Sat | Mar 25, 2023

Cedric Stephens | Vital and timely tourism risk review

Published:Sunday | January 22, 2023 | 12:09 AM
Minister of Tourism Edmund Bartlett
Minister of Tourism Edmund Bartlett

The Edmund Bartlett-led Ministry of Tourism seems to be on the ball. The ministry’s leadership appears to be well-informed and forward-looking and takes appropriate action on a timely basis. An example: 10 days after 2022 ended, Mr Bartlett gave...

The Edmund Bartlett-led Ministry of Tourism seems to be on the ball.

The ministry’s leadership appears to be well-informed and forward-looking and takes appropriate action on a timely basis. An example: 10 days after 2022 ended, Mr Bartlett gave members of the House of Representatives an earnings estimate for the tourist industry for that year. He also provided a 2023 earnings forecast.

This action is atypical of government ministries and agencies. Few local private sector enterprises meet this standard.

One agency of the tourism ministry provided the second example of its parent’s ball skills. The ministry, it said, was planning to engage the services of a consultant to conduct a strategic risk management review or SRMR, of the island’s tourist industry. I am a risk management advocate (see ‘Time for a SMART disaster risk management policy’, July 24, 2022, and ‘Disaster risk urgency and rebellion’, July 31, 2022).

An SRMR is a tool that businesses and other entities use to look at the future hazards they are likely to face and consider ways to manage them should they occur.

Boy Scouts founder Baden-Powell’s 115-year-old ‘Be Prepared’ motto concisely captures the aim of an SRMR. The Economist Intelligence Unit’s 2011 study The Long View: Getting New Perspective on Strategic Risk provides more expansive arguments for an SRMR. It stated that “short-term focus is ingrained in institutional structures and thinking. Most leaders will enjoy an average tenure of around six years, which means there are few incentives to bring long-term problems to the top of the agenda. (Political heads of state entities invariably focus on the next election). A relentless focus on short-term results encourages … leaders to place minimal emphasis on long-term performance. Pay structures have often reinforced this focus by rewarding managers for meeting short-term results. Short-term metrics will always be important indicators of performance, and institutions will always need the ability to make decisions quickly and adapt to immediate opportunities and threats. But a retreat into the present will reduce the chances of long-term, sustainable success. Leaders must therefore combine their skills of adaptability and addressing immediate challenges with a focus on longer-term risks and opportunities.

“The world is changing rapidly. It may seem as though any attempt to think about the future will be doomed to failure. In one respect, this is true. No one can predict the future and the current pace of change means that it is more difficult than ever to attempt it. But by considering how different futures might evolve and ensuring that their organisation is equipped to deal with a range of outcomes, business (and political) leaders will not only be better prepared for the future but will also be more knowledgeable about their current situation.”

A few days after his statement to Members of Parliament at Gordon House, Minister Bartlett pointed out that “natural disasters, climate change impacts and biodiversity loss, food insecurity, political instability and conflicts, the threat of terror attacks, cybercrime and cybersecurity issues, economic recession, epidemics and pandemics are among the disruptive events that lead to global shocks affecting travel and tourism”.

The tourist industry is one of the main contributors to the island’s foreign exchange earnings. These resources are critical to the proper functioning of the economy. Income from tourism nose-divided when COVID-19 was raging, and borders were closed. Many hotels were shuttered, and hundreds of employees were sent home. These disruptions affected other parts of the economy.

Below are more reasons why the SRMR for this industry is now vital and timely:

1. The Ministry of Tourism has two units that are functionally responsible for managing risks. These are Research and Risk Management and Tourism Policy and Monitoring Departments. The ministry recognises that this fragmented approach is not appropriate for the range and complexity of hazards that are confronting the industry. Many big companies overseas have established separate departments staffed with specialists that deal exclusively with managing risks.

2. The physical plant and assets of the tourist industry, for the most part, are in the island’s coastal areas. These locations are low-lying and acutely exposed to natural catastrophes.

3. The slump in revenues in the tourist industry during COVID-19 severely disrupted the island’s economy.

4. Climate change will lead to more frequent and intense hurricanes and flooding. Sea level rise is also predicted. These threats have already started to affect the island and the industry. Hurricane Dorian, a Category 5 storm that struck Abaco Island in The Bahamas in 2019 and caused damage of US$3.4 billion is an example of the magnitude of the threat that faces the industry.

5. Climate change has driven heavy natural catastrophe losses of US$120 billion globally during 2022. For this reason and due to losses in earlier years, the capacity for property insurance, especially for catastrophe-prone regions like the Caribbean, has declined. Also, price increases ranging from 20 per cent to 60 per cent are occurring during this year. Property insurance plays an important role in the protection of investments and assets in the tourist industry. Experts expect that the current market conditions are likely to last for the next three to five years or even longer.

6. Cyberthreats are listed among the major hazards facing the industry.

The provisional terms of reference omitted reputational damage to destination Jamaica, acts of terrorism, crime and infectious diseases.

Private sector companies, especially those that trade on the Jamaica Stock Exchange and other government agencies should emulate the ministry of tourism.

Tourism ministry leadership has shown that it understands the scale of the industry challenges and appears keen to help develop a plan of action to address them. The proposed launch of the Global Tourism Resilience Institute at the University of the West Indies, Mona in February is evidence of this.

- Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: or