Risk Notion

Discuss about teh Concept of facility and risk management using Meriton services apartment, Zetland at apartment number 445 as the case study.

This paper presents a risk assessment report on Meriton services apartment, Zetland at apartment number 445, a modern one bedroom suite. The risk to physical, non-physical, financial and human assets will be assessed or analyzed individually in regards to the venue chosen for the purposes of this assignment.

Risk can be literally defined as the difference between reality or actual happenings/outcomes and the expected outcomes. For example, in our case the management of the asset/venue chosen i.e. the management of Meriton apartment expects that nothing bad in terms of business will arise based on how apartment number 445 is designed, constructed, internally decorated and fitted and any other aspect related to the apartment 445 at Meriton Zetland.  If this difference is big then the risk is big as well. The converse is true for this statement. There are several types of risks depending on the item being assessed. We have Strategic risk, Reputational risk, financial risk as well as asset management risk. (Norris, 2010). According to risk management theory a risk when analyzed in economical view depends on a number of probabilistic events that can be categorized as controllable and uncontrollable. In terms of psychology risk management theory stipulates that risk is viewed as function of behavior inherent to the decision makers or their agents. This means that an entity can take risk based on the nature of their behavior such that one group can decide to take in more risk in order to attempt to meet certain objectives while another group can decide to be conservative and take more precaution hurting its chances of meeting certain objectives. Thus risk is trade off the more an entity takes in more risk the more such entity is poised to meet certain objectives.

There are many things which are subject or open to risk. Among these is the safety of the guest in a hotel or restaurant. The hotel management may put everything within reasonable expectation to ensure that the client or the guest in the hotel is safe. However, the client may slip and fall because of the slippery tiles inside the hotel room thus posing danger to the safety of the client. Businesses also face risks because of the market uncertainty. The venture may put everything in place to ensure that its products or services get sustainable market but the market dynamics keep on changing from time to time and the previous business strategies that the company relied on may no longer be effective in the market. Thus any aspect of the business that still depends on factors which management of the business has no complete control is subject to risk. The reason for this is that anything is bound to happen since the factors that control the outcome can not be fully controlled. (Perry, 2009)

Importance of risk management in the Hospitality Industry

It is very important for Hospitality Industry to implement risk management practices because of a number of benefits that it brings to the industry.

The first benefit is that implementation of the risk management process in hospitality leads to compliance to all statutory laws and standards expected in hospitality business by the relevant authorities. If a hotel for example do not adhere to the strict health standards and put in place measures that ensure that all health related matters in the hotel are monitored effectively then the business may find itself in the wrong side of the law or standard expectations. This may lead to closure of business and/or negative publicity which will drive away customers and thus the venture may not continue to be in business. Thus implementation of a risk management process in hospitality business ensures that the venture is within the law when it comes to all the standards and regulations expected of such ventures. (Huber, Lyons and Pivar, 2014)

Risk management process also ensures efficient use of resources in a hospitality business. When the management indentifies potential risks that may happen in the business it allocates resources effectively such that those risk potential do not realize or actualize thus saving the venture resources that may have been used to mitigate the effects that results from actualization of a risk potential. When the resources are effectively managed the company operates optimally thus realizing maximum profits that can be used to expand the business or improve the service delivery. (Acharyya and Brady, 2014)

Implementation of a risk management process also ensures that the company or the hospitality business identifies and isolate potential risk items or events in the business and provide early warning when such risks are about to fully materialize. The company can then put in place measures that ensure that the business does not suffer from the dangers posed by the risks identified.  (Brotherton, 2016)

There is also the benefit of having standardized reporting of the risks in the hospitality business. When such a process is put in place all the employees in the organization from the junior employees to the management get acquainted to a certain way that the company uses to report on risks associated with its business. When such structures are in place the decision makers in the company get the most relevant information in order to decide measures which the company can put in place in order to ensure better business prospect for the business. The variety of the data and risk indicators will be measured effectively because all the people working in the company are familiar with what is required by the management to take correct measures for the company. There is also the aspect of the improved timelines, conciseness and the flexibility of the risk data that the hospitality business will benefit it implements the risk management process. This uniformity that will be achieved by the company will lead to more consistent decisions that give the company stability in business thus more profitability and success. (Choudhary, 2013)

Venue Risk Analysis

This process also improves the credit rating of the hospitality business in the sense that when the financial institutions assess the risks associated with the company or the business they find favorable figures that points to a situation where risk is effectively being managed by the company. Improved credit rating gives the hospitality business ability to borrow funds from banks and other financial institution for expansion and improvement of the service delivery which in turn improves the profitability. (Scordis et al., 2014) The It is very important that the hospitality business possesses good financial relationship with the banks given that the hospitality industry is a very dynamic industry in that a venture may find itself in a situation where there is huge influx of guests an the business may require urgent funding in order to serve all the clients accordingly. Without good relationship with creditors the business may find faces challenges with cash flow which may affect business and the quality of the services provided. Thus in such situations the hospitality business can count on the assistance of the bank to get through such phases in business. The shareholders also get good returns on investment when the business implements risk management practices owing to the fact that profitability will improve. (Walker, 2019

A risk ranking system

The risks in the apartment number 445 at Meriton suites Zetlan, will be assessed in terms of high, medium and low risks. The components of each risk will be broken down into specific parts that make it easy to rank the risk. Each of the risk will be analyzed individual such that all every aspect of it is considered and weighted against the experience of a team that is well versed with property market and how certain aspects of the property can expose guests living in the property to the risk.  

Kitchen floor and bathroom tiles

Under this risk there are a number of possible scenarios as indicated by the analysis of the specific aspects.

Guest may slip and get injured. If this happens then Meriton suits will likely incur medical cost for the guest treatment. The Apartment will likely loose reputation in the market in terms of safety for the guest. Therefore this is high risk and poses risk to both financial and human assets of the hotel. (Property Management, 2016)

Carpets 

Specific aspects for this risk are as follows.

The carpet can catch fire easily and this poses risk to the whole building. It poses great risk also to all human assets within and without the building as well as physical. This is high financial risk potential to the company.

Congested bedroom    

Specific aspects associated with this risk are as follows.

The movement of the guest inside the room is restricted and may knock him/her-self against the bed. However, since the chances high speed movement in the room is low then the injury that may emanate from such knocks is likely to be small. This poses low human asset risk to the company. (Haupt, 2012)

Open room from the balcony

Specific aspects regarding this risk are as follows.

The pets can enter into the suits through the balcony which may lead guest being scared because they were not expecting such pets in the room. It may also results to damage to guest items and belongings which is not good for the company reputation. The pets’ poses health risk to the guest but this aspect is expected to be minimal because the compound surrounding the apartment is well kept and rarely do dangerous pets find a place to hide without being seen. This risk is therefore medium.

Drawers placed low

Specific aspects for this risk is that children can reach into the drawer and get sharp objects such as knifes inside the drawer which may injure them. This has potential to damage reputation of the apartment in terms of safety of the guest’s children. The drawers are however heavy and it will take time before a baby manages to open it and remove the contents inside. This is therefore risk to human assets of the company and can be categorized as Medium risk. (Vernor, 2011).

Too heavy furniture

Under this risk specific aspects are:

When cleaning the rooms the works may struggle to move the furniture around in order to clean the rooms well. This may damage the floor carpet and may also injure the workers cleaning the rooms. Since the furniture will not be moved all the time while cleaning this risk can be classified as low risk. It however poses risk to both human assets and has potential financial ramifications. (Rejda and McNamara, 2013)

Balcony 

Specifics items under this risk are as follows;

Although the balcony is well protected and no one can easily fall down children should always be watched when playing at the balcony. Although this is the responsibility of the parent or the guardian the company will also need to mind about it because it has potential to ruin the reputation of the company. The risk can however be classified as low as this rarely happens in the hotel. (Valsamakis, Vivian and Du Toit, 2010)

Alarm system

The apartment does not have alarm system in the event that the guest falls sick inside the house and alone. This therefore posses danger to the hospital human assets and has potential to damage the reputation of the apartment. This poses as medium risk. (Warren, 2012)

Bathroom sink

Specific item under this risk is that when such sink are accidentally filled with water from the shower young children can easily get drowned inside the pool thus posing great risk to the safety of the young children. This is however low risk to the company. (Jorda?o and Sousa, 2010

Risk type	Ranking in terms of low, medium and high risk
Carpet	High
Kitchen floor and bathroom tiles	High
Congested room	Medium
Open room from the balcony	Low
Drawers placed low	low
Too heavy furniture	low
Balcony	low
Alarm System	Medium
Bathroom sink	low

Conclusion

The apartment is generally well designed and arranged such that the space inside is utilized effectively. The risks identified and categorized need to be checked by putting measures in place that mitigate on such risks. Hospitality business heavily depends on reputation thus it very important that the same is checked by the management of the apartment.

The company should consider installing different types of tiles in the venue’s kitchen and bathroom. The tiles should not be slippery because the kitchen area and the bathroom are likely to have spill water. Thus to ensure that the guest will not slip and get injured the company should replace the slippery tiles with roughs ones that ensures the guest safety.

The company should also install emergency alarm system in the hotel apart from the telephone line and in an easily reachable place within the room. This will help raise the alarm incase a lone guest inside the venue falls sick.

To mitigate on the issue of bathroom sink the company should place notices at appropriate places within the apartment to ensure that guests are reminded to be watchful over their children while in the apartment. This reminder will serve to mitigate on the low drawers and the balcony risk as well.

The company should ensure that the room can be closed such that there is no entry into the room through the balcony. This will prevent any bets that may likely get into the room through the balcony. Staff cleaning the rooms should receive appropriate training on cleaning house with heavy furniture.

The company should also ensure that there are no highly flammable materials inside the rooms in the suit where carpet is installed. This will minimize the chances of carpet catching fire.

References

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