A Multi Stakeholder approach to Risk Management at Mega Events

James Davies, 27 May 2013

Mega events are large-scale sporting, cultural and leisure events, with complex logistical operations that are heavily reliant upon advanced planning. It is clear that risk managers have an increasing role to play in the staging of mega events that will receive worldwide exposure. Using its general definition risk management is the identification, assessment and prioritisation of risk. The Ryder Cup, Rugby World Cup and Cricket World Cup are good examples of incredible sporting occasions that will be remembered by millions of people around the world. Sporting heroics aside, the competitions are high profile and as such attract higher levels of risk. Applying risk management successfully to a mega event is as integral to its success as it is challenging.

There is a spiral effect in events. The greater the interest of stakeholders, the greater media interest is generated, the greater risk becomes, and in turn yet more stakeholders become involved. Mega events therefore are likely to attract the highest levels of risk and greatest numbers of stakeholders all of whom desire the event to be regarded as a success. Whilst all stakeholders can agree on that desire for an event to run successfully, their definition of success will often vary.

In the case of an international golf tournament for example, and in the event of inclement weather, a sponsor will want as much media exposure as possible whilst the tournament organiser will need to keep the health and safety of the players and spectators at the forefront of their planning decisions. Similarly, venues, groundsmen, green keepers, tourist boards, governing bodies, organising committees and governments will also have their own agenda. Handling this subtly can pose a unique challenge from a risk manager’s perspective, whose definition of a successful event is one for which it has been possible to identify and control the likelihood and impact of any given risk.

This article will consider how approaching risk management from a multi stakeholder perspective provides a balanced view on a risk environment which is dynamic throughout the lead up to an event and through the event itself with the ultimate target being a successful and positive event.

Stakeholders differing views

The successful staging of the Cricket World Cup for example, would require a harmonious partnership between the host nation and the International Cricket Council (ICC) in its role as the governing body and rights holder. The ultimate definition of success for the host nation is the successful staging of the event in their country whilst the ICC’s principle concern is only the successful completion of the tournament, no matter where it was played. This is a subtle difference but an important one where risk management is concerned. To illustrate, in the event of a catastrophe and potential event cancellation, the host nation’s contingency planning would focus on its own staging of the tournament and possible short term postponement whilst the ICC’s prerogative could well involve relocation and the involvement of another host nation entirely.

Looking at an event in more detail and using the Rugby World Cup (RCW) 2011 as an example, in a post tournament article published by KPMG titled “The main event – managing the risk of RWC 2011”, it was concluded that “Without effective communication between security forces, event organisers and private security providers all may be focusing their efforts in different directions. Parties must communicate if there is to be an effective division of effort.” Indeed, there are similar considerations when considering stakeholders who have invested interest in mega events, such as sponsors who provide the necessary capital to run a tournament successfully in return for exclusive rights and the expectation that their brand is given the positive exposure that a successful tournament will bring. The challenge for the risk managers then lies in protecting the contracted rights of these sponsors without neglecting other areas of risk including spectator safety or tournament experience.

Importance of risk management

With three points of view considered we lastly turn to risk managers themselves. Having discussed the challenges posed for risk managers in relation to a multi stakeholder approach, it is important to now consider how these can be effectively met. The risk manager’s job therefore is about bringing together all stakeholders to make sure that the event is delivered successfully based on their joint criteria. Instead of working with each stakeholder separately it makes sense for the risk manager to consolidate the varying positions and to compile an “all hazards” approach to successful tournament delivery. With all stakeholders working together a much clearer picture of the tournament risks can be produced and interdependencies between organisations and groups can be found. In this way all parties can work together. The consideration of risk being hypothetical can be a chore for many professional whose interest is in putting on an event to catch the attention of the world. Risk such as terrorism or adverse weather conditions are hard to predict and manage. Others however can be identified, reduced and in an ideal scenario eliminated. It is unarguable that the approach taken to risk management is vital.

Multi stakeholder approach

So what constitutes success in this area? In their review of RWC 2011 KPMG stated that “All the parties involved, the International Rugby Board (IRB), Rugby New Zealand (RNZ) 2011 and the many government agencies involved used the same framework and this soon allowed a whole of tournament view on risk to be developed”. Producing this all hazards approach to risk management allows many different parties to share opinions and consolidate all their thoughts. In addition, as technology improves, the challenge of bringing stakeholders together and updating risk registers should diminish. Technology allows for more dynamism in this process. Gone are the days of monthly changes to risk management reports. Risks and in particular the controls are changing daily and so in today’s world should the ability to keep reporting mechanisms current.

Risk management platform

Working alongside risk management technology experts and the stakeholders of The Ryder Cup, RT Robertson Taylor W&P Longreach have developed an online platform to assist in the event’s successful delivery.

Figure 1: Click picture to enlarge

Through working in partnership, stakeholders have been able to identify and add risks, in effect amalgamating their individual risk management plans. Each risk is assigned to those stakeholders to whom it is deemed relevant and subsequently rated on an impact and likelihood scale for both its current and target (event time status). Risks range from those which are common to everyone such as the threat of a terrorist attack to those which are specific to individual stakeholders, such as the running of the green on hole 14. Comments, actions and supporting information are regularly added to each risk thus ensuring that stakeholders are constantly communicating, sharing practice and also taking ownership of those areas which are specific to them. As well as the real time benefits, the platform allows rights holders to carry information from one event or tournament onto the next.

Whether managed electronically or not, a multi stakeholder approach certainly works. Again referencing KPMG and their report on the RWC 2011, “Risk was seen as an integral part of decision- making at a management and governance level, as a result there was a high level of engagement and the right level of resource applied to the risk”. Indeed, a multi stakeholder approach to risk management can only contribute positively to the successful staging of a mega event.

The future of multi stakeholder-led approaches to risk management will see “the emergence of a professional community of mega-event risk managers and consultants, diffusing knowledge and practices across events. In the context of mega-event planning and management, then, institutions are highly attuned to risk given the potential for blame when things go wrong.” (Jennings, March 2012). With the combination of knowledge and advancing technology the modern tools of management are evolving to provide today’s mega event risk managers with the data they require to adequately manage an ever changing risk environment.

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Author

James Davies

Managing Director, W&P Longreach

James Davies has worked in entertainment insurance and risk management since 1994.

He managed the UK Sports and Recreation team at Aon Risk Services Ltd until December 2000. There, he was the driving force behind the creation of the department and pioneered the Aon Sports and Recreation team across Europe.

Mr Davies has worked as a risk manager/broker on many international events including the Ryder Cup, New York Marathon, FIFA World Cup for MATCH, many PGA European Tour events and the Athens Olympics. He has also worked as a specialist insurance risk manager and broker to International Management Group and Trans World International. He has worked on film, theatre and rock & pop insurance programs, with clients including Radiohead, Les Misérables and the blockbuster hit ‘My Week with Marilyn’.

James Davies conceived the Sports, Leisure & Entertainment Captive structure and the risk management online platform.  In 2011 he won the International Sports Event Management Event Services Award for his risk management work at the 2010 Ryder Cup.

W&P Longreach is part of Entertainment Insurances Partners Ltd, which also includes Robertson Taylor Insurance Brokers and most recently ESIX, the leading independent sports insurance and risk management company in North America. The group has over 150 members of staff and eight offices in the UK, North America and Canada.

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