2.3.1. Crisis and risk management
Wilks and Davis (2000) have proposed a crisis management
framework which includes risk retention, risk transfer, risk reduction,
and risk avoidance. According to them, the first step in crisis
management is to assess business exposure to potential risks, based
on the frequency and severity of the risks. When the frequency and
severity of risk is low, hotels often factor in risks by assuming and
accepting certain losses. However, when the frequency of risk is low
but the severity is high, operators transfer responsibility to other
parties, such as insurance companies. In contrast, operators reduce
exposure of risks with the use of regulations when the severity of
risk is low but the frequency increases. Finally, when both
frequency and severity of risks are high, operators consider
canceling their program to avoid risks, though such action leads to
loss of revenue and customer disappointment (Wilks & Davis,
2000). Therefore, some host governments work with all stakeholders
to improve safety measures and tourism promotion as part
of their crisis management contingency plans to prevent a crisis
from developing into a disaster and to help the private sector
overcome crisis (Mansfeld & Pizam, 2006).