From Liability to Opportunity: Transforming Risk Management in Hospitality

Jennifer Pack, Vice President of Risk Management, Hyatt Hotels Corporation[NYSE: H]

Jennifer Pack is the vice president of Risk Management at Hyatt Hotels Corporation, which operates approximately 645 hotels and resorts in 54 countries. In her role, she leads efforts to mitigate potential liabilities and ensure the safety and security of guests and employees. Jennifer is adept at navigating the complex landscape of liability insurance and litigation, focusing on proactive measures to protect the organization.

Known for her strategic approach, she collaborates with industry partners like the American Hospitality Lodging Association to advocate for legislative reforms and transparency in litigation funding. Emphasizing data-driven decision-making, Jennifer invests in technology and analytics to refine risk management processes and develop her team's capabilities. Her commitment to continuous improvement highlights the critical value of risk management as an essential function that not only safeguards the organization but also contributes to its overall success.

Addressing the Rising Challenges in Liability and Insurance Costs

As I see it, the most pressing trend and challenge in the industry right now is managing the liability market and its ripple effects on costs, accessibility and perception. We're at a point where rising litigation, fueled by tort reform issues and social inflation, is hitting us hard. Juries are awarding staggering payouts that were once unthinkable. Cases that used to settle for $10,000 are now reaching $250,000, and figures only go up from there. These rising awards mean insurance premiums are increasing, sometimes doubling, which puts a massive strain on hospitality groups. We're trying to absorb these costs, but eventually, they affect everyone down the line, including our guests. Only some insurance providers are willing to cover such high-risk lines, so my team and I are doing everything possible to maintain coverage without breaking our owners' budgets. This includes working closely with industry partners like the American Hospitality Lodging Association, collaborating on legislative reforms and advocating for transparency in litigation funding. On a company level, we're doubling down on proactive measures, from bolstering our claims processes to ramping up training programs aimed at de-escalating situations with guests before they escalate into claims. Using technology and data-driven insights, we’re refining our response strategies to stay agile. These combined efforts, though challenging, are our way of pushing back against complex and evolving liabilities.

To thrive amid increasing liability pressures, we must evolve our risk management approach and reinforce our value to the organization.

The Future of Risk Retention and Liability in Hospitality

Looking forward, if we can’t achieve meaningful tort reform or limitations on litigation funding, we’re likely to see significant shifts in risk retention across the industry. Companies will increasingly retain risk to manage insurance costs, but that also means greater exposure to financial volatility. In extreme cases, without adequate insurance options, we might even see companies forced into bankruptcy by massive punitive awards. Insurers will continue limiting their capacity, pushing premiums higher and possibly creating a scenario where some companies simply can’t secure the coverage they need. Many hotel owners, unable to handle skyrocketing premiums, might opt to be underinsured, which increases both their exposure and ours. On a positive note, if we can curb these extreme payouts, plaintiffs’ attorneys would have less incentive to pursue the industry with these massive cases. However, we're seeing plaintiff firms establishing operations specifically to target the hospitality sector as an ongoing revenue stream. For us, this means doubling down on proactive strategies, with real-time data and analytics, to pinpoint and mitigate risks before they turn into claims. It’s essential that we invest in the people and technology to drive these insights, creating a more resilient foundation against potential losses. But without these changes at both the macro and operational levels, we risk seeing a much more constrained and volatile insurance market, leaving companies underinsured and vulnerable.

Demonstrating the Strategic Value of Risk Management to Other Professionals

My advice to others in this field would be to focus on clearly communicating the value that risk management brings to the organization. Often, we’re seen as a cost center rather than a revenue generator, which makes it tough to secure buy-in for necessary investments in technology, data and systems. But just because we’re not directly making money doesn’t mean we’re not protecting it. The key is to articulate how these investments can create efficiencies, reduce costs and protect the organization from significant financial risks. Taking the time to build a solid business case—demonstrating ROI or potential cost savings—can make a huge difference in securing support from the top. Once you’ve implemented these resources, keep showing how the data and insights you’re gathering continue to add value. Consistently proving your impact reinforces why the company needs a strong risk management foundation.