How to Prevent Disasters at Events
It’s all well and good to be able to see what went wrong after something happened, but that doesn’t change the fact that it happened.
We all learn from our mistakes and having that knowledge can hold you in good stead for future business decisions. With a bit of planning and a pinch of luck, you can avoid failures in the future by using foresight instead. Companies that manage their risk survive the longest.
So just what is risk management? Well, it is defined as a set of processes that a business undertakes to reduce the occurrence of a loss.
Here are some of the most common types of risks:
Intentional vs. accidental: Think of a disgruntled employee quitting just before show time vs. tripping over a power cord and pulling out the lights.
Natural vs. man-made: Not much you can do to predict a blizzard.
Internal vs. external: Internal risks are more within your power (have you staffed correctly?). External may be some patrons starting a fight on your doorstep.
Strategic: A guy starts up a similar business in your neck of the woods.
Compliance: Building codes, fire drills, other laws, etc. These all need consideration.
Financial: What happens when you’ve promised payment to someone and ticket sales are low?
Operational: Power outages, equipment failures, and running out of beer are all valid theoretically.
You need to examine the known risks your event or business plan might face. Be even more comprehensive than you think is necessary, at least the first time around. Ask others for input.
After writing this list, you should slot each of these risks into a risk assessment matrix. You can find many of them online – go for a business risk assessment grid.
Running along the top of the grid you’ll have the consequence of the risk occurring, from negligible to critical. Running down the left side of the grid you’ll have the likelihood of the risk occurring, from rare to certain. This covers both personal injury and financial loss.
For each of the risks you identified earlier, put them where you think they should go on the grid. The squares in the middle will be color-coded to give you a risk rating for each of the potential problems. Don’t waste time deliberating. Getting this down on paper is a great first step and puts you miles ahead of most managers.
Treat the Risks
Once you’ve identified and assessed your risks the next step is to decide what you’re going to do about them. The risk rating from the matrix helps you determine what to do.
For those risks that are unlikely to happen and have low consequences, you may simply accept them. If your best selling beer factory says there’s a small chance it won’t get its stock to you in time, but you’ve got five backup brands ready to go, it’s unlikely you’ll need to do anything about it.
Another option is to avoid the risk. If a particular artist is known for cancelling gigs, but has a huge following, do you take a risk on them? The financial losses that could occur might prevent you from taking a chance on them. If you find the likelihood of a risk is high, avoiding the act is your best bet.
When something has a medium risk rating, the best option is to mitigate the risk. This means reducing the impact of the risk – should it occur – or reducing exposure. Here you control the risk to reduce any damage it may cause. For example, if you know your speaker system can be flaky, make sure you’ve got a backup or a certified technician on hand. The sound will be out for a bit, but will be fixed quickly. A little bit of forethought will provide you with plenty of options to mitigate risk.
Another alternative is to have someone else manage the risk for you or buy insurance. Not all risks are worth your time and money.
Track Risks & Review
Throughout your event, track the risks you’ve identified. Make sure your mitigation strategies are in place and ready to go should any of the identified risks occur.
After your event, review what happened, and, if any of your strategies were employed, gauge the successfulness of them. Add any new areas of concern that popped up throughout the event, they may be handy to know for next time.
Gathering data and preparing for the unexpected goes a long way. You’ll capture the lessons you’ve learned in an easy to follow process that is both measurable and repeatable. When you next need it, the list will be ready to go, and you can add anything new you identify. A little time spent planning can save you headaches later when you least need it!
Watch out for ‘Black Swans’
Risk management has limits. Don’t believe that your risk matrix will cover all bases. Break risks into two categories:
- Known–Unknowns: we know some artists cancel often, but we have little idea when.
- Unknown–Unknowns: think worldwide financial crashes that cripple economies – it’s never happened before.
The first category is simple to mitigate with traditional risk management techniques. The Unknown-Unknowns are poorly understood and impossible to predict. You cannot predict what you do not know can occur.
When an Unknown-Unknown event occurs with big consequences it is called a Black Swan event. They don’t happen often but have the ability to blow your business out of the water. Because they are impossible to predict, they are difficult to mitigate.
A barbell strategy is the most effective technique to deal with Black Swan events. Ensure your business has a diversity of events. Ensure the majority of these events are low-risk (left side of the barbell). Most businesses focus on one type of medium-risk event type and are at more risk than they believe.
Don’t forget to add high-risk events to your portfolio (right side of the barbell). Diversity is important. Exposure plays a part as well. Expose yourself to Black Swan events that can carry positive results for your business. Just don’t let this exposure tank your business. Most successful event managers trace their breakout to one event that they never saw coming.