Internal Control and Risks Mitigation in Tourism Sector in Portugal

Abstract

The Covid-19 pandemic affected the operational risk of organizations, requiring its management through Internal Control Systems (ICS). The tourism sector in Portugal, one of the largest and most competitive, was also one of the most affected by the pandemic, which emerged in March 2020. The main purpose of this paper is to analyse the perception of tourism managers about the relationship between the existence of internal control and risk mitigation in their companies. We present a quantitative study carried out by questionnaire, sent to 830 managers from tourism companies in the region of Porto, Portugal. Most participants consider crucial the implementation of ICS and a competitive advantage in the current pandemic context. They also consider that the implementation of ICS is not accessible to all companies, but its absence does not necessarily make them more fragile. The study also concludes that besides internal control, the role of the Portuguese Government was crucial to overcome the difficulties caused by the pandemic and to ensure companies’ recovery. Financial support from the government allows companies to invest in procedures to overcome the pandemic situation, such as strengthening cleanliness measures, focusing on new technologies and creating products and/or services more attractive to consumers. This study contributes to the perception of tourism managers about internal control, highlight the need to implement risk analysis routines to manage risks that may threaten the company activities and highlight the government´s role in business recovery.