Adopting a Risk Mindset in Hotel Management

By Christopher Bolger Senior Risk Manager, Venture Insurance Programs | June 26, 2016

A good corporate culture of safety and risk management starts at the top and spreads to all staff until it is woven into the fabric of the hotel’s daily activities. An effective safety program holds everyone from executives to housekeeping staff accountable for implementation and execution of clearly defined safety procedures. Hotel staff need to be proactively thinking and talking about safety – immediately wiping up spills, reporting pot holes in the parking lot and cutting off bar guests who’ve had one too many, among other things. By creating and implementing a top-notch safety program and holding employees accountable to it, hotels can significantly reduce their risk exposure and save millions of dollars in avoidable claims or potential reputational damage.

A Good Safety Culture Requires a Top-Down Approach

Overloaded housekeeping carts, heavy canned foods stored out of reach high atop kitchen shelves and extension cords snaking across ballroom floors all pose serious risks to hotels. Multi-million dollar claims may be easy to come by, but they can also be easily avoidable when hotel staff has a proper risk mindset.

For hotels, much like any business, a safety culture focused on risk mitigation starts with executive management. Not only must hotel executives understand safety initiatives and procedures, they must embrace and support these endeavors in their daily routines. It’s essential that hotel employees see that owners and management are supportive of safety initiatives. Though it will take time, employees will then incorporate these measures into their daily activities as well.

Proper risk management is not just important from a safety perspective, but also from a cost perspective. While many executives and employees may see insurance claims as a sunk cost, this is not necessarily the case. Hotel management and employees should understand that these claims do indeed cost the business because a hotel’s past claims history is reflected in its premium. In turn, these claims can have a bearing on the overall success of the hotel – which can directly impact staff via performance evaluations, be it the employee or the company.

One way executives might explain to employees the true cost of filing an insurance claim is to relate it to an employee’s personal auto insurance policy. Most individuals understand that if they file a claim on their auto insurance policy, it will most likely be reflected in the form of a higher premium in the coming months. The same for workers’ compensation claims, the experience of the hotel is compared against an industry standard and if the hotel’s claims’ rate is higher than the industry standard’s, that hotel’s future workers’ compensation premiums will likely reflect that difference.

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