The financial exposure that an event organiser faces in
staging an event can be compared to that of the business interruption exposure
faced by a manufacturer, especially as a result of physical damage to the
factory or venue. The most significant difference being that the potential
revenue generating period for an event is short, often only a matter
of days, when compared to the 12 months period for a manufacturer. In addition
the perils faced by an organiser are not just limited to occurrences
at the venue.
Those organisers of trade shows,
conventions or exhibitions, who own their venues, will have arranged
appropriate property and business interruption insurance during the process of
which, they would have provided protection of their all important revenue.
However, for the majority of organisers arranging adequate contingency insurance
should be a prerequisite of their risk management process. This insurance will
protect the organiser against lost costs and the profit generated in the form
of revenue from causes beyond their control consequently minimising their
potential for financial loss.
An exhibition or conference may take many months or even
years to plan and execute with the associated costs building from the time the
event was conceived right up until the date of opening. Revenue however is generated
over a much shorter period. This revenue may be generated prior to the event if
pre-contracted, or during the event if generated from receipts at the door, or perhaps
a combination of both. Consequently any disruption to the event happening
immediately prior to, or during the event could have catastrophic financial
impact in terms of lost revenue and consequent profitability.
Importantly it should be remembered, that the occurrence does
not have to be in the vicinity of the venue to have an impact on the event. For
example, severe weather could prevent a significant number of attendees arriving
at the venue, an unforeseen third party strike, particularly by airlines or air
traffic controllers, or perhaps more locally a public transport strike, could also
cause a significant reduction in attendance at the event.
The financial exposures faced by organisers are concentrated into a short period of time and the risks that
can affect prospective revenue are broad. With the passing of time it is easy
to forget the once unimagined risks encountered by organisers in recent years.
With no previous historical frequency by which to know or asses them, the best organisers
in the world could not have envisaged the consequences of such exposures as SARS,
Avian Flu and the Icelandic Volcano, nor for that matter the financial impact
on both the event and insurance industry.
What other potential risks are lurking out there no one knows,
but doubtless they exist. However, by working together with industry
professionals in sourcing the appropriate contingency insurance, you can provide
crucial protection of your revenue stream, thus mitigating any unforeseen risks
that could destabilise the future financial stability of your company.
Phillip Eaglestone is an Insurance Consultant at Heartland Events
Insurance and has over 20 years experience as an independent insurance
broker to the events sector. Any comments? Email email@example.com