Risk Management in Tourism

In this course, tourism professionals in management positions will explore the challenges and benefits of resilience in tourism. You will find out about different hazards and their relevance to tourism.

Who is this course for? 

The course is intended for tourism professionals in management positions, and anyone interested in the topic.

What will you learn? 

• You will get an overview of different types of hazards and their relevance to tourism
• You will learn about vulnerability and exposure
• You will learn how tourism activities can contribute to hazard and exposure
• You will learn about disasters

Keywords: Sustainability, tourism, resilience, hazards, vulnerability, disasters

Introduction to Risk in Tourism

In this section, you will get an introduction to risk in tourism and learn how tourism activities can contribute to hazard and exposure. 

Lesson 1: Introduction to Risks in Tourism

Description

Welcome to the second learning unit in the course series, Resilience in Tourism. In this session, we’ll look at topics related to risks in tourism.

To ensure tourism delivers positive long term outcomes to all stakeholders involved, risk needs to be managed. Risk is influenced by the occurrence of a hazard and the vulnerability and exposure of people, infrastructure, or anything else that’s of value. This definition is important because it indicates that by addressing vulnerability and exposure, risk can be reduced even if the hazard remains. Risk can also be described.

As the probability of events or trends occurring multiplied by the consequences of these events should they occur. This means we need to distinguish between the risk of an event and the actual or potential impact the event may have.

There are different types of risk. The World Economic Forum divides them into economic, environmental, geopolitical, social, and technological risks and suggests that they’re all interconnected. These considerations will be the focus of this learning unit. First, we’ll take a look at the factors that influence risks, the different types of hazards, the vulnerability to their negative effects, as well as the exposure of local people, animal species, and resources to these hazards.

So, let’s get started

Hazards and their Relevance to Tourism

Lesson 1: Natural Hazards

Hazards 

Hazards are defined as a process, phenomenon or human activity that may cause loss of life, injury or other health impacts, property damage, social and economic disruption or environmental degradation. They are often clustered in three groups: natural hazards (such as strong rain, earthquakes, landslides); human-induced hazards (such as industrial accidents) and socionatural hazards (such as environmental degradation and climate change). 

An event or a process, either natural or human-made that can cause harm to people, their belongings and their environment, if no precautions are taken.

“Many touristic activities focus on the outdoors and depend on weather, such as skiing, hiking, sailing, surfing, sunbathing, as well as many guided tours and even sightseeing. Climate change science shows that global warming contributes to an increase in natural hazards such as increased rain fall or more frequent heat waves”. Julia

Natural hazards 

Natural hazards are naturally occurring physical phenomena caused either by rapid or slow onset events. They are further divided in different sub-categories namely meteorological hazards, geological hazards and biological hazards. 

Extreme temperatures and droughts are caused by high pressure weather systems. Tourism is highly weather sensitive. Weather can act as an attraction and support recreational activities. For example, many people from the colder North travel to the warmer South or tropics for the warm weather. Tropical islands and other beach destinations have built an image and tourism product around sun, sea and sand and bad weather may impact the visitor experience.

Interview with Dr. Johanna Loehr

Dr. Johanna Loehr is an expert on sustainable tourism, climate change and resilience and is speaking today on the topic of “Climate change”.

Interview

Questions: How is climate change different to natural hazards?

Answer: Our climate is naturally changing, but scientists agree that the increase we are currently experiencing is not natural, but caused by human activity, such as burning of fossil fuels. An increase in more than 1.5 degrees over pre industrial levels is considered dangerous because it will significantly impact our life as we know it today. This means that the goal is to keep global warming to 1.5 degrees. Anything higher will increase the risk associated with long term and irreversible changes. The climate is already warmed 1 degree today and we’re expected to reach 1.5 degree increase as early as 2030 if we continue with business as usual.

Question: What hazards does climate change pose for tourism?

Answer: Climate change increases the risk of natural, climatological and meteorological hazards, such as warming temperatures and extreme heat. Further extreme events including cyclones, bushfires, floods and droughts are also a result. It also causes sea levels to rise and leading to erosion, inundation and loss of land. Then it causes oceans to warm and acidify, with implications for marine life such as coral reefs. It causes hade and changes in rainfall which impact terrestrial ecosystems and then finally, it also changes or creates changes to weather conditions which may expand vector borne and water borne diseases, increasing risk to human health.

Question: What are the impacts of climate change on tourism destinations?

Answer: Climate change impacts destinations, including tourism businesses in 

many different ways. Extreme events can cause damage to physical and natural assets and to destinations reputation if they are no longer considered safe. Increases in temperatures pose a health risk to visitors and staff alike and lead to an increase in costs for tourism businesses, for example, as the demand for cooling or freshwater increases.

As climate change impacts increase, insurance premiums might also increase. For example, coastal properties may face an increase in costs up to the point where these are either too high to pay for the business or where in insurance companies are no longer willing to ensure those properties.

Finally, tourism may also be impacted by the response to climate change. Government policies that make emitting carbon emissions more expensive may increase the price of flying, for example, and consumers may change their travel behaviour to reduce their own carbon footprint.

Meteorological hazards

Flooding

Flooding occurs due to strong rainfall or as an impact of storms, high tides and large waves. 

Strong storms 

Strong storms including tornados, hurricanes, tropical cyclones and tropical storms form due to atmospheric processes. 

Critical for tourism are extreme weather events such as hurricanes, cyclones or floods as they may not only impact the visitor experience but pose a serious risk to people and infrastructure. These events often lead to airport closures, damages to ports and road damage or cut off therefore restricting access. In addition, cyclones, hurricanes and other strong storms can damage ecosystems such as coral reefs, rainforests or cause erosion of beaches, thus impacting the natural assets and attractiveness of destinations which may take a long time to regrow or be restored.

Geological hazards

Geological hazards pose a significant risk to people and infrastructure and can lead to large scale damage.

Earthquakes: Earthquakes are caused by movement of two tectonic plates and volcanic activity from movement and increase of lava and pressure from underground gases.

Tsunamis: Tsunamis are ocean waves created through underwater earthquakes and become particularly dangerous once they reach the shore.

Landslides: Large scale destruction, from langslides, subsidences or sinkholes, impacts tourism due to restricted access, loss of tourism infrastructure and assets as well as increased risk perceptions.

Volcano: Volcanic eruptions often impact air transport due to large ash clouds, even if the volcano does not spit lave, reaching and impacting places far away from the actual volcano. Ash is dangerous for planes as it can cause engine failure. On the other hand, volcanos can be major tourist attractions. 

Biological hazards

The year 2020 has shown the risk of pandemics and their impact on tourism. As a global industry, tourism has not only been affected by governments responses to the pandemic (including border closures, travel restrictions, social distancing rules and many more), but have also highlighted the role tourists play in spreading the virus.

Examples of biological hazards relevant to the tourism sector are: 

• viruses (e.g. pandemics); 
• bacteria (e.g. foodborne illnesses); 
• poisonous plants

The United Nations World Tourism Organisation estimated a 78% decline in tourism arrivals for 2020 with significant implications for destinations and tourism businesses all around the world.

In many countries, the many tourism and hospitality businesses closed for a lock-down period, or reduced operations significantly.

Front of card

 

Lesson 2: Men-made Hazards

Human made (also called anthropogenic) hazards are caused by human intent, error or failed systems.

Accidents

Accidents are hazards and may occur in any business or organisation, be of minor or major scale.

Workplace accidents

Workplace accidents, transportation accidents, structural failure, mechanical breakdown

Workplace accidents pose risk to workers and/or guests and while they usually remain small at scale, they can nevertheless cause a significant impact on individuals, the business, including its reputation, and the environment. Examples include fires, spillage of chemicals and other environmentally harmful substances or gas leaks. Depending on the cause for the accident, these may also be classified as technological hazards.

Hazardous materials accidents

Hazardous materials accidents (radiology, nuclear power, chemicals, gas, oil)

Large scale accidents including incidents at nuclear power stations or major oil spillage into oceans can have significant implications for local residents, natural environment and the tourism industry

Intentional Acts

Strike and demonstration, riot, bomb threat, kidnapping, hostage incident, workplace violence, terrorism, robbery, cyber attack

Intentional human acts can be hazardous to the safety of individuals or the operations of a business as they may cause harm, destruction and/or disruption. The consequences of intentional acts range in severity. Strikes may cause disruption to tourism businesses even if not occurring in your own business, as they may affect transportation and thus visitor arrivals. Terrorism attacks may have a larger impact. 

Information technology

Hazards linked to information technology are of technological nature. Loss of connectivity, failure of technological systems or data loss may cause disruption to tourism businesses and may incur costly damage.

Utility outage

Infrastructure failure or damage may disrupt the provision of utility, thus interrupting access to required resources such as water, fuel, electricity or gas impacting the operations of tourism businesses. 

“These disruptions are particularly problematic for remote businesses which may have limited access to alternative supply, or when supply is disrupted for a long time. Climatological hazards may also lead to reduced access to water, and other change drivers may add additional pressure on existing resources, including population growth and tourism itself”. Julia

Chain interruption

Many other hazardous events lead to interruptions to transportation as transportation infrastructure is damaged or restricted. If not through physical impacts, political responses to events may also lead to impacts on the transport network. This is problematic as it directly impacts tourism businesses as new guests cannot arrive, and existing guests may be stranded. 

Significant financial implications

Especially for small tourism businesses this may have significant financial implications. Small bed and breakfasts or bungalow operations may incur expenses before guests arrive, e.g. by purchasing fresh food and rostering staff. Often run at a tight budget, the lack of revenue may have financial implications. 

These disruptions are particularly problematic for remote businesses which may have limited access to alternative supply.

 

Lesson 3: Workplace-specific Hazards

In addition to the above hazards, workplace specific hazards are commonly grouped into six categories which are of relevant to tourism and hospitality businesses. These are briefly explained below.

Biological

Biological hazards include viruses, bacteria, animals including insects etc. that can cause adverse health impacts. Biological hazards also include, mould, blood and other bodily fluids, harmful plants, sewage, dust and vermin.

Chemical: Chemical hazards are environmentally harmful substances that can also cause harm to humans. These hazards can result in both health and physical impacts, such as skin irritation, respiratory system irritation, blindness, corrosion and explosions.

Physical: Physical hazards are environmental factors that can harm an employee without necessarily touching them, including heights, noise, radiation and pressure. They also include electricity or fire.

Safety

Safety hazards related to anything that creates an unsafe working environment or conditions. These may include, tripping hazards such as exposed wires or a damaged carpet as well as spills, but also unguarded machinery and faulty cords posing the risk to cause fires or electric shocks

Ergonomic

Ergonomic hazards can result in musculoskeletal injuries (injuries affecting muscles, tendons, bones, joints, ligaments, nerves etc.). Ergonomic hazards are a result of physical factors such as a poor workstation setup in an office, poor posture and manual handling (lifting, pulling, pushing, carrying or moving load with your body) long terms health impacts on employees

Psychosocial

Psychosocial hazards include those that can have an adverse effect on an employee’s mental health or wellbeing. Psychosocial hazards include sexual harassment, victimisation, workplace aggression and abuse, and stress

List all hazards that are relevant to the context of your business. Have you had to deal with any of the hazards? Which ones are most relevant and why?

Vulnerability and Exposure

Lesson 1: Vulnerability

Vulnerability is relevant to different scales of tourism. The global tourism industry can be vulnerable to hazards, a country’s tourism sector can be vulnerable, and so can a destination, individual tourism business and people working within tourism.

“This is important because it means a hazard can impact different levels of the tourism system differently, and affect similar businesses or individuals differently”. Julia

Definition vulnerability: Characteristics that make people, communities, cities, or countries more likely than others to experience the harmful effects of a hazard.

The dimensions of vulnerability are widely discussed, and it can be said that it is influenced by sensitivity to potential impacts and a lack of ‘adaptive capacity’ to cope with and adapt to changes. Some conceptualisations of vulnerability also see exposure as a dimension of vulnerability. Vulnerability is thus complex as many different factors contribute to being vulnerable, including social, economic, political, and environmental factors and they may vary for different types of hazards. Vulnerability is therefore place-based and context specific.

Coping capacity

Transcript

Coping capacity refers to the ability of people, organisations and systems to maintain adverse conditions, risks or disasters using the skills and resources available to them. The capacity to cope requires awareness, resources and good management, both in periods of normality as well as when disasters hit.

Coping capacities are important when it comes to reducing risks. The tourism sector as a whole has a reputation for coping and recovering well from disruptions. However, when it comes to resilience, all components within a destination need to increase their coping capacities to deal with risk and change.

First of all, tourism enterprises need to be aware of potential events that might affect the health of their business. These can range from a change in political leadership or heavy rainfalls due to global warming. In such cases, businesses may need to adapt their services so that they can continue to operate. 

If, for example, a tour guide company finds itself unable to provide outdoor activities for a time, it might instead offer indoor cooking classes.

Or if security concerns are an issue at a particular site of interest. A company might offer visits to less controversial sites for a while. 

A seaside hotel might decide to invest in breakwater barriers or mangroves along its nearest beach as a way of coping despite rising sea levels and coastal erosion.

However, in order to achieve resilience at a destination level, all tourist businesses within it need to increase their coping capacity. At a resilient destination, all tourism businesses work together proactively to make risk informed choices. Only when all parts of the system increased their coping capacities will the whole destination be ready to face external challenges and potentially disastrous events.

Vulnerability of a tourism business to hazards may be influenced not only by its own capacity to adapt but external factors. These may include:

Reliance on a range of tourism assets and resources

• climate, natural attractions
• availability and access to resources, such as freshwater

Characteristics of its market

• where do visitors come from
• domestic vs international visitors

 Hazards affecting the destination 

• extreme weather events
• political changes
• climate change

Adaptive capacity of the destination or host country 

• socio-economic conditions that support adaptive capacity of businesses
• governance, policies and regulations in regards to disaster risk reduction

Understanding how these factors contribute to the business vulnerability will help to manage them. Internal factors influencing the adaptive capacity of the business involve the business competitiveness, access to financial resources and other assets, access to information, knowledge, flexibility etc. to name just a few.

An issue found for tourism businesses in many small island developing states was a lack of awareness and knowledge about disaster risk reduction, which was sometimes coupled with fatalistic worldviews, leading to limited business engagement with risk management. Historic planning processes did not take disaster risk reduction into account, leading to inadequate policy frameworks (such as insufficient building standards or zoning for development) and their implementation (such as a lack of Environmental Impact Assessments).

Lesson 2: Exposure

Exposure refers to things of value (people, species, resources, infrastructure but also livelihoods or ecosystem services) in locations and/or settings which could be negatively affected by hazards.

“Not everyone values the same things, which means there is a subjective aspect to what we want to safeguard from hazards”. Julia

In risk management, the exposure of people or infrastructure with high capital value are often focused on, however, ecosystems or cultural sites may be of high value to a community or business, thus making their exposure to hazards a determinant of risk.

Definition exposure: Exposure refers to things of value in a location or setting that could be negatively affected.

Exposure of tourism infrastructure

The exposure of tourism infrastructure is often determined by tourists’ preferences. For example, tourists like to stay close to the beach to fulfil perceptions of ‘paradise’ despite the fact that these locations are more exposed to hazards such as storms, flooding, erosion and tsunamis. Ownership models where local people operate a franchise of a global brand but are responsible for the risk management also increasing local exposure. 

Case study: The adaptive capacity in the South Pacific

Islands in the South Pacific are considered highly vulnerable and exposed to many hazards including those of climate change, because of their size, location and unique characteristics. This extends to their tourism industry. In fact, Pacific small island developing states were classified as ‘climate change vulnerability hotspots in the tourism sector’ due to their strong reliance on tourism economically and high vulnerability to the impacts of climate change.

Vulnerability

Tourism in the South Pacific consisting of many small, family owned and run businesses with often low levels of formal education, limited access to assets, limited economic alternatives, reliant on sensitive ecosystems also vulnerable to multiple pressures, remoteness and reliance on overseas markets.

Hazards

In addition, the majority of tourism businesses and infrastructure is located along the coastal stretch and thus exposed to a range of hazards. For example, Vanuatu had to not only respond to the COVID-19 pandemic but at the same time face category four tropical cyclone Harold in April 2020.

Resilience and capacity to adapt to change

Nevertheless, Pacific communities’ successful maintenance of their cultures and peoples’ well-being in variable and uncertain environments for many generations highlights their resilience and capacity to adapt to change.

Social capital including strong social and kinship networks, collective decision making and leadership, access to resources including land and natural resources, their worldviews, values and belief system (including the importance of family, reciprocity, and relationships leading to remittances from overseas family members) and independence and self-efficiency and experience with previous extreme events provide people with a high adaptive capacity to respond to extreme events

Lesson 3: Tourism activities as a contributor to hazard and exposure

“Looking at the bigger picture, tourism is not only vulnerable to a number of hazards, it may also contribute to the vulnerability and exposure of destinations or communities to disaster risk”. Julia

Greenhouse gas emissions

On a global scale, tourism contributes 8% to global greenhouse gas emissions, in particular through carbon intense modes of transport such as aviation, therefore contributing to climate change.

Carbon footprint of a tourist 

At a destination level, the carbon footprint of a tourist depends on many factors, depending on the activity’s visitors participate in, where they come from, how they travelled to the destination, the type of accommodation visitors stay at. 

Tourism development often occurs in sensitive locations such as coastal zones, protected areas or alpine regions, leading to an increase in people visiting and interacting with these locations. 

Tourism is commonly resource intense, for example

• Many tourists use more water per guest night than the local population.
• They create more waste and thus add pressure on local ecosystems.

These pressures, together with a lack of regulations and gaps in environmental management systems were found to increase vulnerability of Small Islands Developing States (SIDS) due to weakened ecosystems, and this is relevant for other destinations as well. This is of particular concern where tourism development adds stress to ecosystems which naturally provide a buffer against hazards, such as coral reefs, mangroves, dune vegetation and trees. 

 

Disaster

Lesson 1: What is a disaster?

A disaster goes beyond what we understand as an emergency and is determined by a higher degree of societal disruption and causes disruption beyond the capacity of the local resources.

“Disasters thus disrupt the functioning of society. There are many hazards that can cause a disaster as in the previous lessons. Important is that regardless of the hazard, its effects can often be minimised through human action before a disastrous event occurs”. Laura

A disaster only occurs where hazard meets high vulnerability and exposure. Hazards, especially natural hazards, occur from time to time. Preparing for them by reducing exposure and vulnerability reduces their risk and therefore the likelihood of a disaster.

Time for a story: Disasters don’t have to happen

Two friends who own tourism businesses in the same part of town talk about their very different experiences after a heavy rain event.

“That was really the worst night of my life. It rained as hard as I have ever experienced. My hotel was virtually flooded. So much so that some rooms were no longer habitable and I had to rebook guests. My dinner service had to be interrupted because the power suddenly went out. A real disaster. I am worried that this will have negative repercussions in the online reviews. But I really didn’t expect such effects and was therefore not prepared.”

Business owner 1: Not prepared, large damage

• Business heavily affected
• Did not expect a rain event to have such an effect and thus didn’t specifically prepare
• A number of rooms got flooded which meant guests had to be moved
• Kitchen had power outage which disrupted dinner service and left guests angry
• Worried about impact on image of the hotel and negative social media reviews

“My weather alert informed me in advance that a storm was coming. I was therefore able to instruct my employees to take appropriate measures in time. During the last renovation, I already took some precautionary measures and improved my drainage system, for example. In case the power goes out, we always have a generator on standby. My manager has informed the guests about the impending storm and explained the measures that have been taken for safety. All in all, we had been well prepared for the event.”

Business owner 2: Well prepared with limited impact

• Has weather alert and expected the extreme event which allowed him to alert staff who took precautionary actions
• Was aware of this type of event and had planned for an event such as this one
• Had checked all window sealing at the beginning of the season
• Have back up generator in place to secure provision of power
• Trained manager to provide communication to guests in case of such an event to reassure guests that they were safe and provide entertainment during the bad weather

Preparation can reduce the impact of a hazard and thus lead to a very different outcome.

You have successfully completed the second learning unit of the course “Resilience in Tourism”.