Minimizing Meeting Risk

“Risk management is not really another thing to do. It should be integrated into everything you already do,” Tyra Hilliard told a packed room at a panel discussion on Event Risk Management at the recent NBTA Conference in Houston.

The associate professor of restaurant, hotel and meetings management at the University of Alabama noted that as planners write their meeting specs, they need to be thinking about the risks. For example, do we have VIPS; are we doing rope courses?

Address Risk Issues Up Front

“It is a good practice and commonplace to incorporate risk management issues from the start, in your RFI or RFP,” she said. One client includes a risk management checklist, created with input from the company’s director of security, Hilliard noted.

“Getting risk management issues dealt with upfront is important with any supplier, not just with a venue,” Hilliard said. She suggested including wording in an RFP to the effect of: Do not respond unless you answer these questions. “That saves you and the supplier time.”  

She added that it is important to define and communicate risk mitigation needs to everyone, internally and externally. It’s important that decisions are not being made on cost only. “That may mean educating people (your decision makers) about what’s important,” she noted.

Attrition and Cancelation Risk

The most common issue is the financial risk due to attrition and cancellation. “I wish I had a dollar for everyone who says I don’t worry about attrition, and then it happens….the Iceland volcano, wildfires in California… all kinds of things can cause it.“  Attrition bills can be very high, she noted. Once you’ve signed contract, there’s not much a lawyer can do for you.

Similarly, most planners never think they’ll cancel… until the government issues a travel ban or advisory, or there’s a SARS warning. Most people thing that a force majeure clause will protect them, but the question of whether a cancelation is caused by an act of god isn’t always very clear cut.”

Often, there is legal language the effect of being able to cancel due to events “beyond your control that make it impossible illegal or commercially impracticable to hold (or host) the meeting,” she said. That language is helpful but it works for both sides. For example, a hotel in Virginia that had to cancel because of black mold didn’t have to pay any damages for a meeting canceled at the last minute.

Another area of risk that often is overlooked is indemnification. “Indemnification may seem boring, but this is one of the most important clauses in the contract. It means the person responsible pays,” Hilliard said.

Get Certificate of Insurance–from Insurers

Be sure to require certificates of insurance from all suppliers and pay attention to the amount because often liability is limited to the amount of insurance,” she advised. 

Most important, she said, is to obtain the certificates of insurance straight from the insurer. “Otherwise you don’t know if insurance was canceled before the meeting…and pay attention to limits.”

Bear in mind that often contract clauses say up to the limit of our insurance. This is especially important for self-insured companies. “You need to check what this means with your corporate lawyer and insurance people in house, or external.”  

It may also be advisable to have something in the contract about a risk specific to a particular meeting. “For example, if a hotel is under construction, you may want to include a clause for what happens if the hotel is not complete.”

“Involve your legal department before signing any contract,” she advised.

Next week: Preventing and Preparing for Security Issues