'll talk more about some specific instances of risks in the hospitality industry and how to implement procedures to successfully deal with them before they become a bigger problem.

Hospitality's Big Threats

If you worked in construction, one of the big risks of your profession would be getting injured on the job - maybe by hitting your thumb with a hammer or falling off of a roof. In the restaurant business, a risk might include sustaining a burn from a hot dish or having diners leave without paying a bill.

For those in the hospitality industry, including hotels, resorts, and casinos, among others, risk challenges can include everything from guests who fall sick due to food-borne bacteria to cyber threats. Let's examine a few of the more common types of risks that hospitality providers are faced with.

Food, Drink, Bugs, and Cars

Food Safety

Food-borne illnesses like salmonella or E.coli can spread through contaminated surfaces. This type of concern in a restaurant is much higher than at a personal home, and can lead to business interruptions, lawsuits, workers compensation claims, and loss of reputation. To mitigate this risk, proper food handling and sanitation training should be provided for all employees, as well as instruction on careful food sourcing procedures.

Liquor Liability

Liability standards vary from state to state, but businesses that choose to serve alcohol face a variety of risks, from guest injury to death - both on property and off. For example, if a server provides alcohol to a clearly intoxicated individual, and they cause an injury or death after getting behind the wheel of a car, the establishment can be held liable. Mitigating this risk means providing proper training to employees who will be serving alcohol, carrying appropriate licensing, checking identifications, and controlling liquor service at group events.

Bedbugs

A fear harbored by hotel travelers everywhere, bed bugs are showing up in lodging locations from roadside motels to five-star resorts. An infestation can lead to bites, itches, and welts on their victims. Extensive cleaning and vacuuming should be done daily and always in between guests. Other precautions include throwing out infested materials, encasing a mattress in a zippered cover, and using an exterminator.

Transportation

Many hotels provide shuttle service for guests between venues, like to and from the airport. Problems occur when wrecks happen or transportation employees have a driving record with certain violations. Mitigating this risk means properly screening drivers, performing background checks, and requiring continued training, certification, and education of all drivers.

Accessibility and Security Risks

ADA Compliance

This refers to making public areas accessible for individuals with disabilities, protected under the Americans with Disabilities Act. ADA compliance requires parking accommodations and access to public areas of facilities. Failing to comply can result in hefty fines. Staff training is needed to ensure compliance, and expert assessments of your property and accommodations should be completed to make sure all necessary accommodations are available.

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