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