Wednesday, December 5, 2012

Thoughts on Risk Management


Travis Mazingo
Risk Management

Adventure based companies are sprouting up all over the world these days, and encompassing some really dangerous sports and activities.  At what point do the dangers involved outweigh the benefits? As a business owner how do you allow clients to be able to do risky things in pursuit of enjoyment, while at the same time limiting your own responsibility for accidents.  What constitutes as being too dangerous and where do you draw the line between acceptable and not when it comes to risk?  To what extremes should companies allow their clients to go?  All companies, adventure based or not have to implement some sort of risk management plan, the risks that they decide to allow or not allow can determine the success of the business.  
A risk management plan has many parts involving finances, employment, business strategies, and much more.  Let’s focus on what risks are acceptable for a company to allow its clients to take and what are not.  It all begins with liability!  Liability, unfortunately, is the controlling factor in many concepts that go into the creation of a risk management plan.  As a business owner, or someone looking to start a business it is important to understand where responsibility falls in regards to safety.  
Adventure based businesses attract a wide variety of people with different experiences and backgrounds.  It would be foolish to expect all of your clients to be fit, confident and ready for whatever you throw at them.  A successful business is able to cater to different physical and mental abilities, having a risk management plan that covers all potential situations.  What considerations should be made to create a risk management plan that gives all skill levels a chance to excel?  
As a young adult I worked for a bicycle tour company on the island of Maui.  On this tour a client rides a cruiser bicycle in a line of ten other clients, following a tour leader, with a van following for safety.  The tour took four hours to ride thirty eight miles down the steepest paved decent on earth from ten thousand feet to sea level.  The tour was on public roads, with multiple blind, hair-pin turns, and angry locals late for work trying to pass constantly.  As a guide I constantly questioned myself why some of these people would choose to do such a dangerous activity with some of the abilities that they had.  It wasn’t untill later that i found out Hotel concierges, who had no idea what the tour intailed, were responsible for recruiting customers.  The result was that multiple people who did not have the skills needed would come on the tour, and either crash, or ride in the van out of fear.  I see a serious flaw in risk management here!
On the contrary, I recently organized a kayak tour for a team of nineteen soccer players from Maui on the Willamette River.  It was the largest group that the kayak company had taken on a tour at that point, and they were eager to take on the task.  The guide company sent seven or eight guides along with the group of nineteen for a mile and a half paddle each way that usually takes and hour and a half.  Along with being the largest group that had gone out, they were also the most comfortable in the water having grown up in the large surf in Hawaii.  The outcome was that the soccer team went crazy trying to jump off of everything they could, paddling into rapids with no fear, flipping boats left and right, and disregaurding all safety advice of the guides.  This resulted with a bunch of panicked guides trying their best to control the situation.  Not to mention that the tour only took an hour because the soccer team paddled so fast.  Being the meddle man in the end of all of that was funny because i was able to hear both opinions on the matter.  The Hawaiians had fun but would had liked to do something more exciting, and the kayak shop was baffled by the difference from their regular tours.
Both of these companies ran into situations that challenged what they were used to.  What could they have done better?  Both the bicycle and the kayak tour companies should have re-assesed their risk management plans after experiences such as these.  By simply talking with the hotel concierges, the bicycle company could have avoided many of the problems do to a lack of communication.  The kayak company did look back at their errors and have since re-worked some of the ways they deal with large groups.  These are only a couple simple examples of how a poor risk management plan can hurt your business, and a good example of what not to do, or how to fix your mistakes through experience.  It is important to consider all factors that can be involved before creating a successful risk management plan.

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