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The risk management process involves four steps they are
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- Identification of risks
- Assessment of potential losses
- Selection of proper risk management instruments
- Studying the plan and implementing decisions
Identification of Risk
The risk management process begins with an identification of risk that involves not only the assets of the hotel that may be subject to loss, but also the relevant risks that may increase the probability and strictness of loss.
Once the assets of a hotel are identified, the next step is to determine what factors might contribute to potential losses of these assets. The factors that might cause a loss are referred to as risks.
Assessment of Potential Losses
Once the risk management process has identified risks, it is necessary for the manager to engage in two activities they are.
- The assessment of potential losses
- The determination of risk comfort levels
Selection of Proper Risk Management Instruments
Once the organization identifies the risks the manager or owner must decide how to handle those risks. One important way to deal with risks is through loss control. The risks that involve a combination of actions that includes
- Loss control
- Avoidance
- Risk assumption
- Loss financing
- Shifting of loss
Studying the plan and implementing decisions
Each of the risk management practices discussed should be integrated into a comprehensive risk management plan for the property. Prior to its implementation, management and legal consultants should study the plan that we have discussed above.
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