Possible Risk Management Model For The Tourism Industry Tourism Essay

It is good know today, that touristry is considered as the industry with the highest growing rate and potency for occupation creative activity world-wide. Following, touristry, as with any industry, is susceptible to hazard. The hazard could attest itself in many signifiers that can hold black effects on the touristry industry if they are non managed efficaciously.

If we want to specify the hazard, the literature is rich:

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– On a web resource ( What is hazard? ) , we find the hazard as: “ the chance that a jeopardy will turn into a catastrophe. Vulnerability and jeopardies are non unsafe, taken individually. But, if they come together, they become a hazard or, in other words, the chance that a catastrophe will go on. ”

– Raval & A ; Fichadia ( 2007:29 ) appreciate that hazard can be seen as the potency of loss or injury to an entity, ( where ) such an entity can be a individual, a group, an organisation a system or a resource, or alteration to plans or informations, larceny of informations and the unauthorised usage of information.

– Kerzner ( 2001:07 ) refers to put on the line as representing a deficiency of cognition of future events, particularly those events that have a negative impact on the concern, besides referred to as unfavourable events.

It can hence be accepted that, unless hazard is controlled and managed, growing in the industry and occupation creative activity will non be achieved. This is substantiated by the plants of assorted writers, who have identified hazards associating to touristry and the touristry industry ( Shaw, 2010:05 ) .

These hazards can be loosely categorized as follows: nature, offense, wellness and safety hazards, political factors, socio-demographic, technological and economic hazards ( as illustrated in Table 1 ) .

Table 1

Hazard Classs Associated with Tourism and the Tourism Industry

Hazard Class

Examples

Nature

– Natural catastrophe ( Floods, etc. )

– Weather and climatic conditions

– Climate alteration

– Environmental factors

Crime

– Fraud

– Highjacking

– Acts of terrorist act

Health and Safety

– Infectious diseases

Political Factors

– War

– Political instability

– Strikes

Economic

– Lack of support

– Exchange rates

– Rising oil and fuel monetary values

– Economic recession ( local and worldwide )

– Financial crises

– Conveyance

– Conveyance development

Technology

– Information engineering ( IT )

– Reservation systems

– Computer plans

Socio-demographic

– Age & A ; sex

– Family life

– New/ageing markets

– New paths

Beginning: Adapted from G. K. Shaw, A hazard direction theoretical account for the touristry industry in South Africa, 2010, pp. 5-6

To the above categorization, hazard can be divided into two groups, internal ( domestic ) and external ( international ) . Domestic hazards occur within the host state and are normally of a damaging nature that can adversely impact touristry to the state. External ( or international ) hazards are hazards that occur outside the host state ‘s boundary lines, and affect touristry to those states negatively, but to other states, present chances that can perchance be exploited to pull more tourers.

2. Hazard Management

We agree with the writers Baltzan, Phillips and Haag ( 2009:524 ) that describe hazard direction as a procedure of ongoing hazard designation, analysis and developing responses to put on the line factors. This procedure by which challenges and divergences from expected results can be confidently managed by being prepared in progress. Therefore is really importing to placing, measuring and analysing hazard issues, every bit good as planning for the happening of hazard, and includes developing a direction system to manage hazard. This system should be designed to let for the monitoring of hazards to find how they have changed.

If the economic topics disregarding the hazards that apply to concern activities could impact the wellness and safety of employees and clients, the concerns repute, credibleness and position, the populace and client assurance, the fiscal place, the equipment and the environment.

Neitlich ( 2009 ) considers, rightly, that adoption the effectual hazard direction methods and techniques can better safety and concern public presentation in the organisation and therefore better the possible harm of any hazard.

3. Analysis of the Existing Risk Management Models

It is of import that the hazards associated with the touristry industry be identified and that appropriate methods be selected to pull off these hazards. However, before developing any sort of a theoretical account, it is imperative that the differences and/or the combination of procedures, schemes and theoretical accounts to be known. Harmonizing to Cooper and Schindler ( 2001:53 ) , there are different versions of the definition of these facets of theoretical account derivative. They include the followers:

– Processes – a series of actions, directed at a specific purpose. A series of natural happenings that produce alteration or development

– Scheme – a carefully devised program of action to accomplish a end. The art of developing or transporting out a program

– Model – something that is used for a related thought, procedure or system

Given the above definitions, processes or systems could possibly besides be regarded as theoretical accounts.

Assorted hazard direction theoretical accounts are used in concern, peculiarly in the undertaking direction environment. The hazard direction theoretical accounts used in the undertaking direction environment tends to be more general in that they are applicable to a assortment of fortunes depending on the type of undertaking. They are non developed for a specific concern sector, such as finance or the banking industry, and hence they appear to be more adaptable and can easy be changed to accommodate the touristry industry. As will be seen, these theoretical accounts do non differ significantly from one another, but some have restrictions that others do non and may non be suited for the touristry industry ( Shaw, 2010:43 ) . We present a few theoretical accounts encountered in literature follows in an effort to set up their suitableness for usage in the touristry industry.

a. Valsamakis et Al. ( 2000:80 ) posit that hazard direction is an on-going procedure, non to be seen in isolation or as a individual event. Figure 1 shows that the procedure starts with hazard designation, with rating being the chief characteristic to place for hazard control ( for both concern and event hazards ) , before eventually supplying financially for the effects of event hazard. To pull off a hazard, it must foremost be recognized and/or identified, before any type of hazard direction plan can be put into action. This portion of the procedure should be viewed as the most of import map of the hazard direction plan and should be approached in a structured, systematic and well-managed mode.

The hazard control and hazard finance elements of the theoretical account could be presented in greater item. Thereby, the hazard control is about risk/loss badness decrease or loss frequence decrease with the undermentioned elements: fire, security, safety, occupational wellness, exigency planning, motor vehicle loss control, general and merchandises, liability and technology losingss. The hazard funding is about keeping ( hard currency flow, commissariats, militias, equity ) , pre-loss external funding ( confined insurance companies, commercial insurance, province hazard funding and capital market instruments ) or post-loss external funding ( financing installations ) .

Figure 1

Risk Management Model

Hazard Designation

Hazard Evaluation

Hazard Control

Hazard Financing

( Adapted from Valsamakis et al. , 2004:96 )

This theoretical account may be suited for pull offing hazards that lead to fiscal losingss and so the Rumanian touristry industry could utilize such a theoretical account to pull off fiscal hazard. However, it is non ideally suited for version as a hazard direction theoretical account to pull off the other hazards associated with the touristry industry. The theoretical account besides has defects in that the two of import stairss of execution and the rating and reappraisal are omitted.

b. Burke ‘s Model

Burke ‘s hazard direction theoretical account clearly shows the logical sequence of the procedure outlined and how each portion integrates with the whole. Specifying the aims can be seen as finding the hazard tolerance of the concern, and of what the concern is prepared to accept – or non – in footings of hazard impact. Risk designation, quantification and response, together with monitoring and control, constitute the hazard direction program that so becomes formal paperss detailing how the concern will pull off and react to identified hazard.

The integrating and interactions of the Burke ‘s hazard direction procedures are illustrated in Figure 2.

Hazard Control

Proctor and

Reappraisal

Risk Management Plan

Define objecti-

degree Fahrenheits

Hazard

identifi-

cation

Hazard

quantifi-

cation

Hazard

Response

Figure 2. Risk Management Model ( Adapted from Burke, 2000 )

c. The Gray & A ; Larson Model

Gray and Larson ( 2006:209 ) item a procedure similar to that of Burke ( 2000 ) . This is shown as Figure 3. Although there are once more four stairss in the procedure, each is a small different to those of Burke ‘s theoretical account.

An of import component that is losing from Gray ; A ; Larson ‘s theoretical account, but one that is included in Burke ‘s theoretical account is the scene of an aim. In other words, what is to be achieved by hazard direction? This is non ever every bit axiomatic as might be thought. A farther indispensable difference between the two theoretical accounts is that Burke starts with hazard control whereas this measure is merely portion of the execution of hazard responses and, hence, the last measure in the Gray ; A ; Larson theoretical account. The theoretical account presented by Gray ; A ; Larson ( 2006 ) besides explains what needs to take topographic point at each measure of the procedure.

Measure 1: Hazard Designation

Analysis of the undertaking to place all possible beginnings of hazard

Measure 2: Hazard Appraisal

Assess the hazards in term of:

– Badness of impact

– Likelihood of happening

– Controllability

Measure 3: Hazard Response Development

– Develop a scheme to cut down possible harm

– Develop eventuality programs

Measure 4: Hazard Response Control

– Implement the hazard scheme

– Proctor and adjust hazard direction program for new hazards

– Change direction

Known hazards

Hazard appraisal

Hazard manage-

ment program

New hazards

New hazards

New hazards

Figure 3.

The Risk Management Model ( Adapted from Gray ; A ; Larson, 2006:209 )

d. The AS/NZS ( Australian/New Zealand Standard ) Model

A really comprehensive theoretical account, known as the aˆzRisk Treatment ProcessaˆY was developed by the Australian and New Zealand Standards Body in 1995. This theoretical account is really similar to those of Nieman ; A ; Niewenhuizen ( 2009 ) , of Gray ; A ; Larson ( 2006 ) and of Burke ( 2000 ) , but provides much greater item with regard to the decision-making procedures. The theoretical account besides includes the determination doing procedure associated with each of the four or five stairss found in the other theoretical accounts.

Nieman et Al. ( 2003:121 ) suggest that successful determinations follow a well-constructed procedure, which includes state of affairs analysis and planning. Nieman et Al. are of the sentiment that rational determination devising can be described as a logical and systematic attack to placing a job, farther adding that developing alternate state of affairss and so choosing the most appropriate solution is required.

The decision-making ( problem-solving ) theoretical account is illustrated in Figure 4. Harmonizing to Nieman et Al. ( 2003:131 ) , following the stairss in the theoretical account will non, nevertheless, warrant good determinations, but will increase the opportunities of success in determination devising.

The construct of hazard and hazard direction discussed could sum up in Figure 5, which illustrates a few of the many complex facets that need to be considered when developing a hazard direction theoretical account for the touristry industry.

Measure 1

Identify and specify the job

Measure 2

Set ends and aims

Measure 3

Identify alternate solutions

Measure 4

Compare and measure alternate solutions

Measure 5

Choose the solution

Measure 6

Implement the chosen solution

Measure 7

Follow up and command

Figure 4

Decision-making Process – Problem-solving Model

( Adapted from Nieman et al. , 2003:121 )

Figure 5 shows that hazard impacts non merely on the concerns associated with the touristry industry, but on the industry as a whole. The impact can be either positive or negative and hence might be exploited beneficially or possibly minimized if inauspicious, by taking the best scheme through the effectual usage of a suitably designed hazard direction theoretical account.

The touristry industry has now advanced sufficiently that a hazard direction theoretical account can be developed to integrate the multidimensional nature of hazard direction in the Romania touristry industry.

4. The possibility to development a hazard direction procedure and theoretical account for the Rumanian touristry industry. An empirical analysis propose

a. The Risk Management Process

The concluding hazard direction procedure is based on the research of procedures used by other industries, concerns and subjects and has evolved to do it user friendly. The procedure is based on a combination of the procedures presented above and illustrated in figure 6.

Decision-making Process and determiners

Tourist

Hazard Faced by the Tourist:

– Natural

– Political

– Health/Safety

– Crime

– Economic

– Technological

Tourism

Hazard:

– Natural

– Health/Safety

– Crime

– Economic

– Technological

– Socio/ Demographic

Decision-making

– Image

– Productiveness

– Sustainability

– Quality

– Value

– Placement

Hazard Management

– Designation

– Quantification

– Appraisal

– Response – Schemes

i⤠Response Control

Impact

Impact

Business

Figure 5 Hazard and Risk Management in the Tourism Industry

( Adapted from Shaw, 2011:53 )

Measure 1: Hazard Designation

– Identify all possible hazards

Measure 2: Buttocks the Hazard

– Determine the chance of happening and the effect of happening

– Determine the hazard class utilizing the hazard appraisal matrix in Figure 7

– Classify the hazard ( High, Medium, Low )

– Determine the causes of the important hazards

Measure 3: Develop Risk Responses

– Decide how to manage the hazard: Mitigate/Transfer /Avoid/ Share /Accept

– Develop a response to the hazard, in line with the determination made how the hazard is to be handled, that is practical and can be implemented

– Develop eventuality to be implemented in the event that the hazard does happen even though preventative stairss have been implemented

Measure 4: Manage the Hazard

– Implement the hazard response

– Proctor and re-evaluate if required

– Update the hazard direction program for alterations or new hazards

– Implement alterations in a controlled mode

Re-assess the Hazard after Action is implemented

Identify New Risks

Figure 6. Risk Management Process Proposed

The chance of happening and effect could find utilizing Table 2 as a guideline.

Table 2 Probability and Consequence of Occurrence

Probability

Consequence

1

Regular ( ; gt ; 80 % Chance )

1

Highly High Cost or Loss of Life

2

Probable ( 60 – 79 % Chance )

2

High Cost or Serious Injuries

3

Can Happen ( 40 – 59 % Chance )

3

Moderate Cost or Moderate Injuries

4

Low Likelihood ( 20 – 39 % Chance )

4

Low Cost or Minor Injuries

5

Rare ( 6 – 19 % Chance )

5

Highly Low Cost or No hurts

6

Highly Unlikely ( ; lt ; 5 % Chance )

6

No Cost or Near Miss

The hazard appraisal matrix in Figure 7 is used to sort the risk`s badness as high ( 1 -4 ) , medium ( 5 – 7 ) or low ( 8 – 11 ) . The badness ranking in the matrix is a logical derivation from the ranking of happening and effect. Get downing in the top right corner with the highest ranking of 1, which is derived from a chance evaluation of 1 and a effect evaluation of 1, the badness evaluations are so increased by 1 for every square traveling from top to bottom in the right manus column and the left to compensate in the top row as the hazard badness decreases. The lowest badness hazard has a matrix ranking of 11 ( underside left corner ) .

Figure 7 Risk Assessment Matrix ( Adapted from Shaw, 2011:206 )

High badness hazards ( 1 – 4 ) require immediate action to extinguish or at least cut down the happening of hazard or its impact. When the hazard is classified as one of medium badness ( 5 – 7 ) so preventative steps need to be implemented. Hazards in the low badness class ( 8 – 11 ) do non necessitate action in the immediate hereafter and can be accepted, but forces must be cognizant of the hazard.

It recommended that every operator/owner of a concern associated with the touristry industry in Romania uses the hazard badness matrix in Figure 7 to categorize and sort the hazards that have been identified.

The procedure of quantifying the hazard is subjective as it is based on the user`s ability to find the chance of happening and the cost of the effect ( or benefit ) should the hazard occur. Risk direction is non an exact scientific discipline, but still a utile tool to understate the negative impact or maximize the benefit to the person concern, its proprietors and the industry as a whole.

B. The Risk Management Model

The procedure illustrated in Figure 7 was used to develop the proposed hazard direction theoretical account for the Rumanian touristry industry shown in Figure 8.

The hazard direction theoretical account in Figure 8 illustrates the hazard direction procedure in Figure 7. The single hazards found under the hazard factors can be domestic or international hazards. Some of these hazards can be of both a domestic and international nature and will fall into the convergence. Internal or external hazards to the concern are included in the domestic hazards. The single hazards are now assessed, categorised and classified by finding the chance of happening and the effect of the hazard ( Table 2 ) and utilizing the hazard badness matrix Figure 7 ) to categorize and sort the hazard badness as high, medium or low. The following phase of the procedure illustrated in the theoretical account is to place the causes of the hazard after which a response ( action ) is formulated for execution to cut down the loss incurred by the concern should the hazard occur. Once the response is implemented it must be determined if the action taken was successful by reiterating the hazard appraisal procedure and, if necessary, explicating and implementing farther action. New hazards may originate as a consequence of this procedure or are otherwise identified and the procedure starts once more. This is portion of pull offing the hazard.

Hazard Factors:

Organizational Hazard

Environmental Hazard

Competitiveness

Crime ; A ; Political Factors

Infrastructure

Business

Insufficiencies

Economic Hazards

Transportation system Hazards

Health Risks

Domestic includingBusiness Hazards

Overlap

International Risks

Probability of Happening

Consequence of Happening

Hazard Classification

Hazard Categorization

Identify the Causes of the hazards

Develop

Hazard

Responses

Manage

the

Hazard

Designation

Hazard Appraisal

Re-assess the Hazard

New Risks

Figure 8. Proposed Risk Management Model

( Beginning: Research worker: Based on the hazard direction procedure in Figure 6 )

c. An empirical analysis propose

We propose a structured questionnaire designed to set up how the operators in the Rumanian touristry industry rate hazard and the impact thereof on the concern or industry. The questionnaire is divided into two subdivisions, demographic ( institutional information ) and evaluation of hazard.

The demographic information includes:

Type of concern

Degree of instruction of operator or proprietor

The part in which the concern is situated

Other information requested in the demographic subdivision was in regard of the mechanism used to find and measure hazard in the concern and the cardinal factors considered to be of import when finding hazard.

The intent of this subdivision of the questionnaire is to set up the distribution of the informations across different types of concerns in the touristry industry and the part in which they are situated. This is of import, since the research aims to embrace the touristry industry and non merely one specific portion of the industry ( such asaccommodation ) . It is hence necessary to guarantee that the responses that are received are non biased towards one particular concern type or sector within the industry. Although this research is chiefly concerned with the development of a hazard direction theoretical account for the Rumanian touristry industry, this information will besides be utile for farther research intents.

The 2nd subdivision, dwelling of 53 statements, is concerned with the hazards associated with the touristry industry and how the operators rate the identified hazards in regard of strength ( impact ) to their concern. Although the hazards are associated with specific types of concerns situated in different parts in Romania, this research is concerned chiefly with the Rumanian touristry industry as a whole. The inquiries included in the questionnaire are based on the initial hazards listed in Table 1 and the literature survey. A 5-point Likert graduated table is used to help with statistical rating of the responses received, with 1 bespeaking an highly low hazard and 5 an highly high hazard to the concern. Mention to Appendix 1 for the questionnaire and attach toing missive.

5. Decisions

This paper has concentrated on hazards that are likely to happen and impact on the supply side of the Rumanian touristry industry. This implies that it merely focused on the proviso of services for usage by the tourers, who represent the demand side of the touristry industry, and it has non considered the hazards faced by tourers in the theoretical account.

It is hence recommended that the hazards likely to happen on the demand side of the tourer industry be researched for inclusion in the hazard direction theoretical account.

Mentions

What is hazard? , n.d. , retrieved March 17, 2011 from hypertext transfer protocol: //www.unisdr.org/eng/public_aware/world_camp/2004/booklet-eng/Pagina9ing.pdf

Baltzan, Phillips and Haag ( 2009 ) , Business driven engineering, 3rd erectile dysfunction. New York: McGraw-Hill International.

Burke ( 2000 ) , Project direction planning and control, 3rd erectile dysfunction. Cape Town: Management Press.

Cooper and Schindler ( 2001 ) , Business research methods, 7th erectile dysfunction. Boston, Mass. : McGraw-Hill Irwin.

Gray and Larson ( 2006 ) , Project direction – the managerial procedure, 3rd erectile dysfunction. Boston, Mass. : Irwin/McGraw-Hill.

Kerzner ( 2001 ) , Project direction: a systems attack to planning, programming, and commanding, 7th erectile dysfunction. New York: Wiley.

Neitlich ( 2009 ) , The importance of hazard direction for concern proprietors http: //www.evancarmichael.com/Management/1034/The-Importance-of-Risk-Management-for-Business-Owners.html. Date of entree: 18 December 2009.

Nieman ; A ; Niewenhuizen ( 2009 ) , Entrepreneurship: a South African position, Pretoria: Van Schaik

Nieman et al. , 2003, Entrepreneurship: a South African perceptual experience, Pretoria: Van Schaik.

Raval ; A ; Fichadia ( 2007 ) , Risks, controls, and security. constructs and applications, New York: Wiley.

Shaw, G. K. , A hazard direction theoretical account for the touristry industry in South Africa, Thesis submitted for the degree Doctor of Philosophy in Tourism Management at the Potchefstroom Campus of the North-West University, April 2010

Valsamakis et Al. ( 2000 ) , Risk direction, 2nd erectile dysfunction. Sandton: Heinemann

APPENDIX 1 – Letter AND STRUCTURED QUESTIONNAIRE

A RISK MANAGEMENT MODEL FOR THE TOURISM INDUSTRY IN ROMANIA

Dear Director/Manager

The undermentioned questionnaire is portion of an extended research survey undertaken to look into the hazards associated with the touristry industry. Your valuable input is critical to the result of this research. Kindly complete this questionnaire every bit exhaustively as possible. All information will be treated as confidential and will merely be used for academic intents.

Thank you,

Maria Oroian PhD

Dimitrie Cantemir University Targu-Mures,

oroianmaria @ yahoo.com

Instruction manuals for completion:

1 Please reply all inquiries sing your appraisal of touristry hazard as candidly and objectively as possible.

2 Topographic point a tick or a cross in the infinite of the inquiries that reflects your reply most accurately.

3 Where asked for remarks or to stipulate, delight maintain these as briefly, yet exhaustively, as possible.

Section A: Institution Information

What type of concern do you manage/ ain?

Tour operator

1

Travel agent

2

Lodge

3

Hotel

4

Bed ; A ; Breakfast constitution

5

Guesthouse

6

Other ( Specify )

7

2. Please bespeak your highest degree of instruction

No school

1

Elementary School

2

Diploma, grade

3

Post-graduate

4

Professional

5

Other ( Specify )

6

3. In which state is your concern situated?

North-West Region

1

Center Region

2

North-East Region

3

South-East Region

4

South Region

5

Bucharest-Ilfov Region

6

South-West Region

7

West Region

8

4. Please indicate which of the following you use to find and measure hazards in your concern

Physical review

yes

no

Ailments

yes

no

Economic prognosiss

yes

no

Market statistics

yes

no

Drop in turnover

yes

no

Group treatment ( brainstorming )

yes

no

Interviewing tourists/visitors

yes

no

Seminars, workshop, media studies

yes

no

Working closely with authorities establishments

yes

no

Other ( Specify )

yes

no

Global tendencies

Political determinations

Crime statistics

5. What are the cardinal factors that you consider of import when finding hazard?

Physical review

Economic prognosiss

Market statistics

Global tendencies

Political determinations

Section B

6. Please rate the undermentioned hazards in your concern on the strength graduated table.

Highly high hazards

High hazard

Reasonably

Low hazard

Highly low hazard

1. Stress

1

2

3

4

5

2. Diseases

1

2

3

4

5

3. Crime in general

1

2

3

4

5

4. Cost of transit

1

2

3

4

5

5. Road safety

1

2

3

4

5

6. Airline safety

1

2

3

4

5

7. Airport safety and security

1

2

3

4

5

8. Exchange rates

1

2

3

4

5

9. Currency fluctuations

1

2

3

4

5

10. Decrease in disposable income

1

2

3

4

5

11. Inflation

1

2

3

4

5

12. Interest rates

1

2

3

4

5

13. Lack of qualified staff

1

2

3

4

5

14. Lack of experient staff

1

2

3

4

5

15. Aging tourer markets

1

2

3

4

5

16. Decreasing leisure clip of tourers

1

2

3

4

5

17. Urbanization

1

2

3

4

5

18. Seasonality

1

2

3

4

5

19. Water pollution

1

2

3

4

5

20. Air pollution

1

2

3

4

5

21. Natural catastrophes

1

2

3

4

5

22. Fire

1

2

3

4

5

23. Image of the country/destination

1

2

3

4

5

24. Increased competition, nationally

1

2

3

4

5

25. Increased competition, internationally

1

2

3

4

5

26. Change of tourers demands

1

2

3

4

5

27. Insufficient support for preparation

1

2

3

4

5

28. Lack of support for merchandise development

1

2

3

4

5

29. Transporting capacity – excessively many tourists/visitors

1

2

3

4

5

30. Insufficient selling by local governments

1

2

3

4

5

31. Lack of municipal services such as H2O, electricity, sewage

1

2

3

4

5

32. Wars/conflicts

1

2

3

4

5

33. Political instability in neighbouring states

1

2

3

4

5

34. Terrorist activities

1

2

3

4

5

35. Climate alteration

1

2

3

4

5

36. Lack of proper fiscal systems

1

2

3

4

5

37. Theft/fraud in concern by staff

1

2

3

4

5

38. Larceny in concern by tourers

1

2

3

4

5

39. Unable to carry through demands of tourers

1

2

3

4

5

40. Too high monetary values in industry in general

1

2

3

4

5

41. National selling organisation non effectual

1

2

3

4

5

42. Technological alterations e.g reserve systems, new programmes

1

2

3

4

5

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