RISK INSURANCE IN BUSINESS PLANNING FOR HOSPITALITY ENTERPRISES

Abstract

The article  develops  a methodological  approach  to integrating risk insurance into business planning for hospitality enterprises. Hotels and restaurants face property, operational, market, legal, cyber and external risks that can disrupt operations and undermine financial stability. Insurance is therefore considered alongside preventive risk management rather than solely as an additional cost.

The study classifies the main risks of hospitality enterprises and proposes a matrix linking insurance instruments with the sections of a business plan. A seven-stage algorithm covers risk identification, probability and loss assessment, selection of insurable risks, policy design, integration of premiums into projected cash flows, re-evaluation of investment performance and management decisions. Particular attention is paid to coverage limits, deductibles and uninsured losses.

The economic assessment compares scenarios with and without insurance using expected compensated losses, premiums and residual exposure. The proposed indicators complement net present value (NPV), profitability index (PI), internal rate of return (IRR) and discounted payback period (DPP), but do not replace a full financial analysis. Practical recommendations include combining insurance with internal controls, reserves, scenario analysis and periodic risk monitoring. The approach is intended to support more informed investment decisions and requires further testing on enterprise-level data. The proposed framework is particularly relevant under conditions of heightened uncertainty, when a single major loss may threaten the viability of a hospitality project. Insurance decisions should therefore account for the availability of suitable policies and actual contract terms, not merely the nominal insured amount.