Preparation is the Key to Risk Management

Risk Management

Risk management is a dedicated preparedness rather than simply a mental exercise, according to Lisa Sommer Devlin, the most recent Smart Meetings webinar host. In her talk, “Risk Management 101,” she outlined strategies for dealing with the risks of the industry, as well as how to actively avoid them.

“Your job, when dealing with risk management, is to protect your organization,” Devlin said. A lawyer with 25 years of experience in hotel and group contracts, she doesn’t mince words when it comes to planners needing to take the steps necessary to handle any complications that might arise.

“Risk management is the process of assessing and controlling threats to your capital and earnings,” she said. That includes accidents and natural disasters as well as anything else that can keep your event from making the money it should and being successful, in general.

Financial Risks

The most common risk in the meetings industry is cancellations. If a hotel or venue cancels, it can derail an entire event. Likewise, there is always the question of what compensation the venue expects. In these cases, Delvin said, it all comes down to making sure the contract covers every eventuality. “A contract is an allocation of who assumes the financial risk of things happening,” she said.

Lisa-Sommer-Devlin
Lisa Sommer Devlin

While “hotel will not cancel” clauses may seem like the answer, they aren’t enforceable. Instead, Devlin recommends standard liquidated damage provisions, stating exactly how much each party will pay, according to the date they cancel. It is much clearer for all parties. Plus, being able to understand and accurately evaluate your risk is the first key to managing it.

The same can be said from the hotel side for placing minimum commitments in contracts, with groups promising a specific number of booked rooms. Though it may seem antithetical, Devlin contends that meeting hotels halfway, and acknowledging their risk, can lead to better negotiations and deals overall.

Legal Risks

Beyond contracts however, things begin to get murky. While breach of contract could result in legal liability, legal action just as often applies to cases of negligence, defamation and harassment. “Negligence generally means carelessness,” Devlin said. “That’s the essence of what it is.”

Not being prepared and showing a careless attitude with an event or the safety of attendees will lead to a problem every time. Doing walkthroughs of venues, personally checking the credentials of staff and intelligently vetting the type of security your event requires are all part of the equation.

In the end, there is little a planner or an organization can do to prevent from being sued. The best practice is to focus on building the best position to win any lawsuit. Strong oversight and smart decisions about exactly what you take on can be the difference between effective risk management and leaving yourself open to liability.

“Don’t assume a duty,” Devlin said. “If you take on a responsibility, you will be held responsible if you do it wrong.” Instead, planners need to know what they can handle. For example, with data security—especially with the looming regulations of GDPR—it is best to avoid the situation all together. “The safest information is the information that’s not shared,” she said.

Accidents and Disasters

Unfortunately, natural disasters are a growing issue for some of the world’s top destinations. But whether dealing with a hurricane, a fire or an accident at an event, the strategy is the same: Have a plan in place, know whose job it is to address the issue and follow the agreed upon procedures.

Having event cancellation insurance is the safest step to take. But investing in apps to quickly and efficiently communicate with attendees, while also working with your insurance company to find and mitigate problems, is the next level of risk management. Attendees will be safer and planners won’t be nearly as liable.