Challenges of Risk Management in the Sports and Entertainment Industries

Thu, 04/07/2016 - 15:12
by Lou Marciani and Sharon A. King, CPCU, AIC, ARC, AIT

Sports and entertainment are multibillion-dollar global industries, thanks to millions of loyal fans who spend a great deal of time and money in support of them.

Whether attending the Indianapolis 500, the Boston Marathon, the Super Bowl, or a sold-out concert, for many people, experiencing an event in an arena full of cheering fans who share their enthusiasm is particularly exciting. Behind the scenes, however, are many hours spent identifying, analyzing, and managing the numerous risks associated with these events.

Failure to properly analyze and manage the risks in hosting sports and entertainment events can lead to significant injury and even loss of life for spectators, employees, vendors, and event participants. Financial and reputational risk to the event facilitators and teams may also be present.

While some of the risks at sporting events may be obvious, such as a ball hitting a fan or a car driving off a racetrack, there are many other risks that attendees may not consider. For example, how can 100,000 or more people safely and quickly evacuate an open-air facility in the event of a reported tornado or natural disaster? What if people are injured after or while being evacuated? What if everyone is evacuated and the reported weather event does not even occur?

Although not all of the risks around sports and entertainment events can be avoided, some of them can be mitigated or insured. In any case, it is important to have a plan and a system in place to handle anticipated and unanticipated risks.

Lou Marciani, PhD, has vast knowledge about the many challenges in managing risk during large events. Director of the National Center for Spectator Sports Safety and Security (NCS4) at the University of Southern Mississippi, Marciani was instrumental in developing the Sports Event Security Aware (SESA) process. He is an active speaker and writer on sports safety and security, having co-authored Security Management for Sports and Special Events (Human Kinetics, 2012). Marciani also addressed this topic at the 2015 CPCU Society Annual Meeting, serving as a panelist on the educational session, “How to Stay in the Game—Preventing Losses in the Sports and Entertainment Industries,” presented by the Loss Control Interest Group, the Excess/Surplus/Specialty Lines Interest Group, and the Risk Management Interest Group.

Marciani reviews the risks and challenges associated with managing large sports events in this interview with Sharon King, a director of assessments at The Institutes and member of the CPCU Society Loss Control Interest Group.

Sharon King (SK): What are some of the most common risks to patrons attending large sporting events?

Lou Marciani (LM): Today, we address spectator risk from an all-hazards approach. There are three main areas: natural disasters, crowd management, and terrorism.

The sudden onset of storms, tornadoes, or lightning can pose real problems for facility operators. Mass evacuations or in-place shelter at stadium, arena, or open-area events may be required. Mass casualties are a real risk if a sporting venue is hit by tornado, large hail, violent winds, flash flooding, or cloud-to-ground lightning during an event.

Spectator violence in and around stadiums has been another longstanding problem for authorities. Events tend to experience spontaneous forms of violence that result from intoxicated or overzealous crowds that might, for example, rush the field. Failure to prevent acts of violence at events can produce negative consequences, including injury to spectators, participants, or staff; decreased public confidence and future attendance; and property damage.

We must also address the treatment of both domestic and international terrorism. As a result of the recent terrorist attacks in Paris, multiple soft-target, hostage, and IED [improvised explosive device] attacks are major concerns.

SK: What are the biggest challenges to managing risks associated with sports and entertainment events?

LM: Managing risk in the sports and special events environment is uniquely challenging. While other high-security environments, such as a nuclear plant, are able (and expected) to have tight security, restricted access, and visible limitations, the sports and special event environment is built on the principle of “open public access,” meaning that the public may move freely through these facilities without the deterrent of highly visible security barriers. Even as you seek to secure your venue, you understand that the business model requires the public to feel free to move around and explore. Because of that, security can take a backseat to event management and customer experience.

The wide variety of assets, systems, and networks—for example, stadiums, movie theaters, hotels, theme parks, fairs, arenas, and convention centers—and great variation in size, utilization, and owner-management formats of sports and special event facilities and venues pose other unique challenges to the risk environment. For example, some events are held in temporary venues. Oftentimes, races such as 5Ks or marathons are held on temporary courses that change from year to year. Outdoor concerts are often held on temporary stages in venues that may be designed for something else. Ensuring that these structures are safe and secure, and yet remain mobile and collapsible, can create additional safety concerns.

To accurately determine threats and vulnerabilities, an organization must conduct risk assessment annually or when circumstances or threats change.

SK: What lessons have been learned from past terrorist or catastrophic events at large sports and entertainment events?

LM: The lessons learned during the Boston Marathon bombings continue to serve as a basis for longer-term planning and implementation efforts to improve the capacity to prevent and respond to similar attacks and threats.

The events in Boston highlighted how close coordination among federal, state, and local officials is critical in the immediate aftermath and response to terrorist attacks. They also reinforced the principle and value of whole community contributions, including from the general public.

One of the best takeaways from the terrorist attacks in Paris was the good training of front-line staff. For example, those working security at the stadium were obviously well trained to stop terrorists from entering the stadium. However, information sharing continues to be a problem.

SK: What are steps that should be taken by facilities to prepare for large events?

LM: We recommend that facility managers undertake a risk management system process. SESA, for example, indicates whether an organization has engaged in planning, developing, and implementing effective and sustainable safety, security, and incident management systems to:

  • Identify and assess risk
  • Assure quality training programs
  • Customize and implement exercise programs
  • Explore and recommend countermeasure improvement processes

SK: What resources are available?

LM: The Department of Homeland Security offers resources, available to view at, such as a listing called the Commercial Facilities Sector. This includes a diverse range of sites that draw large crowds of people for shopping, business, entertainment, and lodging. Facilities within the sector operate on the principle of open public access, and the majority are privately owned and operated, with minimal interaction with the federal government or other regulatory entities.

The Commercial Facilities Sector-Specific Plan sets the strategic direction for voluntary, collaborative efforts to improve security and resilience in the sector and details how the 2013 National Infrastructure Protection Plan’s risk management framework is implemented within the context of the unique characteristics and risk landscape of the sector. Each sector-specific agency develops a sector-specific plan through a coordinated effort involving its public and private sector partners. The Department of Homeland Security is designated as the sector-specific agency for the Commercial Facilities Sector.

The Commercial Facilities Resources page includes videos that help owners, operators, and employees identify and report suspicious behavior and activity; information on active shooter preparedness; and other commercial facilities publications. And the Commercial Facilities Training page has a listing of commercial facilities trainings that better prepare both the private and public sector to identify suspicious behavior and respond to disruptive events.

Finally, NCS4 at the University of Southern Mississippi offers training, certification, assessments, best practice summits, an annual safety and security conference, and an MBA with a concentration in sports security.

SK: What other information should insurance and risk management professionals know about insuring the safety of large events?

LM: Insurance and risk management professionals should begin to recognize the importance of assuring that facility administrators have a set of scalable standards for assessing risks; identifying vulnerabilities; developing appropriate plans, policies, and procedures; and providing training and exercises to facility staff.

Facility management should adhere to the following objectives:

  • Protect facility occupants—spectators, officials, competitors, and employees—by employing current, research-based best practices for facility safety and security
  • Facilitate compliance with sanctioning bodies, relative to minimum security and safety standards
  • Facilitate compliance with the regulatory requirements of municipal, county, state, and federal agencies
  • Enhance resiliency capabilities to recover from financial losses, including: regulatory fines, loss of market share, damage to equipment or products, and/or business interruptions
  • Possibly reduce exposure to civil or criminal liability in the event of an incident
  • Enhance image and credibility with a proactive stance in safety, security, and incident management

The result will be a continual cycle to review and upgrade safety, security, and incident management programs at participating sports facilities.

Many thanks to the Loss Control Interest Group for its contributions to this article.

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