On the 17^th of August, the Sydney Morning Herald reported that rugby league players may strike over the National Rugby League’s handling of the players’ new collective bargaining agreements.

Meanwhile in South Australia, Adelaide Now declared that construction of the State Aquatic Centre has ground to a halt after sub-contractors went on strike demanding a wage rise.

Elite Athlete Boycotts

Professional athletes are often in a powerful position when negotiating pay or condition claims. They are arguably the most precious resource to the teams and sport they represent; without them, their sport and commercial stakeholders would be severely affected.

Historically, there are many examples where professional athletes have used this power to influence key decision-makers. Examples include:

• In 2007, AFL players boycotted Channel 7 after they claimed the network released the private medical details of two players

• In 1972, tennis player Billie Jean King said she would not play in the US Open the following year unless prize money for males and females was made equal (and it was.)

• The Olympic Games: the Games have been a prime target for boycotts because of the international exposure that such actions receive. The most notable incidents include the 28-nation boycott of the 1976 Montreal Games due to South Africa’s apartheid policies, and the 1980 / 1984 boycotts of the Moscow and Los Angeles Games due to Cold War disputes.

Supplier Workforce Industrial Action

While elite athlete boycotts might grab most of the news headlines, the reality is that industrial action taken by the supplier workforce can be just as crippling for the industry.

Consider the consequences if state transport or contracted security staff were to strike on the day of a major event. As the South Australian Aquatic Centre example demonstrates, the risk is real, and given the potential consequence of such actions, the threat should not be ignored.

Managing the Risk

The key to prevent industrial action from impacting too heavily on your operations is to actively manage relationships with your stakeholders. It is important to understand what issues major suppliers may have brewing in the background, and what impact possible disputes would have.

Undertake a risk assessment to determine the most foreseeable and worst case scenarios for loss of workforce or suppliers, and develop contingency plans in advance.

Business Continuity

Business continuity planning takes into account the loss of critical business functions – for example security, public transport or the main attraction. The business impact analysis section of the business continuity plan should consider each part of the business where a loss can have a high consequence for the organisation.

The recently-published Australian Standard, AS/NZS 5050:2010 Business continuity – Managing disruption-related risk, can help to guide your organisation through the process of improving business resilience.

Organisations, including those in the sports, events and venues industries, will continue to see an increase in the number of “Generation Y” employees – those born in the 1980s and 1990s, and who tend to be heavy users of social media.

Implement Guidelines

The article quotes James Griffin, head of digital strategy for SR7, as saying “A staggering amount of organisations do not have guidelines in place, making it difficult for both staff and the employer to understand what acceptable use is.” This is surprising, given that social media can be an important tool for many organisations to engage with their customers.

With no guidelines in place, social media may be used by employees who inadvertently cause problems for the organisation. Disgruntled employees may refer to their organisation in social media, and this can have a devastating impact on the brand. It is important that clear guidelines are put in place and that the rules are strictly enforced. “An ad hoc approach to engaging in social media and not involving all relevant stakeholders is a common risk [for many businesses],” Griffin said.

Managing Reputation

Another reputational risk is the impact of having negative customer feedback about an event or venue posted onto social media websites. Traditional media may then pick up on the issues resulting in significant reputational damage.

This is particularly prominent in local Government and some sections of the retail industry.

Protecting Yourself

If you consider that social media represents a significant risk to your business (but that it also offers an important opportunity), undertake a risk assessment addressing its impact on the business, and establish clear guidelines for its use by your workforce.

The Risk Magazine article can be found here.

This month, we look at some of the higher-level principles, or aspirational values, that should underpin the process if real changes are to be made to the risk management culture of an organisation.

The Risk Management Standard, AS/NZS ISO 31000:2009, sets out certain principles that should be adopted. These principles suggest that, ideally, risk management:

Creates and Protects Value

Risk management should never simply be a box-ticking, administrative exercise; it should always help the organisation to achieve its goals by allowing employees to focus their efforts on threats that may prevent goals from being achieved.

Enhances an organisation’s resilience and creates strategic and tactical advantage

Risk management programs should always aim to address significant external or internal threats. By completing risk assessments to identify, analyse and treat risks, the threats to the success of an organisation will be minimised, increasing its resilience.

Developing sound crisis management and business continuity plans will further assist the organisation in making itself more robust.

Is an integral part of organisational processes

Risk management should never sit out by itself in isolation – it should cut across all other disciplines, as its aim is to address the impact of uncertainty on objectives. If you consider that every business function has objectives, then risk management helps manage anything that may threaten success.  For this reason, organisations that are successful in managing their risk actively seek to integrate risk into other business processes to the point where it is ‘just part of the things we do’.

Is part of decision making

When any significant decisions are made, consideration of the risks should be part of the process.

Every decision has a range of possible consequences. Risk assessment can help to explore the chance of each consequence occurring. Cost-benefit analysis can help to determine the cost to the organisation for lowering the risk for each alternative course of action.

In this way, risk management can assist in managing change and investigating new business ideas.

Explicitly addresses uncertainty

Although legal compliance is the minimum standard, risk management should strive to go beyond it. Its real value is in helping the organisation to understand and influence uncertainty in the future.

Is systematic, structured and timely

Embedding risk management within an organisation is vital. A key way to do this is to systemise risk assessment, treatment monitoring and risk reporting, and give management risk status reports in a timely and accurate manner.

Is based on the best available information

The nature of most organisations is that they are always changing. With these changes comes new information, and it is essential that all risk-related decisions are based on the most up-to-date information.

Is tailored

Risk management must be calibrated to fit the business. Risk definitions, risk ratings and acceptability criteria, assessment methods and supporting business rules need to be customised. In this way, risk management will be tailored to match the organisation’s needs.

Takes human and cultural factors into account

In order to foster a positive culture, support must come from above. The communications and actions of the Board, CEO and Senior Managers will greatly influence all employees. If the leaders express their expectations and initiate accountability systems, staff will nurture a risk-aware culture.

Is transparent and inclusive

Risk management should be designed in a way that it involves everyone in the organisation but is specific to individual job roles.

Is dynamic, iterative and responsive to change

As mentioned earlier, organisations are always changing; those that do not respond to changes in the internal or external environment risk their very survival.  A risk management system needs to be receptive to change so that it continues to be relevant and useful.

Facilitates continual improvement of the organisation

Organisations should aim to review and improve the ways in which they manage their risk. It is vital that we learn from mistakes and become more resilient as a result.

The people were forced to stay the night in a cafeteria, after a fast-moving low pressure system hit the Mount Hutt resort, which has no accommodation.

The weather can play a significant part in the running of public venues and events. While some impacts may be minor, others may put lives in danger. These are the risks that must be given serious consideration during event planning.

Mitigating the Effects of Bad Weather

The simplest way of mitigating the effects of poor weather is to be prepared for it: develop bad weather contingencies for rain, high winds and thunderstorms.

Not only bad weather causes problems, however. Exposure to sunlight and heat can cause significant issues to  spectators and athletes. Sufficient consideration should be given to providing shaded areas and water for spectators, while “extreme heat” guidelines should be established by sporting organisations.

Most importantly, monitor the weather forecast and radar through the Bureau of Meteorology’s website.

Operational and Reputational Risks

Issues regarding the standard of playing surfaces come up in the media time and time again, especially in cricket and the football codes. It is an example of how an operational risk can lead to the potential for reputational damage.

Another recent example of how a poor playing surface led to reputational damage of a sporting event involved the one-day international cricket match between India and Sri Lanka in December 2009. The match was abandoned after 23 overs, with umpires declaring that the extreme variable bounce made further play too dangerous. At the time, ESPN claimed that this may have led to the possibility of New Delhi losing its right to host any matches during the 2011 Cricket World Cup.

But operational risks affecting the field of play can also have a significant business continuity impact. In some parts of Australia, scarab beetles affect public sportsgrounds and golf courses; this can damage the playing surface, compromising player safety. In the past, scarab outbreaks have forced the temporary closure of affected venues. Similarly, outbreaks of cryptosporidium have forced the closure of public swimming pools across the country, particularly during the 1990’s.

Ultimately, operational risks can have a significant impact on the business and its reputation if they affect a critical business function. The field of play of any public venue or event is the ‘stage’ for core business. As such, organisers should conduct robust risk assessments of this area, to ensure risk mitigation and business continuity management plans are in place and have been tested.

The Incident

The incident occurred during the Love Parade, an annual electronic dance music event. As part of this festival, an old enclosed railway station was used as a venue; the openings at the ends of the 100-metre tunnel served as the only entry and exit points to the area.

The tunnel reportedly became too full, and police began announcing that no new entry should occur. The entry side of the tunnel was closed, and people then began trying to gain access from the back of the tunnel. This caused complete overcrowding of the area which led to the crush. The publicly-released autopsy results indicate all deaths were due to compression asphyxiation (crushed rib cages).

The event is free and entry is not controlled, meaning it is difficult to estimate what the attendance will be, and at what level the current attendance is.

The Guardian reported that the event organisers ignored advice from safety experts warning that the venue was only large enough to hold 500,000 people (about 1.4 million eventually attended), and that there were significant risks associated with large numbers of people moving through the unsealed tunnel.

Related Stories:

Crowd Safety in Question for Justin Bieber in Sydney

The FIST Model of Crowd Crush

We ask this because we see many organisations still struggle with success in implementing risk management; those that do often have a culture that sees it as a box-ticking exercise, rather than actually adding value across the company.

Although corporate governance, compliance and statutory duties all require aspects of risk management to be implemented, to successfully adopt a risk-based approach across an organisation, it must actually help people make better decisions rather than adding another layer of administrative ‘pain’ without any payback.

Risk Assessment – The Funnel Analogy

If an organisation was to identify and treat every possible risk it faced, no matter how insignificant, the list of risks would be enormous. In a perfect world, every risk would be documented, completely mitigated and nothing would be left to chance. But in reality, resources are scarce, and many risks will inevitably be left alone without any action being taken.

The risk assessment process is the way to identify, analyse and evaluate risks to determine which risks need attention.

The diagram below illustrates how the risk assessment process can be likened to a funnelling process.

Essentially, a “box” is filled up with all identified risks, and tipped into a funnel (a risk analysis). Some risks are so small that they fall through the bottom of the funnel and accepted for what they are. To formally document treatments for such small risks does not represent good value for the effort required.

Other risks may be slightly larger, and get stuck along the way. Still larger risks will barely move down the funnel at all. Depending upon the organisation’s tolerance for risk, the funnel’s filters will allow different sized risks to fall through the gaps, or remain at the top. The way risks are prioritised depends on where they sit in the funnel; the higher they sit, the greater the priority they represent.

Risk Treatment

Once all risks have been analysed the challenge is to develop a way to “draw the lines in the funnel”; that is, how you evaluate risks to determine which risks fall through to the bottom (tolerate), which ones get stuck halfway (treat / transfer) and which sit at the top (terminate / transfer).
It is sensible to classify all risks as low, medium, high or extreme. In this way, the decision about what type of action to take is more obvious. A risk that is high or extreme has, by definition, a higher level of urgency and level of unacceptability.

How Much Can You Tolerate?

Levels of risk tolerance may differ between assessments, or across organisations, because of the contexts within which they operate: a risk-averse company may evaluate a particular risk as high and unacceptable whereas a less cautious one may define the same risk lower and tolerable. Similarly, a well-resourced company may classify many risks as lower, whereas a poorly-resourced one may consider it high (because it cannot take risks for its own survival).

By understanding and applying this process and the context within which the analysis is being applied, organisations can apply risk management principles to help deal with future uncertainty, to spend less time on small priority risks, and spend more time on the things that are important (i.e. big risks).

For those who don’t know, the octopus correctly predicted the results of all eight of Germany’s matches. He chose the winners by deciding which one of two boxes to eat mussels out of; each box was marked with the national flag of one of the teams playing. Paul has been lauded as a hero, with the BBC labelling him as “psychic” and “prophetic”, while Reuters branded him the “oracle octopus”.

What does Paul have to do with risk management? On the surface, not much. But let’s do a probability (likelihood) assessment to see how exceptional Paul’s results were, and compare them to the likelihood of other seemingly random events (consequences):

Probability of Different Events

The probability of Paul correctly predicting the result of the first match is 1/2 (50%). There was no option for Paul to pick a draw, so this has been excluded from our analysis.

The probability of Paul correctly predicting the first two matches correctly is =1/2* 1/2 = 1/4 (25%).

Fast-forward our analysis, and the probability of Paul correctly predicting all eight matches =(1/2)^8 = 1/256 (.391%)

Not a bad effort for seafood!

To put in context this level of chance, compare the following statistics:

• An Australian Institute of Criminology report published in 2005 claimed that the national average of burglaries per 100,000 people was 1,397, or about 1/170
• The Federal Office of Road Safety reported in 1999 that the national average of road fatalities per 100,000 people was 9.3, or about 1/110,750
• The National Lightning Safety Institute in the USA claims that the national average of being struck by lightning per 100,000 people was .357, or about 1/1,280,000
• The chance of winning a 6-number lottery is about 1/14,000,000
• The chance of winning Powerball is roughly 1/127,400,000

While the probability of Paul correctly guessing all eight winners was far more likely than winning Powerball, his chance of success was still 1/256 or less than half of one percent. The figures above suggest that if he were in Australia, there is a greater chance of Paul getting ’nicked’ in a burglary than picking eight winners. Given Australians’ love of seafood, gambling and celebrity, perhaps this risk is even greater.

But we think the truth to this story lies not in the arithmetic of betting but in the art of fishing. Any good trout fisherman will tell you that, “the brighter the day, the brighter the lure”. Could it be possible that, under all those bright TV camera lights, Paul was just picking the boxes based on which flag was brighter?

What do you think?

Race, Ethnicity and Religion in Sport

Ethnicity, religion and race have long been a source of tension in sport. This has been illustrated in numerous cases internationally, such as the effects of apartheid on sport in South Africa, the 61-nation boycott of the 1980 Moscow Olympics, and the ongoing calls for cricketing boycotts against Zimbabwe as part of international pressure on President Robert Mugabe’s regime.

Australia has also had its own share of racially-based conflict in sport. Indigenous athletes may be admired by their supporters and the community as role models, but historically both fans and players have used racially-based torments to unsettle an opponent.

In the 1990s, AFL players started fighting back; who can forget the image of St Kilda’s Nicky Winmar lifting up his guernsey to proudly reveal the colour of his skin in front of a grandstand packed full of Collingwood supporters? In 1995, after a spate of Aboriginal players being racially vilified, the AFL implemented its first racial vilification rule.

The NRL has followed by implementing dispute resolution procedures for racial abuse incidents, but as was recently reported on the Herald Sun‘s website, ex-Essendon and indigenous player, Michael Long, noted that the NRL is not proactive on their public stance against racism when compared to the AFL.

Following the recent incident of alleged racial comments from NSW State of Origin Assistant Coach Andrew Johns against Timana Tahu, Long highlighted the slow official response from the Rugby League. He called on the NRL to strengthen its position and show leadership on racism before multi-cultural supporter groups are turned away from the game.

Cultural Leadership

Organisations (including football clubs) have a culture; a set of values that are common to its people. The culture is reflected in the way people behave and the things people say. It can be the result of careful planning by senior management or formed unintentionally and reflected in “that’s how things have always been done around here”.

In Australia, the culture of many organisations, including sporting clubs (and their supporters) often exists because of the way leaders act around their charges. The ABC reported that in the 1990s, a senior AFL club official was quoted in the media as saying “as long as they conduct themselves like white people, well, off the field, everybody will admire them and respect them.” This person represented the same club of those fans who allegedly taunted Nicky Winmar in the abovementioned incident. [A copy of the transcript can be found at http://www.abc.net.au/rn/sportsfactor/stories/2005/1304428.htm].

While it is not suggested that in this instance one incident directly caused the other, it illustrates that the culture of any club (as can be witnessed by the actions of players and fans), is in part set by the club’s leaders through their actions and words. The same applies when implementing risk management across an organisation. Risk leadership is vital. If the leaders say it is important, and continually act upon it, it will become important.

Brand Risk

This incident also helps illustrate the potential for racially-based damage to a brand. There is much evidence in sport of brand erosion to clubs and players resulting from negative public incidents involving high profile players. Although Andrew Johns’ brand may have been temporarily affected as Channel Nine suspended his role on the State of Origin Footy Show, time will tell as to whether this incident has any lasting effect for him. What is certain, however, is that his actions did nothing to motivate and inspire a winning culture amongst his players, with NSW losing the second State of Origin in a landslide.

What is Ambush Marketing?

Ambush marketing can be defined as a marketing activity staged around an event, without any official sponsorship arrangement existing between the event hosting body and the marketer. Major sporting events are regularly a target for ambush marketing, as they represent an attractive opportunity to expose products and their benefits over their competitors, without the overheads of official sponsorship.

The Risk

Ambush marketing can be a major risk to sponsors and organisers of an event. To a sponsor, serious devaluing of sponsor benefits can occur if marketing and advertising rights are not exclusive. If exclusivity and sponsor rights are not strongly defended, legal action can result, and a fall in demand for future sponsorship will occur. This represents a significant commercial risk to all event owners.

In any event risk management plan, it is important to identify potential ambush marketing activities and, where required, consider establishing a brand protection program. Controls may include working with local authorities and businesses to monitor commercial activities within the event precinct, and establishing in advance a protocol with marketing managers and security for responding to ambush marketing incidents.

The Law

In Australia, aside from where State Government legislation has been enacted to protect sponsor rights for a major event, the primary legislation protecting sponsors is Section 52 and Section 53 of the Trade Practices Act 1974, which respectively state:

A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (Section 52)

A corporation shall not… :
(c) represent that goods and services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have;

(d) represent that the corporation has a sponsorship, approval or affiliation it does not have. (Section 53)

Ambush marketing activities can be successful and avoid prosecution under this legislation where they indirectly imply an affiliation with an event rather than making direct and misleading claims of association. Such strategies are often based upon sound legal advice sought by the ambusher.

Ambush marketing can represent a significant legal and financial risk to public venues and events as, depending upon the venue layout and location, physical risk controls that hinder potential ambush marketing may be difficult to implement.