Understanding Risk Management

Understanding business risks and risk management should be a primary concern of all businesses, regardless of the size. In essence, business protection, insurance and risk management go hand-in-hand. Risk management is as much about the identification of opportunities as avoiding or mitigating losses.

While it is not possible to prevent all hazards, the objective of risk management is to reduce risks to an acceptable level, reject unacceptable risks and transfer other risks through insurance and other means. A proven track record in controlling risks may also result in reduced insurance premiums over time and contribute to the long term success of your business.

Risk management planning is an essential part of any business plan. Specific areas that require careful consideration are public liability and occupational health and safety.

What is risk management?

Risk management is a discipline that aims to protect assets and profits by reducing the potential for loss before it occurs, and by financing, through insurance and other means, potential risks to catastrophic loss.

While you cannot prevent all risks, your aim should be to minimise or reduce the risk, or effects of the risk.

Risk management and your business

Few things in life are riskier than setting up and running your own business. Part of the risk of running any business is:

• The loss of your business' assets such as its stock, contents or buildings from events such as fire, storm or theft
• The chance of causing injury to people or damage to their property.

Either of these can cause severe interruption to the operation of your business, possible loss of income or even the total closure of your business. Some small businesses close their doors permanently following a major disaster such as a fire or an extended court case, and this can be due to inadequate insurance.

Risk Management and the Tourism Industry

The establishment of risk management strategies and plans is especially critical in the Tourism Industry. The nature of the tourism industry, a people oriented service sector, means that operators within the industry are at an increased risk of potential problems. The requirement for risk management, especially public liability insurance, in all sectors of the tourism industry is essential to prevent problems arising that may lead to expensive law suits and ultimately business closure.

Risk Management Issues to Consider

• Occupational Health and Safety

Work-related injury and disease occurrences can seriously threaten the financial viability and growth rate of a small business, particularly during the period when it is attempting to establish itself as a long-term ongoing concern. Appropriate planning and prevention methods such as processes in place and training will reduce the OH&S risk within your business.

• Public Liability

This covers you against claims by members of the public who may suffer injury or damage to property while on your premises, or while you are working at their premises. More information and how to include insurance for Public Liability is in the Financial Information page of the website.

Risk Management Plans

In order to eliminate or minimise all potential risks associated with setting up and running your small tourism business, it is essential to have a detailed risk management plan. A set of guidelines in the preparation of such a plan, along with a templates for use in the DTL Awards Business Plans, are available through the following link.

Risk Management Template File

Risk Management References

This information is provided by the Entrepreneur Business Centre. For small business products and services, visit www.ebc.com.au.

From the ninemsn small business section of their site

http://search.ninemsn.com.au/results.aspx?q=small+business&FORM=DNSERR

Template attachment:

http://www.pmc.gov.au/implementation/giude/docs/template_b.doc

OH&S Information:

“Consequences of Poor OHS Performance for Small Business – Business Entry Point Website” Available; http://www.nohsc.gov.au/SmallBusiness/OHSStatistics/SBMW5.htm

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Financial Planning

Financial planning is an essential part of business planning. Careful consideration needs to be given to what and how much your expenses are. Once you have evaluated this you will need to determine how much capital is required to start your business and find a source to finance the business.

Why is financial planning important?

The ability of a business to thoroughly plan their financial direction will ultimately determine the business’ success and validity. Without a detailed financial plan, a business is in danger of overspending on assets without the available capital, leading to the business experiencing debt and inevitably closure. The process of financial planning can be creative; however, it is always important to be realistic when setting achievable financial goals and outcomes.

Additional Information

This additional information will assist in the creation of your financial plan and is to be used in conjunction with the Cash Flow Statement Template/Example.

• Start Up Considerations and Costs
• Licences
• Operating Costs
• Finance Costs
• Marketing Costs
• Permits
• Business Insurance
• Business Taxation
• Cash Flow Statement Template/Example
• References and Further Links for Financial Information

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Marketing

Marketing can be defined as the systematic planning, implementation and control of a mix of business activities intended to bring together buyers and sellers for the mutually advantageous exchange or transfer of products.

If you would like to know the definition of any marketing term, a useful resource is the Monash University Marketing Dictionary. To access this resource, click on the following link;

Marketing Dictionary

Further Information and Links

Tourism Victoria

Tourism Victoria is a vibrant and dynamic organisation actively marketing Victoria as a premier tourism destination domestically and internationally. As a market leader, Tourism Victoria is successfully raising awareness of and visitation to Victoria from within Australia and around the world through innovative and effective marketing strategies and campaigns.

For more information visit the Tourism Victoria Website on www.tourismvictoria.com.au

Tourism Australia

Tourism Australia is the Federal Government statutory authority responsible for international and domestic tourism marketing as well as the delivery of research and forecasts for the sector.

The site and the information contained on it can be used to learn more about international markets and how the leading tourism marketing body for Australia markets its product to potential international visitors.

Read through the ‘Markets’ and ‘Marketing Resources’ on this website to get a broader understanding of this section for the Business Plan.

Tourism Australia also concentrates on Niche Marketing.

For more information visit the Tourism Australia Website on www.tourism.australia.com

Decipher

Decipher is an information service supported by State and Territory Tourism Organisations specialising in Tourism Business Knowledge.

For more information visit the Decipher website on www.decipher.biz

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• Australian Bureau of Statistics
• Australian Taxation Office
• Australian Tourism Data Warehouse
• Australian Tourism Export Council
• Business Licensing Authority
• Liquor, Hospitality and Miscellaneous Workers Union
• Parks Victoria
• Small Business
• Victorian Employers Chamber of Commerce and Industry
• Worksafe Victoria

• Australian Federation of Travel Agents
• City of Melbourne
• Cooperative Research Centre for Sustainable Tourism
• Tourism Accreditation Board of Victoria
• Tourism Alliance Victoria
• Tourism Australia
• Tourism Victoria

• Accommodation Getaways Victoria
• Australian Hotels Association
• City of Melbourne
• Hotel, Motel and Accommodation Association of Victoria
• Restaurant and Catering Victoria
• Tourism Accreditation Board of Victoria

• Exhibition & Events Association of Australia
• Festivals and Events Association
• International Special Events Society
• Meetings and Events Australia
• Melbourne Convention and Visitors Bureau
• Melbourne Exhibition and Convention Centre

Content Coming Soon.

• Career One
• My Future
• Seek
• Training.com.au
• Young Tourism Network

• City of Melbourne
• Crown
• Flight Centre Limited Careers
• MyHospitality

• International Special Events Society
• Meeting and Events Australia