Risk Management | CEME

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!

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