Order 1274068: Assignment 3: Risk Workshop and Risk Register

This paper includes an assessment of the key success factors, as well as the risks of the EQI firm that specializes in providing tourist services in Siwa, Egypt. In particular, it describes factors such as the uniqueness of the place, demand, environmental quality, involvement of the local community in the activities, and investments. The study has also revealed the benefits of the project, its organizational readiness, and the presence of a risk culture, which is determined to be effective. The paper indicates the initial risk levels that are present in the project, and provides recommendations for mitigating and minimizing them.

Keywords: project risks, risks assessment, key success factors.

Assessing Organizational Readiness

Introduction

Any touristic company, regardless of its location, faces constant risks that arise due to frequent changes in the economy or public policy, insufficient planning, and insufficient development of the risk management system. Using the example of Environmental Quality International (EQI), a privately owned Egyptian firm, it is possible to look at the specifics of running a tourism business, identify key factors for its success, and analyze what barriers may occur in the hospitality industry and how it is possible to control them.

Analysis of Critical Success Factors

Critical success factors (CSFs) are common to the tourism industry. However, their particular set may differ because they are directly dependent on the type of services provided. According to Yaraghi & Langhe (2011), it is possible to distinguish the following factors with respect to Environmental Quality International (EQI):

· The uniqueness of the tourist location. Siwa Oasis, on the basis of which EQI develops its activities, is the most remote of the Egyptian oases. It is located at 18.3 meters below sea level on the old caravan route. This oasis is a small island of life in the heart of the Western Desert and is separated from Cairo by a distance of 550 km of lifeless desert. The city of Siwa was built around Shali, a settlement of the 13th century, surrounded by high walls, the purpose of which was to protect the inhabitants from possible attacks. In this regard, Environmental Quality International has discovered a unique geographical location, interesting as a worldwide attraction, which, at the same time, does not have a developed tourist sector.

· The presence of demand from tourists. An important critical success factor is the presence of demand among tourists for visiting Siwa because the oasis offers everything that they expect from the sights of the desert, in particular, dense palm groves around fresh water sources and salt lakes, harsh massifs, and huge dunes. Also impressive are the ruins of Shali built of unbaked clay bricks and similar to urban mazes that once protected Siwa people from raids. Around the oasis, there are ruins of temples that speak of the glory and prosperity of Siwa in ancient Greco-Roman times. This description allows concluding that the provided sights will have a large target audience, including businesspeople, students, and families with children.

· Orientation to international environmental quality. EQI aims to develop global tourism in Siwa. At the same time, it intends to adhere to environmental standards that do not violate the environment. For example, hotels of the company are built according to ancient architectural schemes, which include exclusively natural materials. In addition, the interior is also adapted for the use of natural means to provide convenience - coal fryers for heating, candles for lighting, and so on. Modern social trends prove that tourists are more loyal to environmental protection measures, which increases the firm’s competitiveness against the background of the rest of the tourism sector.

· Commitment to local community involvement in tourism. An important critical success factor for EQI is the inclusion of local people in its work activities. This approach gives several advantages at the same time. Firstly, it is a saving in organizational costs since local residents do not need additional housing provision. Secondly, the surrounding community understands the peculiarities of the traditional way of life in the area most deeply and is able to transfer it to the service sector. Thirdly, the involvement of local residents in tourism activities contributes to the growth of their well-being, which improves the economic health of the area as a whole.

· Support from the International Finance Corporation. Tourist activities based on the above principles are a priori successful for investors, because of which the company has good financial support in the Corporation. In addition, it is possible to assume that it is not the only investor, which may be interested in the project, so financial support will allow EQI to feel more at ease.

Project Benefits, Organizational Readiness, and Risk Culture

Project benefits. According to the previous section, the main advantages of the project are the uniqueness of the tourist location and the unemployment of the tourist segment in the analyzed region (Siwa). In this regard, Environmental Quality International gets the opportunity to start tourism activities in the oasis first and use all available resources to increase its own efficiency (Jugdev, 2012). Another important advantage is the balance between old traditions and modern innovations. In particular, the attractiveness of the place for tourists increases if it focuses on the culture and identity of the area. The sale of souvenirs and goods that correspond to national traditions, the reconstruction of ancient buildings - all these features fall under the definition of the term national treasure, which tourists always explore with interest. Finally, an important advantage is the good relationship with clients. That is, the firm organizes leisure in such a way that it meets their needs if taking into account living in an area that is underdeveloped in terms of infrastructure (Jugdev, 2012).

Organizational readiness. Regarding organizational readiness, Environmental Quality International has some problems. First of all, they relate to construction directly. In particular, EQI initially decided to build houses for tourists with using original technologies, namely, palm logs and blocks of rock salt and mud. For modern times, it is an innovative way of construction, which does not have a technical description since only a few local elder residents know the traditional methods of housing construction. The second problem in this sector is the high cost of construction. The materials necessary for the construction must be pretreated and created by experienced craftspeople. For this reason, there is also difficulty in the qualification of workers and the schedule. However, the firm could solve the described problems in the end, which helped the company to cope with the tasks and build the required number of lodges corresponding to the national culture. Another organizational problem was the involvement of local women in the execution of work. Traditional culture and education of local female residents did not allow them to work with the male population, so the influence of the company stopped for a while. However, EQI has found a way out. It consisted in introducing women to tailoring traditional clothing and other attributes with elements of national motives.

Risk culture. The risk culture is the knowledge, belief, values, and understanding of the risks that a certain group of people with a common goal shares (Govori, 2012). In the case of Environmental Quality International, the firm maintains its risk culture at a high level. First of all, the organization’s goals that are the same for the whole team ensure this result. All of the project participants understood that tourist activities in the classical style could hinder the development of the project. For this reason, they all adhered to common principles, in particular, focusing on environmental standards, maintaining local culture and attractions, and preserving ancient traditions. The inclusion of the local community in the project has played an important role. The formation of common values among the locals, which Environmental Quality International has supported, has ensured the growth of their friendliness and loyalty to the company. In turn, it has significantly reduced the risk of conflict with the local population. In this regard, it is possible to consider the risk culture of the firm effective since it provides a significant advantage for all project participants including Siwa residents. For the company managers, it includes competitive growth, a good income, and a contribution to supporting local culture. In turn, Siwa residents receive improved local economies, reduced unemployment, and control of local attractions.

Identifying the Initial Categories of Risk

The initial risk categories in the Environmental Quality International project can be the following (Hillson & Simon, 2012):

· Technical Risk: Technical processes, Technology, Design, Reliability and maintainability, Security.

· Management Risk: Operations management, HS & E.

· External Risk: Environmental/weather.

Technical risks. This type of risk may relate to technical problems arising during construction or subsequent repairs. According to the previous section, the construction has been quite expensive. In addition, it requires unique materials, the making of which is a long process, given the lack of qualifications of workers. For this reason, there may be a chance of creating a poor-quality building that does not meet safety standards. In addition, it is also necessary to remember some of the needs of clients. Hypothetically, it is possible to assume the situation that a certain segment of tourists will refuse to rest in an area where the usual modern comforts are minimal. Therefore, to meet their needs, the company will have to change construction plans, thereby disrupting the construction technology, or violate the local landscape and environment. Also, risks related to subsequent housing repairs are likely. Given the fact that the construction used archaic technology, the strength of the buildings may suffer. For this reason, they will require constant renovation to prevent accidents. It may require additional and significant capital investment.

Management risk. The project of EQI focuses on the use of local labor and resources. There is a possibility of their shortage or difficulties with the management and control of working personnel. Occupational safety and health also pose significant risks. First, the construction does not use materials manufactured according to modern international standards. Instead, it uses local resources, in particular, palm wood, rock salt, and mud. Reliable research on the safety of using these materials does not exist, so there is a possibility of violating labor laws that guarantee the safety of workers. In addition, the used materials may not be suitable for applying as building attributes. For example, a palm tree may not be soaked enough in salt water and contain ticks. Rock salt or mud can cause allergic reactions in visitors. For these reasons, it is necessary to consider this risk as particularly important.

External risk. Finally, one of the risks is the likely instability of weather conditions in the area. It is necessary to note that Siwa is characterized by high temperatures in the daytime and low temperatures in the nighttime. The constructed buildings maintain a balance of temperatures. However, considerable climatic discomfort indoors can occur when the temperature deviates significantly to either side.

Conclusions and Recommendations for Managing Project Risks

The information obtained shows that the main risks of Environmental Quality International (EQI) are technical risks and risks of occupational safety and hygiene. Given the ideas from the book by Heldman (2005), it is possible to propose recommendations for mitigating and minimizing these risks:

1. First of all, the firm must mitigate the technical risks that relate to the production of materials and construction. For these purposes, it is necessary to conduct a scientific study of the composition of materials used for construction, find out their properties and stability, and conduct a series of laboratory tests. Based on the data obtained, the EQI management will be able to develop a manual for technical operation and preparation of materials, including a list of mandatory procedures and the rigor of their observance. This approach will help to improve the skills of workers and avoid technical errors in construction.

2. The second recommendation concerns occupational health and safety of workers. In this case, laboratory testing of materials for construction will help as well. After obtaining the necessary data, the person responsible for safety should create conditions, which will eliminate the risk of injury to workers or their illness. For example, these conditions may include specially equipped rooms with good ventilation for the production of stone blocks or soaking the wood. Also, this approach will help to minimize the likelihood of allergies among clients.

3. The third recommendation is to build separate rooms of modern material and with internal amenities for customers who do not want to live according to traditional local characteristics. Such a step will resolve the issue with the satisfaction of the full range of tourist needs.

References

Govori, A. (2012). Measuring and Managing the Impact of Risk on Organizations: The Case of Kosovo. Journal of Advanced Research in Management, 3(1), 17-26.

Heldman, K. (2005). Project manager’s spotlight on risk management. San Francisco, CA: Jossey-Bass.

Hillson, D., & Simon, P. (2012). Practical project risk management: The ATOM methodology (2nd ed.). Vienna, VA: Management Concepts.

Jugdev, K. (2012). Learning from Lessons Learned: Project Management Research Program. American Journal of Economics and Business Administration, 4(1), 13-22. doi: 10.3844/ajebasp.2012.13.22

Yaraghi, N., & Langhe, R. (2011). Critical success factors for risk management systems. Journal of Risk Research, 14(5), 551-581. doi: 10.1080/13669877.2010.547253