Legal, Ethical and Sustainability of Risk Management


Risk management is a process that was designed to offer a general framework for organizations to assist in the identification, monitoring, analysis, evaluation, and management of unforeseen threats to the business (Robertson, Moore & Kean, 2004). The application of this process has been accepted plus proven to be successful in different parts of the globe and the disaster management societies around the world have effectively used them. Risk, as explained by (Constantinescu, 2015), is found in every aspect of life in real world such as in nature and around people’s social life including in tourism, hospitality and events. The idea of risk management is an organizational procedure that is supposed to be a process used in the tourism industry, destinations and businesses including a host of multiple agencies process.

The process of risk management must also involve the communication and consultation aspects, which are essentially necessary to be undertaken during each step in the process of risk management. A process of both internal plus external communication and discussion about the process needs to be set up and sustained between the stakeholders and decision-makers who hold different views in various areas and their expertise is considered. An analytical essay which explains the nature of the scope, identification and analysis of the significant ethical, legal, and sustainability dimensions of risk management in the tourism, hospitality and events industry. When risk management is effective, it can avert crisis that may arise from arising issue and the poor assessment of risks plus misunderstanding and mismanagement may lead to a crisis. Risk management entails the assessment of the probability of any negative happenings that may cause the tourism sector to not function customarily (Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Cooperation (COMCEC), 2017). Overall, these factors outline the steps and processes involved in risk management, as they seek to establish policies, systems, and procedures including how the internal and external organizational relationships.

Legal Dimension of Risk Management

Liability is one of the important legal issues of risk management, and this includes the acceptance of any damages or loss resulting from actions, omissions or obligations resulting to harming others due to lack of observing the above-given scenario without compensation to the aggrieved parties. When one is involved in the hotel and hospitality industry, it is important to note that they should take responsibility for their actions and the organizers should assign liability for actions they do not have control over. In a case scenario where there is an event for a children’s fun park, in case there is an accident, and one of the fun park merry go round malfunctions and cause injuries, there should be steps to know who is to take liability for the disaster.

The duty of care is another form of a legal issue of risk management, for example, in tourism; there are relationships that exist between guests and hotels including tour guides and participants. The aforementioned then translate to what the concerned parties put in place measures that prevent disaster in case care is not taken and where there is foreseeable room for catastrophe. If a person or institution acted unreasonably and their services or goods did not meet the set standards or expectations, this results in the breach of the duty of care. For instance, if there were construction repairs in a hotel and the contractors left a gas pipe leaking without repairing the damage, this is the epitome of not observing the duty of care aspect in the proper formation of risk management. In this example, there is the outright foreseeability of the risk involved by the hotel management when they decided to leave a leaking gas pipe and outright gravity of injury risk in case the hotel got destroyed by the leaking gas. In this regard, there is logical practicability that comes with the need to fix the leaking gas, but the hotel ignored it causing or exposing the risk of injury and loss of both life and property. Therefore, the lack of due diligence on the part of the hotel leads to exposure to damages and risking lives due to their ignorance of the industry’s standard practice of duty of care.

Negligence is the lack of doing or taking reasonable actions and steps in situations where a reasonable person should have acted reasonably (Webster, 2015). In other words, when the safety principles of an organization fall short of a given standard and damage or loss happens because of this, the injured individual can sue for negligence. In this regard, neglect covers the legal and ethical dimensions of the risk management by way of law and the common practice of principles and business morality. There is the need for hotels and players in the hospitality industry to observe this aspect so that in case of damage or loss of property or life from the intent of the institution to cause harm, recklessness or failure to act reasonably, and these results will not be blamed on them. Webster (2015) indicates that in the tourism industry, most of the lawsuits that usually involve negligence, are those where one of the parties seek monetary compensation. As dictated by law and expected by ethical duties, there is the need for individuals and institutions in the hotel and hospitality industry to have documented evidence such as security and safety credentials from their suppliers and other contractors to mitigate any claims of negligence on their part.

Ethical Dimension of Risk Management

The fundamentals of primary human conduct are referred to as ethics and entail honesty, prudence, openness, equitability, dignity, avoidance of suffering, and goodwill. Ethics give guiding principles for suitable actions between individuals and groups in given circumstances including the appropriate way forward. Head (2005) notes in doing this, the process shows respect for other individuals’ and groups’ privileges and rights actions which defend others from humiliation or harm, including activities that empower others with freedom to act on their own will. The observation of the basics mentioned above leads to a synergy in administrative and human resource systems that form the basis of management of resources. When organizations do not follow the laid down rules or adhere to any systems of moral ethics in their operations, there is a possibility of serious issues arising and affecting the organization including the risk of damaging its moral values of honesty, responsibility, reliability and accountability (Silvers, 2008). In this regard, business ethics lead to the establishment of moral philosophies in organizations in the hospitality industry by observing values, norms and behaviors that guide the organization in the society (Robson, 2008). It also leads to the interest of the well-being of people in the organization such as employees, customers and suppliers who form the part of the management of stakeholders.

In this dimension of risk, there is also a factor known as the “ethical gap” which defines the variance of the risks that are noticeable and those that are not expensive (Hansson, 2004). If tolerable risk is lower that of discovery, there is not a way to conclude if the risk falls in the bracket of tolerable ones. So as to minimize and eliminate the gap of tolerable risks and that of discoverable risks, there is need for to minimizing the level of affordable risks till it corresponds to the level of noticeable risks. An example is when a chef at a New York restaurant was caught on a client’s camera redistributing some leftovers to a fresh plate that was served to another customer who had order a similar meal in a restaurant. Risk exposure and taking the said risk are two different aspects since in risk taking, the individual or organization knows the risks plus is also ready to face it. However, exposure to risk is the action of an individual or organization being placed in a greater form of risk or harm as a result of other factors or people’s action. In this regard, good risk management requires that it is followed up by good ethics so as to support it while at the same time, the aspect of good ethics dictate and call for good risk management in return. Therefore, risk management and morally upright ethics have the tendency of going hand in hand.

Sustainability Dimension of Risk Management

Sustainability in the hospitality industry is usually an interpretation that is constructed within business obligations instead of an ongoing obligation to sustainability (Jones, Hillier & Comfort, 2016). The sustainability aspect of risk management is not exclusively agreeable among issues but have common characteristics as the others because it focuses on the future that is always unpredictable in any industry. Sustainability risk management is interconnected with the environmental and social responsibility risks, and in order to work around these relationships, and performance, businesses utilize risk management principles (Anderson 2009). However, if a hotel has a culture of sustainability and a strengthened alignment in the understanding of risks that come with business strategies, then the organization will survive. Sustainability seeks to incorporate and bring about the aspect of balance in the contending objectives of the environmental, economic, and social elements. Sustainability entails serious reflection of the future of an organization and the way forward in an unpredictable future (Gemmell and Scott, 2011).

Sustainability risk management is organizations’ strategies of the future and creating business opportunity in the future and adding sustainability into risk management certainly results in better control and measure. Sustainability has an effect on economics, society and environment in risk management. For example, Fukushima was made inhabitable when a huge tsunami struck the north-east coast of Japan in March 2011. The loss of property, people and animals led to a lot of suffering in different forms and caused a lot of harm due to the nuclear radiation. The residents of Fukushima had to vacate their homes and as of now, only half of the population is presently leaving there and the rest cannot access their homes. The aftermath of these events was nuclear radiation, and Fukushima has been left as inhabitable and not a pleasant tourist attraction. According to Ritchie (2009), organizations need to learn ways of mitigating future crisis by making disaster preparedness plans so as to diminish the risks of an incident that might occur through development of future prevention and mitigation strategies.

Sustainability helps bring about better control and measures put in place for the provision of a higher level of promise that the, in the end, ensures the organization prospers in the long run. In the earlier set up of the hospitality industry, the cost and feasibility of the sustainability of the organization were placed as a specific duty and burden on the general society and environment. Organizations did not feel the effects of these burdens and ignored by the industry, and as a result, they could not tell the misguided form or nature of their interaction with clients. When the full effect of this detachment was felt, the result was the internalization of the sustainability into risk management while observing the impact of the same on the business. The consequences of this internalization are felt through the utilization of using risk management principles, making companies more sustainable and resourceful.


Therefore, the need for the observation of legal, ethical, and sustainability integration in risk management policies goes hand in hand with the success and resourcefulness of the business, including the internal and external stakeholders. It is necessary for an organization in the hospitality industry to observe the implementation of the above under the laws set up to control their business environment and the ethics threshold setup for the regulation of character plus due diligence. All in all, the importance of the need for setting up a reasonable sustainability plan due to the unpredictable nature of business needs to be observed as it is a crucial part of the risk management aspect. These three dimensions are best ways in risk management, and are essential in helping organizations address risk and problems before disasters occur.


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