1.Collect the job description and assess the requirements and what is being done. Identify gaps emerging from the department and work related risks in a multidimensional aspects. Specific risks in relation to internal, external, strategic and operational risks.
2.Theory of risk management (definition of risk management – what do you mean by risk management cycle – impact etc.)
3.Assess historical risks happened in the past and perceive future risks.
4.Describe the risk statement
5.Select an appropriate risk model or models that fit the risk assessment
6.Write the methodology as to how you have collected the data and what risk assessment criteria you will be using Risk likelihood and risk impact
7.Use the 4 T’s, which risk you want to treat, which risk you want to tolerate, which risk you want to treat and which risk you want to transferee.
Introduction to Strategic Risk Management
Strategic Risk Management is a process that includes identifying the risks, assessing the risks and managing the risks which an organization may face due to internal and external factors, scenarios and events. The risks identified may restrain an organization from achieving its objectives and goals as the risks tend to impact the functioning of an organization. Thus, the main aim of strategic risk management is to manage the risk accordingly, so the objectives of an organization do not suffer. The other objective of a strategic risk management is the protection of the company’s stakeholders and their value. The strategic risk management is the primary component and is crucial in the foundation of Enterprise risk management. The strategic risk management is a continuous process that should be incorporated in the strategy execution, strategy setting, and strategic management. The hotel industry is surrounded by many risks that can have an instant impact on the brand image in the market. There are many sources of risks that emerge in a hotel due to the internal and external factors. The thing that worsens the situation that unlike other industry the damage in the hospitality industry is massive as it is a business to customer relationship and the organization runs on it. So, the risks majorly depend on the customer experience. Being the manager of a hotel, there are huge responsibilities that are associated with different departments. Any slip in any of the department gives birth to new risks. Thus, it is the duty of the manager to manage all the departments appropriately. The Hilton UAE is one of the most popular pillars in the hospitality industry. But as a manager, a regular risk assessment is needed for the better growth of the organization.
The Hilton UAE has been working successfully for many years. But with the continuous evolution and the growing demand of the customers, the hotel faces some risks every now and then. For the organization, delivering excellent customer experience is the only way to survive in this competitive market. In the hotel industry, risk can emerge from any corner, from the customer getting sick to physical injuries and risks due to fire and any other catastrophe (Agarwal & Ansell, 2016). As a manager, it is the duty to ensure that all the aspects that are related to risks should be checked regularly. In the recent time, the Hilton UAE has been facing some risks that have been identified related to various aspects, they are-
Risks in the Hospitality Industry and the Impact on Hilton UAE
Hilton is a world renowned brand and when an organization of such status delivers bad quality food, then it is considered as the biggest risks. This has been a complaint by many customers in recent times, especially at the prices the hotel is charging this comes as a huge risk. Many of the customers have complained about contaminated food that results in food-borne illness that is delivering a bad customer service (Baker, 2009).
The rapid evolution of the hospitality industry has made it difficult, even for many big organizations to keep up with the changes. The biggest change that is affecting the Hilton UAE, is the lifestyle hotels, which are providing high standard services at economical prices. The customers are shifting to lifestyle hotels and this new competition has shaken many big organizations. The Hilton UAE is suffering due to customer loss, as the customers are shifting to lifestyle hotels. The biggest competition of Hilton UAE is Saadiyat Rotana Resort & Villas, Grand Hyatt, and the Crowne Plaza (Benischke, Martin & Glaser, 2018).
Hilton UAE is an expensive hotel and due to the economy going downstream the organization has suffered a lot of losses. The organization caters to a particular target audience and it has been very difficult for the organization to deal with this risk and the loss of profits. The situation has worsened due to the new millennial trends that are affecting the functioning of the Hilton, ultimately resulting in loss of profits.
Risk management is one of the main elements of project management. The project risk management deals with the decision making process. In a project or an enterprise, the decisions play a very crucial role in the formulation and the depletion of risks. For the organization Hilton UAE, the main focus of the organization should be on making correct decisions. The process of managing risks can be conducted only if the project risk management has a methodical and disciplined approach (Bromiley, Rau & McShane, 2014). The risk management cycle includes-
Most of the risk management literature considers risk identification as the first stage of the cycle, but the first step has to be the analysis of the strategic and organizational contexts. The project context is the key context, as it informs about the project goals, objectives and scope that are related to the time, cost and quality. It is very important to understand these aspects and the linkage between strategic goals and the business plans of the organization. It is important because this will help in understanding the different aspects in detail which will further help in the other stages of the risk management (Chol et al., 2012).
Identified risks for Hilton UAE
Risk Management is a process that helps in determining what, when, how and why factor that is associated with any uncertainty of the project. The identification of numerous risks requires to know about the different scenarios under which the potential risk can arise. For the management of the risk, the identification of the risk and its root cause is very important for any organization.
The process of risk assessment or analysis is also conducted in various stages, they are-
- Purpose- The main objective of conducting a risk analysis is to differentiate between various risks and to prioritize them, so that the actions of the risk management could be finalized accordingly(Delis, Hasan & Tsionas, 2015).
- Level- The level of the risk has to be determined as it is very important to know about the consequences which an organization will face due to the occurrence of a risk and what is the probability of a risk occurring again and within which time period.
- Information- It is very important to analyze different information related to the organization’s past, various relevant experience and information about various different aspects. This information is further needed to conduct a qualitative and quantitative analysis of the risk(Harris, 2011).
- Output- The risk analysis will provide with a result that will offer a list of risks that will be arranged in an order that will list the most significant risks first and then the least significant one.
- Risk Mitigation
Risk mitigation and risk treatment require a bunch of strategies that have to be implemented for the rectification of the problems that an organization is facing. The response to the risk is very important as this is the only way it can be managed logically.
The identification of risks at Hilton UAE has been done categorically in internal, external and operational risks. The risks identified has to be analyzed further so that appropriate mitigation approach can be finalized (Hartmann & Driessen, 2013).
The past risks that the organization Hilton UAE faced was due to the world recession that affected the business all over the world. The world recession reduced the purchasing of the customers. The Hilton targets elite people because it is an expensive organization. During, the time of recession the market went down as the people were unable to afford such luxuries. Due to this risk, the evolution of lifestyle hotels took place. Now, the Hilton UAE is facing this risk of losing its customers as the customers are being provided with equivalent services at economical prices. The Hilton UAE has not adapted to this change and it is important for the organization to keep changing with the new trends in the market (Hofmann & Scordis, 2018).
The five step risk assessment model is the most appropriate for the organization Hilton UAE. The five stages of this model are-
- Risk identification
- Qualitative risk analysis
- Quantitative risk assessment
- Risk response planning
- Risk monitoring and control
The main approach of the qualitative risk analysis is that it helps to determine the various specific risks that have to be categorized on the basis of their intensity and probability. The qualitative risk analysis will help the organization Hilton UAE in examining risks that may require special attention. It is conducted on a rating scale (Irving, Prager & Standley, 2010).
Bad food quality
The quantitative risk assessment mostly covers the risks that will be related to budget, schedule and the profits of the organization. The uncertainty associated with an organization have the first effect on certain quantitative aspects. The quantitative risk assessment is associated with the amount or quantity that will be affected due to the risks. In the organization Hilton UAE, the main issues that the organization is facing are the loss of profits due to the loss of customers that is happening because of bad customer experience and the lifestyle hotels. The organization is gradually facing the loss of profits that have to be managed effectively (Kousky & Kunreuther, 2018).
The Five-Step Risk Assessment Model
Risk response planning is the process of reducing the occurrence of risks that are affecting the organization. For the controlling the risks and managing them effectively in the organization Hilton UAE, it is important to incorporate the four T’s process, which includes-
- Transferring Risk
The organization has to transfer the risks appropriately so as to control the loss which the Hilton UAE is facing. For transferring the external risks, it is important for the organization to cater to a large amount of audience rather than just targeting the elite group (Obydenov, 2018).
- Tolerating Risk
The organization also has to tolerate the various risks and taking no actions for certain risks is the best response. This is due to the fact that some of the responses to the risks are not cost effective and to control these risks the best option is not to react and just monitor them regularly (Park, 2017).
- Treating Risk
For the organization Hilton UAE, it is important for the organization to think of strategies that will be helpful in treating the risks accordingly. For the bad food services, the organization has to conduct a hygiene inspection, so as to cure the issue of contaminated food. For the risks of lifestyle hotels, it is important for the organization to provide discounts that do not affect the overall organizational goals. This will also help in dealing with the economy, which is slowly improving.
- Terminating Risk
All the risks should be handled through this approach. The termination approach of risk is most frequently used by the organization. The elimination of risk facilitates the organization with the surety that the organization working will not be affected. For the Hilton UAE, it is important for the organization to eliminate its bad food delivery risks as this will affect the organization image immensely. For all the risk the first approach should be to terminate it and then the other approaches should be taken into consideration (Roberts, 2009).
The Hilton UAE should monitor the risks regularly, even the risks that are being tolerated. The monitoring of the risks is important as it informs about the various changes that the risks have gone through due to the various response strategies. The monitoring further helps in controlling the changes with different approaches as the earlier approaches have failed (Sax & Andersen, 2018).
Thus, from the strategic risk assessment, this has been formulated that the organization Hilton UAE is facing from high risks and the organization is in the urgent need to implicate changes so as to manage the risks. The risk that has been identified in the organization are demanding change in the quality of the services which the organization is providing and also the changes that the organization has to adapt to due to the changing trends in the market. So, it will be advisable for the organization to implement changes instantly as this will further affect the organization’s profit and image massively.
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