Risk Management

Essay from the year 2008 in the subject Hotel Industry / Catering, grade: B, University of Derby, 41 entries in the bibliography, language: English, abstract: No one can be sure of what the future will bring; therefore decisions on future events or incidences create risk and uncertainty. Technically, uncertainty is a situation where there are a variety of possible outcomes and little, if anything, is previously known to guide a well-rounded decision. (Garlick 2007) Risk is a situation where there are a variety of possible outcomes and all of the possibilities are known before and final decisions are taken. The higher the variability of these possible outcomes, the greater is the risk. Risk has been gaining a lot of attention in recent years. Until recently, it has always been viewed in a negative light, as something to avoid, as a danger. Risk management embraces risk as being inherent to business and providing the opportunity to maximise wealth. (Knowles et al. 2004) King (2000) argues that risk traditionally been defined in terms of the possibility of danger, loss, injury or other adverse consequences because for positive events we tend to use the words ‘chance’ or ‘possibility’. The Risk Management Standard defined risk as the combination of the probability of an event and its consequences, and risk management is being concerned with both positive and negative aspects of risk. (Institute of Risk Management 2002 quoted in Collier et al. 2007, p. 6) Over the last few decades, dealing with risk has become a distinctive and important area of management. It is already sees as an essential part of any successful organisation. (King 2000, Jablonski 2006, Löfstedt 2005) Sometimes, especially in business, certain risk can be an opportunity - for example making an investment in the stock market, floating shares or buying a new business. (Jeynes 2002) That is why it is important to do further research in order to avoid crises and point out opportunities especially in the hospitality industry. Risks can be classified in a number of ways: Business or operational risk: relating to the activities carried out with in an organisation Financial risk: relating to the financial operation of a business Environmental risk: relating to changes in the political, economic, social and financial environment Reputation risk: caused by failing to address some other risk.