Part 1 of this new series on Risk in Tourism looks at the first of five risk categories from a legal perspective. By Adv. Louis Nel.
The Concept of Risk
“A ship is always safe at the shore – but that is NOT what it is built for.” Albert Einstein.
When you are asked to address the concept of risk, how do you approach the topic and what do you deem to be ‘risk’? I was asked to do just that and thought it would be easier if I categorise risk into the following five categories and then deal with the risk profile of each, i.e. broadly speaking the areas of risk that any business is exposed to can been allocated under these five categories:
PEOPLE
MONEY
LAW
SERVICE
ECOLOGY
All businesses should be aware of these risks, take the necessary steps to identify the extent to which it manifests itself in his or her business and take the necessary steps to minimise, contain or eliminate the risk. This process is called risk management and the successful implementation of such a process will not only make your business more risk averse but will also lead to a decrease, not only in the incidence of high risk events, but also to your insurance premiums. If you do so successfully over a period of time, you even be in a position to qualify for higher excesses and thus lower premiums (subject to your risk and claims profile), and if you are REALLY successful, you can start looking at self-insurance and even an off-shore captive – now we are talking!
1. PEOPLE
People may be at the heart of any business but what do I mean by people? Let’s make things simple and say for the sake of this discussion there are four categories, namely:
• Staff (whether full time employees or independent contractors – who incidentally are not employees and don’t fall within the jurisdiction of the CCMA.
• Third party service providers (‘TPSP’).
• Business associates; be they partners, shareholders, directors, members or trustees (Bear in mind that in terms of the Consumer Protection Act (CPA), all of these business associates, including associations and body corporates, are deemed to be legal personae, which is unusual).
• Customers (note that in terms of the CPA – even a potential customer is a customer for the purposes of the Act!).
Each category brings different challenges to the table and if you don’t realise this, have proper contracts, systems and strategies in place, you may well be ‘caught with your pants around your ankles’ and embarrassment will be the least of your worries!
Disclaimer: This article is intended to provide a brief overview of legal matters pertaining to the travel and tourism industry and is not intended as legal advice. © Adv Louis Nel, ‘Louis The Lawyer’, August 2014.
READ MORE ON RISK IN TOURISM ON PAGE 38 OF THE AUGUST MAGAZINE HERE (This article looks at the fine print of insurance policies – aka policy wording. By André du Toit).
