When combined with other pressures such as the smoking ban, increasing competition caused by relatively low barriers to entry into certain areas of the sector, and what some refer to as the “employee paradox” – the expectation that relatively low paid individuals have to provide a first class customer experience – many businesses in the sector are finding the current trading environment very challenging.
Such conditions often lead to a reduced focus on the management of risk and reduced spending on health and safety processes and training, as companies strive to make money on core activities. Unfortunately the resultant increase in insurance claims, and the risk this presents to both brand and reputation mean that such spending cutbacks often equate to a false economy.
A disruption to a business will impact on the customer experience and their perception of a business or venue will certainly be altered, leading to a loss of reputation that could take years to recover from, if at all. So the impact of disruption is not a one off but can become an ongoing issue that hinders the business for years to come.
As Warren Buffett famously said: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
In addition to reputation, the continuing hangover from such business interruption will impede the day-to-day running and profitability of any business, especially if the recovery is long and drawn out. To avoid such issues it is critical that companies in the leisure sector develop a robust risk management policy, integrating such areas as business continuity planning, reputational risk protection, claims defensibility and bespoke insurance cover.
So, a great opportunity for all in the sector, but some areas to be aware of, and stay on top of. Success will breed success.
For more information contact your broker or visit www.zurich.co.uk/expertise