Risks Management in Global Trade in Tourism Services

Risks management

Author’s name

Institutional AffiliationTable of Contents

TOC o “1-3” h z u Risks Management in Global Trade in Tourism Services PAGEREF _Toc321145894 h 2Introduction PAGEREF _Toc321145895 h 2Hypotheses PAGEREF _Toc321145896 h 3Aims and Objectives PAGEREF _Toc321145897 h 3Literature Review PAGEREF _Toc321145898 h 4How the Government Helps Banks in Mitigating Risks in Tourism PAGEREF _Toc321145899 h 5Risks Non-Attributable To Negligence or Errors PAGEREF _Toc321145900 h 6Risks Attributable to Negligence or Errors PAGEREF _Toc321145901 h 7Security Protection of International Tourists by Judicial Apparatus PAGEREF _Toc321145902 h 7Insurance System in Tourist Protection PAGEREF _Toc321145903 h 8Research Methodology PAGEREF _Toc321145904 h 9Ethical Considerations PAGEREF _Toc321145905 h 9References PAGEREF _Toc321145906 h 10

Risks Management in Global Trade in Tourism ServicesIntroductionTourism status globally makes it increasingly vulnerable to disloyal treatment of the diverse providers in the tourist industry and against the unpredicted events. Risks management in the tourism industry is as a result of compliance to of several multilateral, bilateral, regional, or international treaties concerning the protection of tourist demanders on the global markets. Risks management has become, and remains, a vital constituent of the way every business operates in the tourism industry. There are manifold prospects for risks to develop into disasters or disruption events, across this industry (Michael & Cioccio, 2008). Security issues, natural catastrophes like cyclones and outbreaks of contagious diseases are examples of risks which might have a significant impact on this industry. Risk management planning is predominantly important in facilitating the different players in the tourism industry to respond, as well as adapt to unforeseen occurrences. Risk management in the context of tourism refers to planning as well as implementation of various processes directed towards managing the adverse consequences of disasters and crises on tourism. It as well addresses tourism’s prospects for improvement in procedures and systems (Robert, 2009). This paper addresses the concern of risk management in and how the industry implements the different procedures and systems in order to mitigate the risks associated with tourism.

HypothesesWhat is the role of risks management, and to what extent does risks management influence service delivery in the tourism industry? How does the tourism industry implement this, bearing in mind that, many players within the industry have failed in the quest of the same?

Aims and ObjectivesThis dissertation proposal aims at exploring the risks management associated with global trade, in tourism services. The objective is to:

Provide an overview of the risks management associated with global trade, in tourism services.

Show how the government helps banks in mitigating risks in tourism.

Explain the various types of risk scenarios in the tourism industry.

Utilize secondary research in exploring the risks management associated with global trade, in tourism services.

Provide a conclusive understanding of the problem as well as the different mitigation approaches such insurance systems and judicial apparatus.

Literature ReviewIn the event that tourism demand is generated at the tourist’s location of residence, defined by socio-political, economic, and ethnical characteristics of a regional or national territory, the tourism consumption, in general, is made within the tourism offer basins. This would be prior to, during, subsequent to the displacement, in addition to at the place of destination (Lawton & Weaver, 2003). Irrespective of the character of the service or product which the tourists decide to purchase, the consumers bear some essential rights. These fundamental rights include:

The right to information, including unreliable marketing, labeling or detrimental practices, so as to organize of all the essential information in making purchase decisions.

The right to decide from a variety of services or products at the prices created by the competition.

The right to be listened to, meaning the opportunity of expressing dissatisfactions in relation to the services or products purchased, but also the purchasing conditions.

The right to protection and security, in order to be certain that the services or products they purchase are not injurious, and do not present hazards for the consumers (Borge, 2005).

In 1985, the United Nations (UN) approved principles concerning the protection of clientele. The objective of these principles was to implementation a model for member-states of the UN in regard to the fulfilling suitable consumers’ protection (Dritsakis, 2010). This was in order to establish superior standard regulations for the providers or producers, and also for distributors to encourage the international cooperation concerning clientele protection. This was envisioned to contribute to the satisfaction of the needs of consumers or customers of a company that engages in tourism (Dirggers, 2009).

How the Government Helps Banks in Mitigating Risks in TourismThe tourism industry is fundamentally vulnerable to a diversity of risks that may be natural, or man made, widespread, and isolated. The tourism industry has in recent years developed several risk management policies in order to mitigate the impact of possible risks. The industry enters into partnerships and commercial joint arrangements with a variety of industry players including the banking industry (Laiming, 2001). Several studies show that the tourism industry experiences diverse complexities in accessing adequate capital to initiate new ventures or in expand the existing ones (George, 2009). In this context, government would want to regulate the provision of its support, particularly the contingent liabilities generated through these support mechanisms. For instance, by means of government guarantees of the obligations related to grantor payment or repayment of debt. The governments would seek equilibrium between the risks it would incur in support of infrastructure investment as well as fiscal prudence (Alire, 2004). In striking this balance, it helps the government in making careful decisions concerning when it would provide public-finances support and regulate the government liabilities that originate from such public-finances support, while being aggressive in promoting infrastructure investment in the tourism industry (Chang & Lee, 2007).Risks Non-Attributable To Negligence or ErrorsThis chapter includes category risks, which originate from, the ignorance of risks or dangers owed to human or natural hazards that are not under the power of travel organizers or travel agents. Nevertheless, the existence of these category risks might negatively influence security or welfare of the tourists (Mawby, 2007). These risks might be generated by contagious diseases, social revolt, workplace conflicts, and major events such as earthquakes, criminal, or terrorism acts. It is also appropriate to include any eventual occurrences which can be created in the course of displacement to tourist destinations or in the period of the stay (Lundberg, 2006).

Occasionally, travel agencies lack sufficient information or do not have the opportunity to notify their clients, who might take precautions prior to travel to reduce such depressing effects attributable to the lack of adequate information (Fortson, 2000). Consequently, the tourist requires accurate and up-to-date information concerning the travel. This would assist in that, by acquiring the information regarding the travel conditions, the tourist may decide if they would wish to avoid the destination or route or maintain the intent to travel. The tourist may protect himself against such eventual risks (Robert, 2009).The inevitable risks, which are outside the control of the travel agencies, might also bear negative consequences regarding the possessions that the tourist carries with them. In such state of affairs, the law of contracts stipulates that the contractors are free from any responsibility (Churchill, 2008). The lack of sufficient information and reasonable judicial knowledge of the tourists makes the travel organizer or agent to agree to such contracts, even though the buyer is disarmed under such risks (Grabowski, 2003). These are the risks which are brought about by his displacement to a tourism destination, which proves to be, at the purchasing moment of the tourist services or products, a comparatively known, risky destination (Chang & Lee, 2007).

Risks Attributable to Negligence or ErrorsThis chapter includes category risks, which result or, are derived from the involuntary or voluntary actions of the travel agents or tourism providers, which are considered as a consequence of their responsibility. From the perspective of consumers or demanders in tourism, the procurement of tourist services packages signifies a financial effort (Gin & Cossens, 2008). In this financial effort does not guarantee the expected contentment as a result of inappropriate performance, it might compromise consumption of the tourist services packages in the period of the holiday. The damages brought about involuntarily by the travel agency, might be the outcome of a lack of preventative measures, by not adhering to the norms or regulations, or even as a result of professional incompetence on the part of the travel agencies (Kerzner, 2006).

In so doing, the tour agency or operator is material accountable, irrespective of the precautionary norms that may have been applied for defining the responsibilities of the organizer towards the tourist (Carter, 2000). This also imposes the tourist with a comparable obligation. Therefore, the responsibility arbitrates even for the easiest culpability. The tourist may be held responsible for his irrational, or rational actions, whose results represent a risk for the tour organizers or for the provider of the tourism services that is the object of the transactions (Gunn, 2004).

Security Protection of International Tourists by Judicial ApparatusWhile the obligation to demonstrate proof of identity is perceived as a check on a persons’ freedom of movement, a passport constitutes a method of identification that is universally recognized (Enders, 2007). The significance of the passport as a valid identification document is established by the authorities in standardizing its structure and content (Davis & Weinberg, 2000). This is in order to conform to international techniques in simplifying the record of the person’s identity. The risk of theft or loss of the passport is proportional to its significance, and consular institutions are skilled in facilitating the issuance of some provisional identification documents (Berno & Moore, 2005).

Insurance System in Tourist ProtectionInsurance is fundamentally a financial mechanism that facilitates one entity to transfer the risk of potential losses to a second entity, the insurance provider. The insurance provider must be willing to accept this risk for a predetermined duration of time in exchange of imbursement of premiums (Paisley, 2007). These transfers involve risk assessment, and risk pricing. Risk assessment involves the evaluation of risks so that they can be acknowledged and priced. While risk pricing, on the other hand, involves assigning of a monetary value on the risks (Brawner, 2003). Insurance helps in restoring the security of a policy holder following a distress. If designed well, insurance generates inducements for the policy holders to diminish risky behavior (John, 2003). Insurance as a mechanism in risk management runs high in negotiations concerning global climate change under the patronage of the United Nations Framework Convention on Climate Change (UNFCCC). In reality, insurance is among the policy apparatus for adaptation stipulated in key UNFCCC resolutions (Jorgensen, 2011).

Tourist insurance is a policy measure in tourism services that are adopted as a way of providing protection to the insured people from risks that would threaten them in order to grant security (Smith, 2003). As a result of the differing interests among the signatory entities in an insurance contract, namely, the tourists, the insurers, and the brokers, as well as the necessity of extension, in every country, regarding the practice of tourist insurance, the World Trade Organization (WTO) committee of experts decided to incorporate, in the attributions of civic authorities, the negotiation concerning tourist insurances with private insurance institutions. The promotion of tourist insurance to national levels on reasonable tariffs must comply with some conditions (Jorgensen, 2011).

Research MethodologyIt is essential to note that this research will be principally based on the utilization of secondary research as the primary research methodology. The quantitative analysis of data collected from the secondary sources will be the principal method utilized in the secondary research. Data will be compiled from identified materials or sources academic and business journals and books that focus on risk management in the tourism industry. Such sources of information are regularly precise and not manipulative as would be the case with qualitative research (Ellis, 2000). In qualitative research information is distorted or manipulated easily. The study, as has been cited in the aims and objectives section, will seek to explore and establish the risks management associated with global trade in tourism services, and to demonstrate the pivotal role played by risks management in global trade, in tourism services. Secondary research refers to the compilation and employment of available data (Glaser & Strauss 1967). In the context of this research study, the main secondary data sources will be: books, business and academic journals relating to risk management in the tourism industry. The data acquired from the secondary sources will be mainly be utilized for the development of the literature review section of the dissertation proposal. This will assist in supplementing a decisive understanding of the issue that this dissertation explores.

Ethical ConsiderationsAll research findings realized will be handled in the highest degree of prudence and in regard to ethics. None of the sources shall be linked with any definite observation, and neither shall any observation be correlated without clear reference to the source.

Summary and Conclusion

Tourists’ global status makes them increasingly vulnerable in relation to the disloyal conduct of the diverse providers in the tourist services, as well as against the unexpected occurrences. According to WTO estimations, Europe will continue until 2020 as the region that would generate the highest number of tourists. At the international perspective, it was established that, in the future, the tourist consumer’s protection insurance will focus on structured tourist arrangements, as well as on standards that must be appreciated by the expedition organizers, and by tourist services packages providers. In regard to client’s dissatisfaction in relation to the services provided by the expedition organizer, the WTO developed an extremely strict regulation with the intention of protecting the consumers. In the event that the discontent is subjective, meaning communication deficiencies, staff behavior and attitude, the liability is transferred from the tour-operator, and laid on the services provider. In the event of solving of the consumer’s grievances, it recommends an arbitration method, rather than the court of law.

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