The Need for Risk Management in the Event Industry - Essay Example

Risk management is a logical approach that is used to eliminate or minimize the level of risk in any business operation. It is a continuous process which identifies risk; analyzes it and its impacts, and then prioritizes it. Risk management assesses and quantifies business risks, followed by the synchronized and economical application of resources to mitigate, scrutinize, and control the probability and impact of adverse events or to exploit the realization of opportunities fully (Kolakowski, 2011). Risk management can be anything from an awfully convoluted process, to requiring nothing more than making a few trivial adjustments. Risk management, as it relates to the event administration, may include action items such as fire evacuation procedures or it may be a minor problem from rowdy guests. Risk management, basically seeks to minimize the prospect of money or other forms of finance that can be utilized ineffectively or abused. It increases the profit margin for the company, by making sure that all resources are utilized safely, logically, and efficiently. Though, the actual process of risk management varies from company to company but in general, it requires support of owners, together with the management team, in order to filter the overall process and attain the lowest degree of risk possible. (What is risk management, 2003) Sources of risks can be uncertainty in project failures, financial markets, accidents, credit risks, legal liabilities, natural disasters and causes and also a deliberate attack from an adversary. As risk management is an integral part of any kind of business, it is also an essential component and a specific prerequisite for successful event management. It combines many management disciplines, such as change management, knowledge management, strategy and leadership. Risk management can be considered as an informal decision making course that seeks to generate certainty from uncertainty.  The importance of risk management in the event industry has developed with the growing complexity and specialisation of service supply. Though, it does not prevent snow conditions from forcing event managers to cancel a festive marquee event, but not understanding and effective execution of useful risk management strategies can result in disastrous situations. Risk management, without any doubt, is significant part of the planning process. Analysing the risk, allows a firm to recognize the degree to which potential risks might impact the events. Risks can be measured in accordance to their possibility or likelihood of happening and they can also be considered in terms of the impacts of the risk or its consequences. Examining a risk and preparing risk matrices enable the managers to establish the acceptability levels of risks and it also helps in prioritising the management of the risks. The three commonly used matrices are: consequence matrix, frequency matrix and risk matrix. The consequence matrix covers four levels of costs; public and worker safety and the economic and environment loss. Once the consequences related to the risk have been acknowledged, next step is to approximate the frequency with which it may occur (Brander and Roy, 1995). After determining the consequences and frequency linked with a specific hazard, risk matrix is used to determine the overall impact of the risk. If the consequences are very severe and occur frequently, then it calls for the management to take a prompt action, where doing nothing is not an option. As the severity and frequency of occurrence of the risks decreases, the time to conduct detailed analysis and investigation increases. Cost considerations can be taken into account, as well as the normal scheduling constraints such as availability, timing, etc. Even when the outcomes are not so brutal and their level of occurrence is very low, it is still significant to resolve the issue and implement recommendation according to schedules (Understanding risk, 2009). While, lack of concentration or a mistake from doctor kills one patient, a failure in managing a risk can kill hundreds of individuals. Eleven people were injured and two died on December 4, 1998, when a Minneapolis police van swerved into the crowd awaiting Holidazzle parade on Nicollet Mall. A small mistake on the part of driver caused two deaths and a large amount of compensation money to the victims’ families. Such incidents can be avoided and the crowds can be made safer by taking some precautionary measures and managing things carefully. Drivers should be restricted from swerving or weaving towards the crowds. Speed must be limited to no more than 10 miles per hour. Levels of amplified sound effects and music should be moderate, so that, it doesn’t startle animals or the drivers (Chanen, 2011). A drag race event turned into a catastrophe in Rawalpindi, Pakistan when, on losing control of his vehicle, one of the participants crushed five spectators standing along the race-track. There were no safety fences and people were standing very close to the tracks. The race did not even take place on proper race tracks but on a highway and sand was accumulated on the edges of the road. The race was conducted without the permission of authorities (Khan, 2010). The driver of the car or, the people standing too close to the tracks are not to be blamed, but the management who did not even bother to put safety barriers around the road. Expecting people not to get too close to the racing tracks during a race is naive approach at best and absurd at the worst. When planning an event, safety measures are essential to ensure that everything will fall into place and no mishap will happen. It is always better to deal with preventative process, rather than ending up regretting the things taken for granted. Proper protective measures can save many lives and properties. A seven-year-old boy was killed, at the Easter Week 2007 carnival, while on the Sizzler, in the southern Arkansas town of Hope. The boy and his mother were not properly locked in their chair when the ride started. Shortly after the Sizzler started its run, the boy and his mother both fell out, and the boy was struck in the head twice. The operator tried to stop it, but he couldn’t do it quick enough to prevent the boy from getting hit on the head (Glow, 2007). The boy was pronounced dead due to the traumatic brain injury. While, the real reason of his death is carelessness of the person who did not fasten the belts properly. There should be emergency stop buttons installed in these rides to immediately stop them in case of such incidents. Taking precautions and managing risks beforehand is vital as it can save lives. A fire on the Tivoli Tuur ride, while in operation injured thirty seven people. The ride was running at full speed when it caught fire, burning gondolas to a brusque. Flames had already destroyed five plastic gondolas and electrical system of the ride by the time fire was extinguished. Best device to battle a fire is to prevent it from happening. (Glow, 2007) The events more prone to fire incidents are carnivals and BBQ nights, where there is a lot of electrical wiring and usage of highly flammables. Fire is one of the foremost concerns for the event mangers as it destroys more or less everything that it comes across it. There are certain measures to prevent and control fire which the company must consider when organizing an event (Ayling, 2011). There were nine casualties and almost twenty-six people injured, when the crowd slipped and fell in the mud, at Roskilde Festival, Denmark in 2000. The cause of the deaths was suffocation after pressing the chest. The victims did not have any injuries except a few bruises or abrasions, here and there on the body. After investigating this incident, it is said that the safety and security measures taken at this event cannot be criticized. It must be acknowledged that the system was not safe enough because the accident happened despite the barriers. A different and safer arrangement should be made when organizing such events. (Roskilde Police, 2000) In Phnom Penh, Cambodia, at the water festival round about four hundred people died. Witnesses’ claim that the crowd crush took place when people were attempting to leave in panic. Some people jumped into the river, while some tried to climb the bridge by grabbing and pulling cables which became loose and resulted in more deaths. (BBC, 2010) This is one of the worst cases of mismanagement related to the event industry. Due to the failure of crowd management and an incompetent and inadequate response to the disaster, hundreds of people died while many were injured. It was also reported that only half of the officially reported number of police officers were actually there. Those who were present on the scene lacked the proper training of responding to an emergency (Mydans, 2010). There are two issues needed to be considered in risk management related to crowds; crowd management, i.e. the movement and facilitation of the crowd, and crowd control which includes measures taken to calm down people once the control is lost. It is the response and reaction of the management team to an emergency (Tum, 2006). These are just a few examples; there are many other such incidents, which have caused thousands of deaths due to lack of proper risk management. On the other hand, due to appropriate understanding of risks and dealing with them in advance, resulted in successful events, improving the image of the organizations. Just because plans may sometimes go wary, doesn’t mean one should not make them. Managing an event efficiently, by reducing the probability of risks and being able to control a hazardous situation, harm can be prevented to the guests as well to the companies repute and assets. Organizing an event is a serious business with serious responsibilities. Companies managing events must provide a healthy and safe environment at each and every event, for every person who has come together to make, install, manage, attend and participate in the event. It is imperative to cover the essential plans, safety measures, and regulations relevant to producing safe and successful events. (Silvers, 2011) An example of successful event management is International Festival and Event Association (IFEA). This association consists of many public sector organizations, ranging from national government departments to small volunteer groups. IFEA’s main objective is to endorse co-operation between producers and suppliers. It primarily, promotes communication between, managers, organizers and event producers which is a very significant part of the risk management. It is the Premiere Association which supports and enables successful and safe festivals and events worldwide. International Festival and Event Association have celebrated more than fifty years of success (Shone & Parry, 2004). North Sea Jazz festival is a historic event, which first took place in 1976. With passing years it has developed into a major international Jazz event. Hundreds of artists perform in this show with thousands of people attending it. This event takes place successfully year after year, due to the careful administration of events and analyzing the risks and taking appropriate action. Consultation and communication are key factors to thriving risk management. Once event managers become aware of the risks linked with an event, they need to develop procedures to manage them. One way of analyzing risks and their impact is to evaluate the probability of the risk occurring and the consequences if it does. Although, there are many ways of assessing risks, event industry mostly uses qualitative assessment method. Basically, it aims at identifying how severe and grim a risk may be on commercial or safety terms. Once the event manager has fully analyzed and is well informed of the risks, only then he/she can construct a risk management plan; checking to ensure that appropriate safety measures are set up, alerting staff in case of an accident and preparing a contingency plan for any kind of emergency.   The event manager should also request a handover letter from the electrical, gas, etc. companies, stating that the equipment is installed correctly, so that there is a proof that duty of care had been considered. These precautionary steps increase the costs, but are necessary to ensure safety of people and the repute of the organization. The costs incurred are not more valuable than the lives of individuals. The more complicated the risk is, the more detailed consultation, research and control is required. In this sense, risk management can also be seen as a knowledge management system as it involves identification, creation, representation and distribution. It also increases insight and experience. The risk management system is a dynamic process which requires an effort towards continual improvement. Safety checks and awareness education are good ways to start, but there is a requirement to regularly improve safety methods and lower the risk potential. Not only the event manager, but the whole organization needs to think constructively about how to reduce risk and make activities safer. Risk management practices can be viewed as creating safer and hence, better and safe events for all those concerned in the setup and delivery, and also the people who attend. The implementation of effective and strong risk management and controls in risk management encourage stability throughout the entire financial system of the company and provide a safe and sound environment to the people attending the event. Distinctively, three important functions are controlled by the risk management: protects the firm against credit, market, liquidity, legal, and operational risks; protects the workers and guests from serious non-market related losses (e.g., death, injuries, etc.); and Protects the company from suffering adversely from reputational risk and losing its customers. The importance of effective risk management in the event industry in protecting it against serious and unanticipated loss is illustrated in the examples given above. Not analyzing the risks and improper controls can finish a company, as lives are at stake if any unanticipated unfortunate incident happens. 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