Event Management

Expecting the Unexpected: How to Manage Risk Ahead of Your Event

Expecting the Unexpected: How to Manage Risk Ahead of Your Event

Associations have been managing risk at events since the beginning of associations. Speakers don’t show. Technology doesn’t work properly. Individual attendees have health emergencies. Weather threatens event venues.

Those are old-school crises. In today’s environment of pandemics and expanded technology use, what should your events team keep on their radar when developing risk assessments and crisis plans?

Write, Review and Update All Crisis Plans

Before you begin thinking about new threats, make sure you have the old threats managed in your existing crisis plans. If you don’t have crisis plans, spend some time developing them for each of your events, and don’t forget your day-to-day operations.

After the September 11th attacks, many associations realized that they had no formalized plans for keeping up with employees during an ongoing major crisis. Does your staff know what to do if they can’t access their office or are stranded by a storm when traveling on association business? Crisis plans can provide “next steps” to everyone in your organization when disaster strikes.

You can find guides to help you organize the planning process, as well as guides to help you consider all the areas of your business, online. You might start by accessing resources from the American Society of Association Executives or your state association. Updating existing crisis plans every year will help ensure that association and event staff members know what to do in any emergency. With that task completed, your team can turn to new contracts.

 

Review Your Event Contracts

In today’s world, meeting planners are often the experts who negotiate event contracts. If an association works years ahead to secure event space, it’s tempting to breeze over the boilerplate language in the signed contracts with hotels and other event venues. Savvy event planners, however, learned long ago to scrutinize sections like attrition clauses, making sure the language protects the association. Likewise in the past two years, the “force majeure” clauses in commercial contracts have become increasingly important in the association world.

Because of the wording in these sections of contracts, some associations have been able to cancel sleeping room commitments and event-space rentals without a penalty. Others have been denied refunds of initial deposits or have had to pay for space they couldn’t use. The disruption has led to litigation and many sleepless nights for association execs. Your position when disaster strikes depends on the language in your contract, particularly the force majeure section.

A force majeure clause governs the allocation of risk if the contract is hindered, delayed, or prevented because of an unforeseen event. Event planners can negotiate the wording of this clause, but many have simply used the boilerplate language thinking it will protect them if something unforeseen comes up. That’s not always the case.

For some associations, the covered events in their contracts included things like fire, flood, war, riots, or acts of God, but did not specifically mention epidemics or pandemics. Those associations often had trouble resolving payment issues and had to rely either on the broad definition of phrases like “acts of God” or previous definitions of phrases like “natural disaster” to prevail.

Finally, the force majeure clause defines what will happen if the breach is caused by an unforeseen event. Some associations were not able to recover any of the deposits they had paid, even though the event could not be held. The contracts in those cases held that both parties were relieved of any “future performance,” but they did not address the issue of deposits.

The difficulty in knowing exactly what to do when writing force majeure clauses is that you are trying to provide protection against something you can’t foresee. Your legal adviser should be able to help you write or negotiate force majeure clauses in future contracts. Yours is not the only association to face repercussions from the pandemic, so association attorneys are aware of the problems you face.

Hotels, resorts, and other venues also know what you face. They face it too. Many venues have worked with their association partners to delay performance on their contracts. By delaying events a year or changing the type of meeting held at an event space, associations have managed to use deposits and honor contracts without destroying their bottom lines. By negotiating a resolution that serves both parties, venues and associations have managed to stay out of court.

As a response to risk, some associations have regularly built the cost of event cancellation insurance premiums into their event and fundraising budgets. As the pandemic has continued, however, event cancellation insurance premiums have doubled or tripled. Even with the higher cost, some associations may decide ECI policies are the best solution. Others have been experimenting with options like self-insurance – earmarking funds in their reserves to cover losses from event cancellation.

 

Bad Things Will Happen. How Will You Handle Them?

Each association will have its own needs to consider in planning for future crises. It stands to reason that small associations with limited budgets may be at the greatest risk for financial difficulties if events are canceled, but all associations are at risk.

Knowing that emergencies will happen but not knowing when, it’s best to start planning now.

  • Be clear about your goals.
  • Draw on your experience and knowledge.
  • Engage your staff and your board.
  • Be willing to ask for expert help.
  • Face the possibilities realistically.
  • Put mitigation strategies into practice as soon as possible.

Taking the time to recognize the possibility of disaster – large and small – while the pressure is off can help you and your team shine when the pressure is on.

If hosting an in-person event is too risky for your association right now, consider adding some pizzazz to your virtual event offering.

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