The Ben Cousins Saga - A perfect example of Risk versus Reward in Sport

If risk is the chance of receiving a benefit but potentially a loss, then the Ben Cousins saga is a classic example of risk and reward. The challenge for AFL club Richmond, is to balance the chance of loss with the chance of achieving a gain.

As Cousin’s options for clubs in the AFL have dwindled throughout 2008, Richmond now appears to be offering the Brownlow medallist a lifeline; but the risks are high.

What is the chance of the reformed drug addict reoffending and the potential damage to the club’s brand, reputation and balance sheet through loss of ticket sales, membership and sponsorships? It was only 2005 when the Victorian Transport Accident Commission ended a long standing relationship and sponsorship with the Richmond Club following a drink driving incident involving a Richmond player. It was reported to have cost the club in excess of $500,000 per year.

The opportunities that Ben brings to the club are however considerable. A Brownlow medalist, seasoned midfielder and big potential crowd draw card are obvious. He could add considerable financial value to the club and its brand, if he remains ‘clean’. Onerous drug testing procedures imposed by the AFL and the club may be tolerable depending upon the club’s risk appetite and effectiveness of these control measures.

A risk-based approach to financial decision making can help sporting clubs make decisions about alternative courses of action. Risk management is not just about compliance with standards and the law, but is about minimising threats and capitalising on opportunities within an agreed framework.

For more information on event risk management - contact Reliance Risk.

Risks to Events and Venues from the Current Economic Crisis

So how will the current financial crisis impact upon venues and major events industry in Australia? Clearly the current situation represents one of the most significant emerging risks to these industries experienced in recent times.

Revenues
Firstly, the falling exchange rate will make it less attractive for major US and European artists to tour Australia if our currency continues its current rapid slide. Sponsors of major events and public venues will become more selective in terms of their marketing spend and this will flow on to a reduction in revenues for sponsored entities. If the economic downturn continues towards a global recession, unemployment will increase and the public will have less disposable income to spend on discretionary items such as concert and major event tickets.

Expenses
As the credit crisis worsens across the financial sector, more of the insurance industry is likely to be affected. The loss of one of America’s largest insurers, AIG, shows the potential that the crisis presents to the insurance sector. As insurer profits diminish, insurance premiums will likely increase, given the current point in the insurance cycle.

Risk-Based Approach
The instinct for sports, venues and event organisers may be to batten down the hatches and cut costs. It is in fact, a time to review the organisation’s risk profile and manage risk effectively. Your organisation may have to take on more risk in a market that is shrinking. That is, assessing and mitigating the organisation’s financial exposures and liabilities while maximising opportunities presented by the changing economy. All this while maintaining compliance standards and continuing to differentiate your organisation’s brand and reputation from competitors. A tough ask but an important one!

In this environment, all businesses must fight harder to win every dollar and make a more concerted effort to keep every dollar that they have. Prudent risk management practices are the key.

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Marketing applied to Event Risk Management and Enterprise-wide Risk Management in Sports, Events and Venues

For many venue managers, event organisers and sports administrators, the marketing managers are the rain makers; the creative ones that generate the ideas and win the business. For operational staff responsible for implementing these ideas, the marketing managers are sometimes perceived as the ones who create the risks which they have to manage. Yet every part of the business has risk and marketing managers of venues, events and sports have many strategic risks which can impact their success.

If the five basic steps of successful marketing are:

In each case there can be threats to achieving these strategic objectives. For example, a marketing campaign that raises awareness but fails to connect with the purchaser’s needs, is likely to fail. In the same way, a marketing campaign that arouses interest but then expects to secure large scale purchases or repurchasers without a trial and single purchase, is also unlikely to succeed.

The list of possible threats and indeed opportunities to any marketing campaign are an important consideration when combing marketing in event management, venue management or sports administration with Event Risk Management or Enterprise-wide risk management (ERM). These represent some of the terms of reference for identifying the marketing related risks, and are those which should be considered, documented and mitigated by the marketing manager.

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Incident Reporting: An Important Feature of Event Risk Management

Notifiable Incidents
We all know incidents should be reported and recorded. OHS legislation in every state has requirements for alerting the regulator when ‘Notifiable Incidents’ have occurred.

Civil Action
Accurate and timely reporting and recording of incidents can also be useful in potential claims management, where incidents are potentially serious enough that they may result in civil action against your organisation. Where serious incidents do occur, it is a good idea to call your legal counsel before conducting an internal investigation, as they can advise as to how best utilise ‘legal privilege’ when documenting causes of such incidents.

Near Misses
It is also useful to document near misses. Near misses can be a very good indicator of the potential for more serious accidents before they occur. Following research conducted into industrial accidents in the 60’s and 70’s by the ‘father’ of Loss Control, Dr Frank Bird; a ratio was developed that is now well regarded in safety risk circles. It is known as:

It suggests that for every serious incident, injury or fatality; there are 10 minor incidents, 30 property cases of property damage or loss, and 600 near misses. If your event, venue or organisation has experienced a serious incident in the last year, multiply that number by 600. This will give you a rough idea of the number of near misses that may have occurred over the same period. Then check that number against the number of near misses that were actually recorded. If it is significantly lower, then the chances are that there is allot that is going on that is unreported.

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