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Reputational risks in the leisure and hospitality sector

Casualty
N/A

November 9, 2021

Understanding the risks to your reputation is the first step to minimising them, being prepared if something goes wrong, and mitigating potential damage.

Reputation is vital in leisure and hospitality businesses. Few things are more valuable than a trusted recommendation, or worse than a bad review.

In a time when news and opinions travel fast, any negative experiences can quickly spread, go viral, or in the worst cases, even hit the mainstream news.

Having the proper tools, strategies, training and insurance in place are essential in helping to reduce reputational risk.

Key risks: the big five

Based on our experience of cases and claims, we’ve identified five of the key reputation risks facing leisure and hospitality businesses:

  • Harm to people on the premises.
  • Allegations of unsafe or unhygienic conditions.
  • Discriminatory attacks or abuse on customers.
  • Active assailant attacks, whether caused by terrorism or not.
  • Employee abuse relating to equal opportunities, discrimination, working conditions or safety.
  1. 01

    Harm to people on the premises

    It goes without saying that you always want your customers to enjoy a great experience.

    A fundamental part of that is ensuring that you keep your customers safe and never cause them harm.

    There are many regulations and measures to help protect your customers, such as safety checks at attractions, allergy labelling on food products and having lifeguards near pools and water-based facilities.

    However, even with these in place, sometimes physical accidents, food poisoning, or allergic reactions can happen.

    For example, a malfunction at an attraction resulting in harm to visitors will not only have to be investigated, leading to closure and loss of trade, but is also likely to attract a lot of damaging publicity.

    Crisis communications can help manage the situation and provide expert advice to avoid the damaging news escalating.”

    Tom Rowley | Global Markets P&C Hub,
    Willis Towers Watson

    Crisis communications can help manage the situation and provide expert advice to help avoid the damaging news escalating.

    Businesses should check their business interruption insurance to make sure they have cover for loss of profit while closed or disrupted.

  2. 02

    Allegations of unsafe or unhygienic conditions

    If an incident occurs that causes harm, it’s quite likely that allegations of unsafe or unhygienic conditions will follow.

    For example, if someone suffers an allergic reaction or becomes unwell after consuming your product, this may raise questions around labelling or contamination.

    Live monitoring of social media and news can help businesses understand how the public is responding to an incident.”

    Tom King
    Global Markets P&C Hub,
    Willis Towers Watson

    Live monitoring of social media and news can help businesses understand how the public is responding to an incident.

    Businesses can then use this information to adapt their response where appropriate.

    It’s also important to consider whether you could suffer reputational damage through a business associated with your own.

    For example, if someone suffered an allergic reaction from food purchased from a catering concessions business within a stadium or transport hub, the venue may suffer reputational damage by association, even if it is not legally liable.

  3. 03

    Discriminatory attacks or abuse on customers

    When customers interact with the leisure and hospitality sector, they’re putting their trust in businesses to respect them and meet their needs.

    The public wants to associate with companies whose morals, ethics and beliefs generally align with their own and, as society becomes more socially aware, people expect public-facing industries to reflect that.

    The public wants to associate with companies whose morals, ethics and beliefs generally align with their own.”

    Tom Rowley | Global Markets P&C Hub,
    Willis Towers Watson

    Those that don’t may face severe reputational damage, whether or not legal charges are brought as a result of discriminatory attacks.

    Businesses must take steps to ensure their staff are trained in recognising and reporting discriminatory abuse and ensure policies and procedures are in place to do this.

    At the same time, they must also create a culture that actively pushes back against discrimination.

    With growing awareness of movements such as Black Lives Matter, simply having policies and statements condemning racism won’t be enough if it is not backed by action to combat discrimination and abuse.

  4. 04

    Active assailant attacks

    Because leisure and hospitality businesses are open to the public, they face a higher risk of attack than many other businesses, either by terror groups or lone assailants.

    The 2017 Las Vegas music festival shootings by a lone gunman and the Paris Bataclan terror attack are just two high profile examples from recent years.

    Although there were fewer active assailant attacks globally during COVID-19 lockdowns, the risk is rising again as society reopens after the pandemic.

    Leisure and hospitality businesses should make sure staff are trained to spot unusual behaviour that may give early warning signs of an attack.

    They should also have a practiced plan in place of how to manage the immediate fallout of an attack.

    Simple things like making sure a high number of staff are trained in first aid can help save lives while emergency services are getting to the site.”

    Tom King | Global Markets P&C Hub,
    Willis Towers Watson

    Simple things like making sure a high number of staff are trained in first aid can help save lives while emergency services are getting to the site.

    Appropriate insurance and brand rehabilitation strategies are crucial for the leisure and hospitality industry in the wake of such attacks.

    They may have to close for periods of time for investigations, physical repairs, or out of respect of those that have been affected by an incident.

    Having the correct cover and plans in place will reduce the strain of such periods.

  5. 05

    Employee abuse

    Customers want to choose brands whose morals and values align with their own.

    How businesses treat their staff can have a huge impact on reputation in this respect.

    Any suggestion of employee abuse will not only deter customers but also detract new talent.

    Any suggestion of employee abuse will not only deter customers but also detract new talent.”

    Tom Rowley | Global Markets P&C Hub,
    Willis Towers Watson

    Legislation is in place to help protect employees from discrimination at the hiring stage, but it may not follow that a culture of discrimination does not exist once an employee is on board.

    Leisure and hospitality businesses often attract younger workers, offer less secure contracts and have a high staff turnover.

    However, this does not mean that staff do not have to be protected.

    If allegations of abuse come to light, businesses will be judged for how they respond.

    Allegations should be taken seriously and investigated appropriately.

    The public and potential employees will react very negatively to a broad statement that says all the right things, but which is not followed up by real change.

Staying on top of your reputation

When incidents occur that could damage your reputation, knowing how to overcome the fallout is key to maintaining a good reputation.

From having a strong initial response that shows you’re handling the situation, to taking action to avoid future incidents and facing up to fines or liability, customers will scrutinise how you respond to a crisis as much as the crisis itself.

Preventing a situation in the first place is much more difficult and requires businesses to constantly monitor how they’re perceived, whether that’s in the press, on social media or by other organisations they’re associated with.

At Willis Towers Watson, we have delivered a new reputational crisis insurance and risk management solution that means you can discover, mitigate, control and repair reputational damage as it happens.

At Willis Towers Watson, we have delivered a new reputational crisis insurance and risk management solution that means you can discover, mitigate, control and repair reputational damage as it happens.”

Tom King | Global Markets P&C Hub,
Willis Towers Watson

Powered by reputation intelligence specialist, Polecat, live sentiment and impact analysis means you can stem the tide on reputational damage before an event escalates and be confident that any drop in profit as a result is covered.

You also have access to crisis consultants, paid for by insurers, who can advise you when a crisis occurs to help you handle it as well as possible.

The insurance element of the product is triggered by the occurrence of a reputational crisis event. It provides indemnity for loss of profit and the costs of brand rehabilitation, designed to help you recover financially from a crisis.

For more information about our reputational crisis insurance and risk management solution, or to arrange a free initial consultation, please contact:

Contacts

Tom King
Global Markets P&C Hub
Willis Towers Watson

Tom Rowley
Global Markets P&C Hub
Willis Towers Watson

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