Insurance as an economic tool for risk management in the hospitality industry and sustainable development

The subject of research – features of risk management in modern conditions with the use of
economic instruments of insurance.
The purpose of this article is to substantiate the feasibility of using insurance as an economic tool
for crisis management in the hospitality industry and to ensure sustainable development, as well as
the benefits of financing the risk of possible losses due to various factors by acquiring protection from
the insurance company and developing a system of criteria.
Methodology of work – the position of theories of normative economy and creative industries,
the concept of sustainable development. Based on a systematic approach, the factors influencing the
risk management of economic activity in Ukraine are identified. Using the methods of expert analysis,
the trends of introduction of insurance instruments in risk management of the tourism sector and
hotel and restaurant business are determined. The methods of structuring and synthesis revealed the
strengths and weaknesses of the potential for sustainable development of the hospitality industry in
Ukraine and developed proposals to strengthen the role of insurance instruments in ensuring stable
growth of tourism and solving risk management problems of hotel and restaurant business.
Results – the role of new insurance tools and methods for risk management in crisis conditions
is defined, new threats and risks of economic entities generated in a pandemic are outlined, factors
hindering the development of environmental insurance are identified, factors of their activation are
revealed and measures are proposed. Their expansion, the expediency of introduction and use of
new tools and methods of insurance for risk management in the current crisis of the economy is
substantiated.
Conclusions – Insurance as an economic tool of risk management in the studied areas is of
particular importance in financial and economic crises, in particular in force majeure circumstances of
doing business due to a pandemic like COVID–19. Important for the hospitality industry is the concept
of «economic risk», which is defined as the possibility of accidental occurrence of undesirable losses,
measured in value terms. To provide this concept of operational content, it is necessary to classify
risks according to various criteria, which can be based on the structural characteristics of risk, the
specifics of information support and features of risk measurement. For specific risks, it is also possible
to use not only general but also specific classification criteria related to the specifics of the risks.
In this context, the classification of risks according to adequately selected criteria can improve the
understanding of both the sources of economic risk and methods of minimizing it. However, insurance
as a risk management tool is not universal; its use has its limitations, which may be related to the type
of risk, the relationship of the parties to the insurance and their attitude to risk. An important feature
of the risk management system at the state level is the use of methods related to the risk reduction
procedure, as the state’s ability to avoid risk and transfer risk is quite limited. At this macro level, it
would be appropriate to create state sectoral insurance funds. At the firm level, the risk management
system is an integral part of overall management. This is manifested both at the level of strategy
and organizational structure of the firm. In some cases, outsourcing the risk management process is
effective. The risk management tool in this case will be a risk management program.