Risk Management | CEME


Uploaded by BizTraining on 09.10.2011

Transcript:
Risk Management for Event Planners Although there are a number of aphorisms of
Murphy’s Law, at its simplest it says: “If anything can go wrong, it will.” Seasoned
event planners are all too familiar with Murphy’s Law, and they prepare to do battle with Murphy
early on in the planning stage of every event. This preparation is called risk management.
When you plan an event, don’t make the mistake of thinking that you are borrowing trouble
by anticipating it while developing a risk management plan. Quite the contrary really.
By anticipating the potential for problems in every facet of the event, you will be prepared
to catch them early and react swiftly and effectively to avert calamities.
In this discussion, we’ll look at the steps you need to follow to manage risk, ways to
mitigate risk and risk management insurance. Part 1: Risk Management Planning
When you first start to outline your risk management plan, look at the big picture and
ask yourself questions about acts of God like: could we get six feet of snow the day the
event starts, are we holding a seaside event during hurricane season, has the hospitality
industry in the community been plagued by a string of arson fires? You can get a pretty
good handle on what you might be up against from mother nature by doing Google image searches
of the locale. A news search of the area will tell you if there are any potentially threatening
people-caused calamities on the horizon. Next, evaluate your transportation plan. How
will an airline or railroad workers strike effect your attendee base? What will happen
to your transfer plan if gas prices skyrocket? Now it’s time to take a good look at your
venue and suppliers. What do your point people tell you they have in place to manage problems
like power outages, fire, equipment failure and personnel strikes? Some of your risk management
is the responsibility of those you’ve contracted with; make sure their preparedness is noted
in each contract. How will you handle medical emergencies? People
who over imbibe at an event cocktail reception? What if a fight breaks out?
You need to apply good risk management policies to your budget items as well. For instance,
what if your title sponsor pulls out at the last minute leaving you with no way to pay
for a significant part of the event? What will you do if an unscrupulous supplier holds
items you need hostage in order to get more money out of you?
Some risks are obvious: bad weather at an outdoor wedding, for example. Others are your
responsibility to ferret out. Is your guest registration data on a secure server so no
one can steal all the credit card numbers or event guest identities? Might there be
a violent disruption of the political rally you are holding?
Once you have asked and answered all of these questions to the very best of your ability,
you will have identified risk. Now you need to realistically determine whether
the risks you have listed have a high, medium or low probability of occurring. The most
attention needs to be given to those high probability risks. We suggest you put your
risk management plan in spreadsheet format so you can organize each risk’s probability.
The next column in your risk management spreadsheet identifies the magnitude of the negative effect
each risk, if it is visited upon your event, carries. For example, a technology glitch
at registration has a high probability of happening. If your network goes down or your
database dumps dozens of registrant data files, what will the consequence of that be?
The last step of the spreadsheet risk management exercise is to prioritize the risk. The items
that have both a high probability of occurring and a severe negative impact are your top
priority areas for predetermined risk alleviation or mitigation planning.
Part 2: Risk Mitigation Now that you have established what the risks
to your event are and prioritized managing them, you can formulate management risk strategies
for implementation if necessary. There are four fundamental ways to manage risk: avoidance,
retention, transfer and reduction. Obviously, you want to avoid risk in any way
you can. You can do this by determining that a particular element of or activity at your
event carries such a high risk that you should simply eliminate it from the event plan. If
it is essential to the event and cannot be eliminated, determine what you need to do
to avoid the risk it presents. For example, we determined that registrant data loss is
a high risk, high impact probability. We can avoid the impact of the occurrence by making
frequent and redundant backups of the data and maintaining that data in various digital
file types that can be re-imported to the database if necessary.
In some cases, event planners are forces into risk retention. This is when we acknowledge
the risk and own it. We’ve determined there is no way to avoid it. No way to transfer
it. No way to reduce it. So we put the potential cost of the risk into the budget and we recognize
the risk in the plan. An example of this might be inclement weather at that outdoor wedding.
We’ve rented the tent, for the reception and supplied it with heaters and fans for
climate control, and we have a crew standing by to reconfigure the tent from sit-down dinner
configuration into theater seating so the wedding can come inside. We’ve also kept
one end of the tent uncluttered so guests can enjoy a standup cocktail reception while
the crew re-sets the tables after the ceremony. Transferring the responsibility for the risk
to a third party is also an effective way of managing risk. Once you’ve identified
your high risk priorities, ask yourself if they can be managed by an outside service
provider. For example, how about hiring a security firm to maintain the peace at that
political rally? Or a tech firm to manage registration and data with full redundancy
at their off-site servers. Especially in cases of security, it is important to consider transferring
the liability to a third party. Finally, practice a comprehensive risk reduction
strategy for all risks. In risk reduction, you essentially establish an implementable
contingency plan for all potential risk areas. At the registration desk, have printouts of
all the existing registrants and teach your crew to manage the registration on paper if
the computers go down. Risk reduction is the practice of always having a “Plan B’ that
you can readily switch to without diminished results.
When practicing these four strategies, always remember to monitor risk potential on an ongoing
basis, especially with the high risk possibilities. Keep a close eye on these areas so you can
react immediately if there is any indication of a problem.
Part 3: Risk Management Insurance Per Yale University’s Digital Licensing
Information system, Force Majeure literally means "greater force". “These clauses excuse
a party from liability if some unforeseen event beyond the control of that party prevents
it from performing its obligations under the contract. Typically, force majeure clauses
cover natural disasters or other "Acts of God", war, or the failure of third parties--such
as suppliers and subcontractors--to perform their obligations to the contracting party.
It is important to remember that force majeure clauses are intended to excuse a party only
if the failure to perform could not be avoided by the exercise of due care by that party.”
As an event planner, you will need insurance to cover Force majeure and acts of God risks.
Event Liability Insurance: Events are always required to carry general liability insurance
protecting the planner, personnel, and venue from liability and lawsuits stemming from
causing accidental injury or death. A standard general liability policy for events also includes
riders that cover property damage, automobiles used, liquor liability, third party property
damage, loss or destruction of equipment (rented or owned), spectator medical coverage, and
even worker’s compensation expense. Inclement Weather Insurance: Weather changes
are the most common Force Majeures most event planners have to grapple with. Weather insurance
helps mitigate losses from bad weather at outdoor events, as well as weather impact
on attendee numbers due to travel interruptions. Event Cancellation Insurance: Events are sometimes
cancelled or rescheduled because of weather, flooding, earthquakes, hurricanes, acts of
terrorism, performing artist cancellation and venues being closed or condemned by authorities.
If your event has even a medium probability of being cancelled, this insurance protects
you from financial obligations of contracts and lawsuits related to the cancellation.
Annual Events Coverage: If you hold the same event every year, you may choose a full coverage
policy that covers the event as long as it occurs. These policies typically do not cover
car races and other driving events, rock, rap and hip-hop performances and film production.
Vendors and Exhibitors Insurance: Especially useful for events that have third party exhibitors,
these policies cover general liability issues, liquor liability, property damage, medical
emergencies and owned and rented equipment. The liquor liability portion is especially
significant if any alcohol will be served in conjunction with the event because it indemnifies
the organizers if someone drives intoxicated and causes injury or death. Note: always have
liquor liability insurance in place for any event that serves alcohol or allows people
to bring their own. Entertainment Insurance: This insurance is
basically a cancellation policy. It varies from the basic event cancellation policies
in that it can cover elements like refunding ticket sales after the money from them has
already been spent. Wedding and Wedding Cancellation Insurance:
These policies cover losses for cases when a venue becomes unusable, vendors go out of
business or cannot deliver, and other unforeseen and uncontrollable reasons the wedding might
be cancelled, like the bride or groom being deployed by the military. If you are planning
a wedding of any significant cost, it is wise to insure it.
No matter what type of event you plan, there are insurers who can cover all contingencies.
Most will be happy to advise you on what you need and work with you to develop a custom
policy. Risk management! Don’t event plan without
it!