Strategic risks are mounting post-pandemic as firms cite fears around reputational risk and underinsured BI losses
As evolving technologies and changing consumer tastes bring new challenges to large leisure and hospitality businesses, the industry continues to suffer reverberations from Covid-19.
Managers are keenly focused on risk however are unsatisfied with the insurance coverage available. This is according to a report from WTW.
Intangible risk concerns
Many of the hotels, health facilities, venues and attractions, bars and clubs, restaurants, and other leisure and hospitality companies surveyed appear to be grappling with matters of risk and risk transfer:
- 44% say risk-related losses were higher or much higher than expected over the previous two years.
- Only 28% say the root causes of the risks they face are within their control.
- Almost three-quarters say they lack the data or knowledge to address risk.
- 59% measure and monitor their reputation, and 46% think reputational risk insurance is necessary (22% say it’s mission critical).
- 52% say their insurance covers damage to property only, but not the cost of business interruption if they are forced to close.
“Companies in the leisure and hospitality sector are still feeling the effects of successive global shocks and changing consumer behaviours,” observes Garret Gaughan, head of Direct and Facultative at WTW.
“69% of our survey respondents believe that they don’t have access to the right insurance and risk transfer solutions and 56% lack the right risk management tools and insight,” he reports.
Still feeling the COVID hangover
WTW’s survey found that the sector’s post-Covid recovery is far from complete, with about half the $300 million+ firms polled still some distance from business as usual.
- 47% observe a skills gap following an employee exodus from the sector.
- 46% feel a pinch from the shift to home-based leisure activities.
- 46% are now more focused on improved margins over the next two years than sales growth, the priority for only a third.
- 52% say increased competition from outside the sector is one of the greatest obstacles to their strategic objectives.
- 70% say the accelerated switch to digital is the greatest long-term legacy of Covid-19.
The survey was conducted late in 2022 among more than 600 CEOs and heads of risk, operations, or compliance at leisure and hospitality companies worldwide with revenues in excess of $300m.