8.5 Risk Management

Events should be fun, informative, transformative, and productive. However, as with anything that involves people, equipment, and money, risk is an ever-present possibility. The event planner must assess the risk of creating the event and do everything possible to keep people, property, and brand identity safe. Risk management involves identifying, assessing, and preparing for anything that could go wrong before, during, or even after the event. It matters for the safety of people, property, finances, brand reputation, and professional credibility. Anytime an event draws people together, some level of risk to people and property exists. Guests may trip and fall, have an allergic reaction, or suffer an unexpected health crisis. Items may get lost, stolen, or damaged. Other risks include fire, extreme weather, or, in the worst-case scenario, an active shooter or social violence. Additionally, events that involve sales of tickets or other items risk fraud, theft, or data security breaches. Should any of these threats materialize, they can damage the reputation of the host client. Failure to protect against some of these risks can result in legal action against the client or the planner. Litigation or loss of property or life can permanently damage the professional reputation of the planner and possibly end their career or result in jail time or the need to pay restitution.

Risk Management Step-by-Step

To safely assess risk, a planner should follow basic steps. They should identify possible risks, evaluate each of those risks, create a response strategy for each risk, and then create a risk communication plan. In step one, the planner must identify possible risks. It helps the planning process to break down risks by category. Think about risks to people, property, finances, and brand reputation. At this stage, list out each possible risk, regardless of how insignificant or improbable. Next, evaluate each risk for how likely it is to occur and how severe the outcome of occurrence would be. For example, the planner might identify that a tornado is a risk to the outdoor wedding that they are planning. During the evaluation phase, they might determine that tornadoes do not typically happen in that part of the country during the month of the wedding. Conversely, the planner might identify that rain is a risk to the outdoor wedding, and upon further investigation, they might discover that rain is highly likely in that part of the country during the month of the wedding. The third step in the planning process requires evaluating what to do about each risk. For each risk, options exist for how it will be handled. The planner may decide to accept the risk. This works well in cases where the severity of the risk is not high or if the likelihood of it happening is very low. In the wedding example, the planner might accept the risk of a tornado after determining that there is a low likelihood that one will interrupt the wedding. A planner might also choose to reduce or mitigate the risk, a tactic that works well for most areas where a little extra planning or education can greatly reduce risks.

In the wedding example, the risk of rain interfering with the wedding is high and would have a severe impact on the event. In this case, the planner might mitigate the risk by renting tents to cover the main areas. Risk can also be managed by transferring it to someone else. In this case, the planner might purchase insurance or have vendor contracts that transfer the risk from the planner to a third party. The planner could accomplish this by purchasing liability insurance to cover costs incurred by trips and falls, purchasing fire insurance for venues, or contracting with a software company that assumes all risk if a data breach should occur. Transferring risk involves a legal contract that clearly outlines the roles, responsibilities, and outcomes of specific risks. The last option for risk evaluation is to avoid the risk altogether. A planner might determine that the likelihood and severity of the risk are too high to proceed. In the outdoor wedding example, the planner might feel that the likelihood of rain is too high and that the severity of the impact of the rain too great. In this case, the planner might decide to move the whole wedding indoors to another venue to avoid risk. In sum, risk management requires that the planner take responsibility for identifying potential risks to people, property, finances, and brand reputation. Planners have a legal responsibility to keep people and property safe, and the best way to do so is through thorough and thoughtful planning.

Risk Matrix

A common visual way to assess risk is through creating a risk matrix. A risk matrix entails a graph that lists risk severity and risk probability on its axis. Each risk is then slotted in where the probability and severity are relevant. This matrix helps planners to categorize risk.

Contracts

Contracts are legal documents that outline the responsibilities, timelines, deliverables, payments, and legal recourse for faulty or undelivered goods and services. Transferring risk through contracts provides a solid risk management strategy, as these documents stipulate and broadly define expectations for goods and services that are either high-stakes or high-value. Although a contract may not have specific details such as the exact menu items, it does identify and big-picture elements, such as the date of the event and location as well as the scope of what is being contracted. Catering contracts, for example, list the date of the event to be catered, the start and end time of service, the location, the guaranteed headcount by the planner (also referred to as the food and beverage minimum), the type of service to be provided. It also stipulates whether any secondary rentals are needed for catering, such as dishware and linens, and who pays for them. It also documents who is liable for non-service or non-payment and who is responsible for staff and guest health.

Contracts should also include cancellation clauses that protect both parties. If a planner or a vendor needs to cancel the contract for any reason, for example, they will typically pay the other party a cancellation fee. That fee normally increases as the event date nears, as finding new work or vendors becomes increasingly difficult as time draws short. Good contracts usually also clearly identify change order processes. Change orders specify the steps both planners and vendors must take to add, delete, or change the services under contract. Typically, a vendor will refuse to accept change orders one week prior to the event, as supplies have already been purchased and staff have been scheduled. The change order timeline and process should be identified by both parties in the contract to avoid confusion. Overall, contracts are legal documents protecting both parties. If the planner is not familiar with contracting, they should ideally consult with legal counsel before signing.

Communicating the Risk Management Plan

The best risk assessment will do no good if no one knows about it. As a result, once risk assessment has been completed, it needs to be formalized as a written document that is distributed to the necessary team members. This document includes the risk matrix and the plan for each risk. It should also include copies of contracts and insurance policies as well as a list of the roles and responsibilities of staff, vendors, and team members. It should also include an easy-to-search list of emergency contact numbers for vendors, suppliers, and nearby emergency services. Good event planners will include a list of backup vendors and suppliers as well, in case last-minute replacements are needed. Another important part of the risk plan is to have written documentation of what to do if something happens at the event. For example, if someone trips and falls at your event but does not require medical attention, it is good practice to have the individual fill out an accident form that details what happened and where it occurred, and describes the outcome. This way if a few days later the guest tries to make an injury claim against the planner, they have documentation that was signed by the guest at the time of the incident.

Creating the Communication Plan

A communication plan resembles the risk management plan, as it identifies stakeholders and their roles and responsibilities, and how they will communicate with each other. It also identifies who gets to make statements on behalf of the event. This is important in the case of an emergency. False or misleading statements made by uninformed staff can have lasting and sometimes legal consequences. The communication plan should answer some important questions, such as, “In the case of an emergency, who gets to decide to cancel the event?” If something negative happens at the event, who is responsible for talking to the press? Who gets to post about the event on social media? If a mass announcement needs to be made to staff or guests, who is responsible for that communication, and how would that announcement be made? These key communication questions should be covered in a good communication plan, and that document should be made available to the entire event team and any applicable vendors.