The recent London Olympic Games drew a total of over 219.4 million viewers over the course of 14 days. What people don’t realize is the way Risk Management factored into the success that was the 2012 London Olympics. In particular, the use of Strategic Risk Management was employed by the Olympics Organizers to evaluate and implement risk mitigation policies and procedures for the Games of which the general public was not even aware. A recent article by Will Jennings in Harvard Business Review, “The Olympics as a Story of Risk Management”, looks at the Games from a Risk Management perspective. The article reveals how the International Olympic Committee (IOC) evaluated Strategic Risk Management and how some scenarios could have damaged the Olympics’ reputation and affected the international competition politically and strategically within certain markets. The fact that Strategic Risk Management played an important role in their decision making process is a positive sign that illustrates the significant role Strategic Risk Management can play in successful event planning.
The strategic approach to evaluating risk over the course of the Olympics allowed the IOC to determine the best way to deal with politically sensitive issues, such as supply chain disruptions, tensions between participating nations and even terrorist attacks. By taking this approach, the Olympics Organizers used philosophies that are espoused by those who practice Enterprise Risk Management (ERM). ERM was implemented by looking at non-financial risk and evaluating the differences between Event Risk and Business Risk. The greatest Event Risk was reputational, as one error in judgment or thinking could have cost the IOC the respect that they have earned over the course of organizing the Olympics for more than a century. This is one area that cannot be addressed by simply purchasing proper insurance policies, but by applying risk mitigation procedures and developing contingency plans that can address any loss at a certain event. The answer to the question, “How can ERM and Event Risk be properly applied to an event of any size?” is simpler than you may think.
By adopting a three-dimensional philosophy that uses ERM to effectively mitigate risk, an organization can best transfer those risks into a positive outcome. This thought process aligns with the beliefs espoused by the Global Risk Management Standard ISO 31000. If you would like to learn more about ERM and the way it can be incorporated into improving your company’s bottom line, please do not hesitate to contact our Managing Principal, Albert Sica at 732.395.4251 or [email protected].
