Tourism Management 33 (2012) 1598e1603

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Tourism Management
journal homepage: www.elsevier.com/locate/tourman

Research note

Developing a risk management model in travel agencies activity: An empirical

analysis
Maria Oroian a, *, Marinela Gheres b
a
Dimitrie Cantemir University of Targu Mures, Bodoni Sandor 3-5, Targu Mures, Romania
b
Babes-Bolyai University, Cluj-Napoca, Teodor Mihali 58-60, 400591, Romania

a r t i c l e i n f o a b s t r a c t

Article history: This study applies a risk management model to identify risks for Romanian travel agencies. Through
Received 3 December 2011 extrapolation, the results of this study may be useful to all intermediaries in tourism, whether in
Accepted 20 December 2011 Romania or not. Risks are identied by factor analysis and categorised as being organisational, envi-
ronmental, competitive, economic, political, those of infrastructure, circumstance, business deciencies
Keywords: and specic (local) risk. Depending on the position relative to the risk we proposed a risk management
Risk
model in tabular format, where any travel agency can add, delete, or move risks from a category to
Risk management model
another.
Tourism
Travel agencies
2011 Elsevier Ltd. All rights reserved.

This research note presents the results of an empirical analysis
aimed at substantiating a model of risk management in travel
agencies activity. The main sources of information and data are
from the specialized literature and from empirical research on
travel agencies in the city of Targu Mures (Romania). Depending on
the responses received, we could select then the most important
factors that a travel agency must consider to properly manage risks
of their activity.
The questionnaire (see Appendix 1) is concerned with the risks
associated with the tourism industry and how the operators rate
the identied risks in respect of intensity (impact) to their business
(Shaw, 2010). A descriptive analysis was carried out on all the valid
data to determine the mean intensity rating and standard deviation
for the responses to all the statements in the questionnaire (see
Appendix 2). Using the descriptive analysis made it possible to
identify and distinguish between signicant and insignicant risks
(Cooper & Schindler, 2001).
The methods used for determining and assessing the risk were
found to be in order actions of competitors (76.19%), market-
related statistics, seminars, workshops, media reports (71.4%),
complaints, interviewing tourists (66.6%) and economic forecasts,
* Corresponding author. Tel./fax: 40 365 401 125, 40 760 279 720 (mobile).
E-mail addresses: oroianmaria@yahoo.com (M. Oroian), marinela_gheres@
yahoo.com (M. Gheres).
URL: http://www.cantemir.ro
group discussion (61.9%). This shows the attention that travel
agencies give to the market competition, specialized publications,
but not least, emphasis covers the needs of tourists. The groups
discussion (brainstorming) method proved to be equally
important.
The initial analysis of risks using the descriptive statistics (see
Appendix 2) and the frequency distribution of responses to the
individual risk statements has identied a number of risk types
classied as extremely low or low (with mean intensity rating
between 2.06 and 2.62) e 21.56% of the risks and high or extremely
high (with mean intensity rating between 3.29 and 4.38) e 39.21%
of the risks. Those considered being in the category high to
extremely high must be included in any risk management model
that is developed for the travel agency.
The high/extremely high category of risk requires more atten-
tion when identifying the causes of these risks, the evaluation and
the response that is developed to minimize any negative impact of
especially domestic risks or to obtain maximum benet from
exploiting international risks.
The factor analysis was also used to identify the risk categories
that are the most important (Steyn, 2000). We have grouped the
categories of risks according to the mean variables that entered into
their composition as it follows: organisational risk, environment
risk, competitiveness risk, economic risk, political factors, infra-
structure, circumstantial risk, business insufciencies and specic
(local) risk (see Appendix 3). A closer analysis of the factors
revealed that although statistically correct, some of the risk state-
ments do not fall logically to the factor to which they have been

0261-5177/$ e see front matter 2011 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tourman.2011.12.020
 M. Oroian, M. Gheres / Tourism Management 33 (2012) 1598e1603 1599

Table 1
Qualitative risk analysis matrix e Level of risk.

Table 2
The tabular model.

Category/risk item Likelihood Consequence Category Response type Response/action

Factor 1 - Organizational risk (Internal business risk)
Lack of funding for product development
Theft in business by tourists
Lack of proper nancial systems
Insufcient funding for training
Change of tourists needs
Unable to fulll needs of tourists
Theft/fraud in business by staff
A 2
C 3
C 3
B 2
C 3
C 2
E 3
H Mitigation
H Transfer of risk
H Mitigation
H Mitigation
H Mitigation
M Mitigation
M Transfer of risk
Accessing funds available through
government or local programs
Greater attention given to training staff
Raise issue with government
Accessing funds available through
government or local programs
Adaptation to the demand
Changing marketing strategy
Dismissal of the guilty one(s)/a better
human resource management

A - Almost certain, B - Likely, C - Possible, E - Rare, H - High risk, M - Moderate risk, 2 - minor, 3 - moderate.

allocated. An example of such misallocation is the inclusion of lack
of qualied staff and lack of experienced staff in Factor 7, which are
infrastructure factors. A redistribution of risks into risk categories
will therefore be necessary when constructing the risk manage-
ment model.
The factor correlation matrix for the nine factors indicates that
decision makers in travel agencies should pay special attention
not only to risks ranked as having the highest risk but also to risk
factors in risk analysis grouped by organizational risk and busi-
ness insufciencies respectively. Many of the risks in the two
categories can be signicantly reduced through an adequate
management.
Risk management models can be constructed in various ways,
for example using ow diagrams, mathematical models or
simple means such as tables and spreadsheets (Gray & Larson,
2006). The model proposed as part of this research will be
kept simple and will be presented in tabular format, which is
easily converted into a spreadsheet. The operator of any business
in the tourism industry has then the opportunity to select only
those risk items that are identied for his/her business at any
particular point in time.
The risk assessment matrix in Table 1 is used to classify the risks
severity as insignicant (1), minor (2), moderate (3), major (4) and
catastrophic (5).
It is recommended for travel agencies and other agents in the
tourism industry to use the risk severity matrix in Table 1 to
categorize and classify the risks that have been identied. The
process of quantifying the risk is subjective as it is based on the
users ability to determine the probability of occurrence and the
cost of the consequence (or benet) if the risk occurs. Risk
management could be considered as a useful tool to minimize the
negative impact or maximize the benet to the individual busi-
ness, its owners and the industry as a whole (Robertson, Kean, &
Moore, 2006).
The tabular model (Table 2) is an example of what the nal
working model for a specic business may look like. The ratings
in Table 2 are arbitrarily chosen to serve as an example only and
have no scientic basis. These ratings may not be applicable to
all business and therefore every operator/owner of a business
associated with the tourism industry must decide on the
probability of occurrence and the consequence of the risk as
applicable to the business and then use these values to
1600 M. Oroian, M. Gheres / Tourism Management 33 (2012) 1598e1603

categorize and classify the risk using the risk severity matrix in 3. Please rate the following risks in your business on the
Table 1. intensity scale:
The tabular model presented can be easily stored in electronic
format in MS Word format for easy reviewing and updating as
conditions change or new risks are identied. It is recommended (5) Extremely high risks
that the risk management model be enhanced and made more (4) High risk
user-friendly by transporting the data into a suitable and expert (3) Moderately
(2) Low risk
system shell, with or without learning capabilities.
(1) Extremely low risk
1. Stress 1 2 3 4 5
Appendix 1. A risk management model for the tourism 2. Diseases 1 2 3 4 5
3. Crime in general 1 2 3 4 5
industry in Romania 4. Cost of transportation 1 2 3 4 5
5. Road safety 1 2 3 4 5
Dear Sir/Madam, 6. Air line safety 1 2 3 4 5
7. Airport safety and security 1 2 3 4 5
The following questionnaire is part of an extensive research 8. Currency uctuations 1 2 3 4 5
study designed to investigate the risks associated with the tourism 9. Decrease in disposable income 1 2 3 4 5
industry. Your contribution is very important to the outcome of 10. Ination 1 2 3 4 5
11. Interest rates 1 2 3 4 5
this research. Please ll in this questionnaire carefully. All infor-
12. Lack of qualied staff 1 2 3 4 5
mation will be treated condentially and we will be used only for 13. Lack of experienced staff 1 2 3 4 5
academic purposes. Finally the results of the study will be made 14. Aging tourist markets 1 2 3 4 5
available. 15. Decreasing leisure time of tourists 1 2 3 4 5
16. Urbanization 1 2 3 4 5
I am looking forward to hearing from you.
17. Seasonality 1 2 3 4 5
Yours faithfully, 18. Water pollution 1 2 3 4 5
19. Air pollution 1 2 3 4 5
xxxxxxxxxxx
20. Natural disasters 1 2 3 4 5
Instructions for completion: 21. Fire 1 2 3 4 5
22. Image of the country/destination 1 2 3 4 5
23. Increased competition, nationally 1 2 3 4 5
1. Please answer all questions regarding your assessment of 24. Increased competition, internationally 1 2 3 4 5
tourism risk as honestly and objectively as possible. 25. Change of tourists needs 1 2 3 4 5
2. Place a tick or a cross that reects your answer most accurately 26. Insufcient funding for training 1 2 3 4 5
27. Lack of funding for product development 1 2 3 4 5
in the spaces provided.
28. Carrying capacity e too many tourists/visitors 1 2 3 4 5
3. Where asked for comments or to specify, please keep these as 29. Insufcient marketing by local authorities 1 2 3 4 5
briey, yet as thoroughly, as possible. 30. Wars/conicts 1 2 3 4 5
31. Political instability in neighboring countries 1 2 3 4 5
1. Please indicate which of the following you use to determine 32. Terrorist activities 1 2 3 4 5
33. Climate change 1 2 3 4 5
and evaluate risks in your business. 34. Lack of proper nancial systems 1 2 3 4 5
35. Theft/fraud in business by staff 1 2 3 4 5
36. Theft in business by tourists 1 2 3 4 5
Physical inspection Yes no 37. Unable to fulll needs of tourists 1 2 3 4 5
Complaints Yes no 38. Too high prices in tourism industry 1 2 3 4 5
Economic forecasts Yes no 39. Technological changes e.g reservation 1 2 3 4 5
Market statistics Yes no systems, new programs
Actions of competitors Yes no 40. Legislation 1 2 3 4 5
Drop in turnover Yes no 41. Political instability in Romania 1 2 3 4 5
Group discussion (brainstorming) Yes no 42. Increase in fuel cost 1 2 3 4 5
Interviewing tourists/visitors Yes no 43. Amount of overtime worked by employees 1 2 3 4 5
Seminars, workshop, media reports Yes no 44. Number of temporary personnel vs the total 1 2 3 4 5
Working closely with government institutions Yes no number of personnel
Global trends Yes no 45. Customer complaints 1 2 3 4 5
Political decisions Yes no 46. Repeat business vs new business 1 2 3 4 5
Crime stats Yes no 47. Range of products too limited 1 2 3 4 5
Other (Specify) Yes no 48. Working point location (business) 1 2 3 4 5
49. Distance from main competitor 1 2 3 4 5
50. The range of products belonging to competitors 1 2 3 4 5
51. Prices of competitors 1 2 3 4 5

2. What are the key factors that you consider important when
determining a risk? 4. What specic actions and recommendations can you suggest
to ensure a proper and successful Risk Management Plan?
________________________________________________________________________________________
Physical inspection ________________________________________________________________________________________
Economic forecasts _______________________________________________________________________________________________
_______________________________________________________________________________________________
Market statistics __________________________________________________________________________
Actions of competitors
Global trends
Political decisions
Thank you for your co-operation.
 M. Oroian, M. Gheres / Tourism Management 33 (2012) 1598e1603 1601

Appendix 2. Descriptive statistics (Arranged in high to low sequence of intensity)

Descriptive statistics

Statements N Range Minimum Maximum Mean Std. deviation

Increase in fuel cost 21 2 3 5 4.38 .669
Cost of transportation 20 4 1 5 3.90 1.119
Image of the country/destination 20 2 3 5 3.85 .813
Decrease in disposable income 20 2 3 5 3.80 .768
Terrorist activities 21 3 2 5 3.76 .995
Air line safety 21 4 1 5 3.67 1.238
Natural disasters 21 3 2 5 3.67 1.111
Currency uctuations 21 3 2 5 3.67 1.065
Airport safety and security 20 4 1 5 3.60 1.188
Ination 21 3 2 5 3.57 .870
Seasonality 21 4 1 5 3.52 1.123
Wars/conicts 21 4 1 5 3.52 1.289
Road safety 20 4 1 5 3.50 1.504
Political instability in neighboring 21 3 2 5 3.48 1.078
countries
Increased competition, nationally 21 3 2 5 3.43 .811
Change of tourists needs 21 4 1 5 3.43 1.028
Lack of qualied staff 21 4 1 5 3.33 1.317
Too high prices in tourism industry 21 3 2 5 3.33 .913
Lack of experienced staff 20 4 1 5 3.30 1.129
Increased competition, internationally 21 4 1 5 3.29 1.007
Political instability in Romania 21 4 1 5 3.24 1.091
Fire 21 4 1 5 3.24 1.179
Insufcient marketing 21 4 1 5 3.14 1.153
by local authorities
Stress 19 4 1 5 3.11 1.286
Climate change 21 4 1 5 3.05 .973
Customer complaints 21 4 1 5 3.05 1.161
Unable to fulll needs of tourists 21 4 1 5 3.00 1.049
Decreasing leisure time of tourists 21 3 1 4 2.95 .973
Prices of competitors 21 3 1 4 2.95 .973
Air pollution 21 4 1 5 2.86 1.195
Technological changes e.g 21 4 1 5 2.86 1.153
reservation systems,
new programs
Water pollution 21 4 1 5 2.81 1.250
Lack of proper nancial systems 20 4 1 5 2.80 1.005
Range of products too limited 20 4 1 5 2.80 .894
Working point location (business) 21 2 2 4 2.76 .831
Lack of funding for product development 21 3 1 4 2.76 .944
Theft/fraud in business by staff 21 4 1 5 2.71 1.454
The range of products belonging 21 3 1 4 2.71 1.007
to competitors
Legislation 21 4 1 5 2.71 1.056
Insufcient funding for training 21 3 1 4 2.71 1.007
Amount of overtime worked 21 4 1 5 2.62 1.117
by employees
Interest rates 20 3 1 4 2.60 1.095
Carrying capacity e too many 20 3 1 4 2.60 .995
tourists/visitors
Distance from main competitor 21 3 1 4 2.57 1.028
Repeat business vs new business 20 3 1 4 2.45 .945
Theft in business by tourists 20 3 1 4 2.40 1.188
Aging tourist markets 20 4 1 5 2.40 1.142
Diseases 19 3 1 4 2.32 .946
Urbanization 20 4 1 5 2.25 1.070
Number of temporary personnel vs 20 3 1 4 2.20 1.005
the total number of personnel
Crime in general 18 3 1 4 2.06 .998
Valid N (listwise) 13
1602 M. Oroian, M. Gheres / Tourism Management 33 (2012) 1598e1603

Appendix 3. Summarized factor analysis results

Risk items Factor Loading Mean value

Factor 1 - Organizational risk (Internal business risk) 2.83
Lack of funding for product development .906
Theft in business by tourists .857
Lack of proper nancial systems .710
Insufcient funding for training .663
Change of tourists needs .610
Unable to fulll needs of tourists .529
Theft/fraud in business by staff .403
Factor 2 - Environmental (Nature) 3.12
Water pollution .963
Air pollution .963
Fire .884
Natural disasters .759
Climate change .359
Factor 3 - Competitiveness 3.08
The range of products belonging to competitors .973
Distance from main competitor .935
Prices of competitors .725
Technological changes e.g reservation systems, new programs .639
Too high prices in tourism industry .505
Increase in fuel cost .540
Working point location (business) .420
Factor 4 e Economic risk 3.50
Decrease in disposable income .916
Ination .909
Cost of transportation .755
Interest rates .428
Currency uctuations .349
Factor 5 - Political factors 3.34
Political instability in neighboring countries .970
Legislation .820
Terrorist activities .757
Political instability in Romania .719
Wars/conicts .556
Factor 6 - Infrastructure 3.48
Air line safety .946
Airport safety and security .937
Lack of qualied staff .884
Lack of experienced staff .637
Road safety .407
Factor 7 - Circumstantial risk 3.19
Increased competition, internationally .928
Increased competition, nationally .845
Stress .673
Decreasing leisure time of tourists .445
Factor 8 - Business insufciencies 2.57
Number of temporary personnel vs the total number of personnel .842
Urbanization .750
Crime in general .693
Repeat business vs new business .692
Amount of overtime worked by employees .611
Image of the country/destination .566
Range of products too limited .524
Aging tourist markets .492
Factor 9 - Specic (local) risk 2.92
Insufcient marketing by local authorities .806
Customer complaints .464
Carrying capacity e too many tourists/visitors .554
Diseases .451
Seasonality .447

Ranking of factors

Factor Mean Ranking

Factor 4 - Economic risk 3.50 1
Factor 6 - Infrastructure 3.48 2
Factor 5 - Political factors 3.34 3
Factor 7 - Circumstantial risk 3.19 4
Factor 2 - Environmental (Nature) 3.12 5
Factor 3 - Competitiveness 3.08 6
Factor 9 - Specic (local) risk 2.92 7
Factor 1 - Organizational risk 2.83 8
Factor 8 - Business insufciencies 2.57 9
 M. Oroian, M. Gheres / Tourism Management 33 (2012) 1598e1603 1603

Factor correlation matrix

Component correlation matrix

Component 1 2 3 4 5 6 7 8 9
1 1.000 .173 .153 .135 .224 L.208 .139 .282 .198
2 .173 1.000 .116 .062 .120 .010 .005 .007 .147
3 .153 .116 1.000 .005 .165 .007 .097 .150 .008
4 .135 .062 .005 1.000 .067 .103 .116 .024 .026
5 .224 .120 .165 .067 1.000 .014 .010 .022 .075
6 L.208 .010 .007 .103 .014 1.000 .122 .190 .015
7 .139 .005 .097 .116 .010 .122 1.000 .275 .196
8 .282 .007 .150 .024 .022 .190 .275 1.000 .214
9 .198 .147 .008 .026 .075 .015 .196 .214 1.000

Factor correlation matrix shows that none of the absolute values of the correlations coefcients are above 0.282, which indicates that the factors are not very closely correlated.
Although correlation does not indicate causality, it does indicate the nature of the linear relationship - positive or negative. The factors with the highest correlation coefcients
are bold.

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