Everything is on track
After Beijing, Munich Re is once again the leading Cancellation risk partner for the Summer Olympics in London. The spectrum of risks at major international sporting events is largely similar. At the same time, the areas of focus vary depending on the venue, so tailored solutions and professional risk management are required.
Following the European Football Championship, a truly global sporting event awaits us: the 2012 Summer Olympic Games in London. Starting on 27 July, more than 10,000 athletes from around 200 different nations will compete in 302 disciplines for the coveted bronze, silver and gold medals. Nine million spectators are expected at the competition venues, while between three and four billion people will follow the spectacle on television.
It is an event of superlatives, and one where the hosts and organisers must live up to high expectations, both financial and organisational. The sale of the television rights, sponsorship money, income from ticket sales and souvenirs will all help finance the spectacle to a large degree. Should problems occur in the course of the event that lead to postponements, cancellation of certain events, or even to the Games being called off, the organisers would face large claims for damages that they would almost certainly be unable to bear alone.
Munich Re as leading risk partner
Munich Re will again be one of the leading risk partners in London, as indeed it is at most sporting events that attract worldwide interest. Until the Olympic flame is extinguished, Munich Re will be covering a significant share of the claims that could arise in the event of the abandonment, interruption, delay or relocation of the Games – with the help of individually tailored cancellation-of-events insurance cover.
"Munich Re carries a substantial portion of this risk", explains Andrew Duxbury, Underwriting Manager at Munich Re in London. If the Games were called off, Munich Re would provide cover of around €350m through several policies. Guaranteeing this amount of cover requires not just financial strength, but also the necessary expertise to allow the risk to be assessed and managed in the best possible way."
Knowing what is important
There are many possible reasons for disruptions to the Games. The spectrum of risks is similar no matter where the event is held. Nevertheless, certain country-specific parameters need to be taken into account in the design of the cover. The key points in this regard are:
- Clarifying contractual liability issues in connection with TV rights, sponsoring and ticket sales
- Factoring in the political risk (war, civil unrest and terrorism)
- Natural catastrophes (earthquake, windstorm, flood)
- The experience of the host country in staging major events
- Envisaged security concepts
- Quality of the infrastructure
- Design of emergency plans
London’s specific challenges
London’s most obvious specific challenges centre around the ever present threat of terrorism as well as simple practical issues of travelling around the city. UK authorities are extremely experienced in counter-terrorism work and they will of course be ably supported by the international security network in analysing the threats within the UK but of course also those which are imported by any one of the 200 competing nations. Of course surprises are possible as was the case last summer when an outbreak of rioting and looting initially caught police and the authorities in London by surprise before being brought under control. It should be noted that several Olympic Official Test Events running in London at the same time were unaffected. The British government has pledged to spend £1bn, solely to ensure security at the Games, which accounts for 10% of the overall organisational costs.
Travelling within London at peak periods is often challenging and the extra load to the infrastructure placed on it by Olympic visitors will undoubtedly lead to delays. Many offices including those of the Munich Re have Contingency plans in place to maintain staff levels and operations during the Olympic period. Organisers have created special Olympic lanes on the busiest roads to ensure that officials and athletes are not delayed. Problems for spectators would be regrettable but an issue for the London Olympics reputation rather than the trigger for any potential insurance claim.
All the parties involved including insurers and reinsurers will be watching the following weeks with considerable professional interest but with the interest of all stakeholders so closely aligned it is hard to see any other outcome than a hugely successful party atmosphere and ideally world record performances in many of the events!
The preparation takes years
"The discussions with clients and their brokers begin many years before the actual event. With the backing of our tailored solutions, the organisers can offer a guarantee to stakeholders that their investment will not be lost if the Games cannot actually be held. Without this security, many companies would view a financial involvement as too risky", explains Andrew Duxbury. “We have over 40 years experience as risk partners for these global events and have visited venues, spoken to consultants and organisers all over the world. The knowledge and experience gained has allowed us to take such a leading role in the London Olympics”.