Everything you need to know about insuring a global event

Japan is ready to catapult itself on to the global sports stage by hosting two of the world’s biggest sporting events in the space of less than a year, and the insurance implications are paramount.

Japan will begin by hosting the Rugby World Cup between 20 September and 2 November this year, with more than 400,000 fans expected to visit the country and an anticipated television audience of more than 120 million. But the real prize comes just under a year later when the ‘Greatest Show on Earth’ comes to Tokyo in the shape of the Summer Olympics and Paralympics between 24th July and 6th September 2020.
 
Some of the stats surrounding the Olympic Games last staged in Rio de Janeiro, Brazil, in 2016 are spectacular.

Rio featured 10,000 athletes from 207 different nations in 31 sports, with almost half the world’s population watching the action on television, in the stadia or online. Estimates put the global audience at 5 billion with 3.7 billion actively engaging with media and 350 million watching the opening ceremony alone. 

It’s little wonder that global businesses are attracted to the event with such a huge audience guaranteed. In fact, American television channel NBC recently paid 7.65 billion US Dollars to win broadcast rights for the period of 2021-2032 (that’s up from $4.4 billion paid for the previous package). Other companies paid 200 million US Dollars just for the right to be named an Olympic Global Partner. 

Therefore, the pressure on event organisers to have sufficient insurance in place to cover absolutely every eventuality is intense, especially in a country where natural disasters are a daily fact of life. 

Natural risks in Japan

Japan is situated on the Ring of Fire arc of volcanoes and accounts for 20% of the world’s earthquakes of a magnitude 6 or greater on the Richter Scale. In fact, scientists estimate the country suffers 2,000 earthquakes every year, with minor tremors almost every day - and Tokyo, the host city for the Olympics, is by no means exempt. 

With climate change also contributing to ever-changing weather patterns and an increased risk of natural disasters in the region, having the right insurance in place is vitally important.

Last year the strongest typhoon in 25 years hit Japan, killing 11 people. Subsequently, 41 people died during a powerful earthquake on the northern island of Hokkaido. And the most recent tremor came in the same region, measuring 5.8 off the coast of Hokkaido in May 2019.

“A lot of what we will do in the coming months is contingency planning," said Rugby World Cup tournament director Alan Gilpin, adding that organisers needed to plan for eventualities such as losing a stadium or major transport hub during the event.

As for the Olympics, the Japanese government estimates more than 10 million visitors will converge on Tokyo and is already planning to increase visitor awareness of earthquakes and to strengthen infrastructure to cope better in the case of a tremor. 

On top of that, concern has been raised about the sailing events too as they are due to be staged at the Port of Shonan in Fujisawa, south of Tokyo. A recent simulation project suggested a tsunami could hit the region just five minutes after a tremor and leave it flooded to a depth of one metre.

Five other sports - triathlon, beach volleyball, canoeing and rowing - are also being held in coastal regions.

Key considerations

Here are the key things to consider for organisers of global events in Japan: 

Location and venue - what are the risks to the event?

Identifying specific risks to a location and venue is imperative as this could be related to geography, traffic, accessibility or even terrorism. In the case of the Rugby World Cup, which is staged at venues across the country, stadium and host venue risks could vary between regions. In the case of the Olympics, Tokyo will feature 33 different venues with 11 of them built from scratch, adding in extra risks in terms of venues opening on time. The rebuilt Olympic Stadium in Tokyo is being used for both the Olympics and the Rugby World Cup. But that doesn’t necessarily mean the risks are the same.

What happens if - have you thought of everything?

A robust risk assessment, which considers absolutely every eventuality is vital, both in terms of helping to prevent and mitigate risk. Think about events you cannot control as well as those you can.

Earthquake – what is the plan should Japan be hit by a big quake again?

Considering Japan’s earthquake history, organisers and venues need to know how to cope if a tremor hits before or during a major event. There is a myriad of health and safety considerations, including evacuation, but plans will also need to be in place for curtailing, moving or delaying the event, including adequate insurance to cope with related costs.

Loss Mitigation – are plans in place to make sure the event can proceed should something go wrong?

Losses can be reduced with good planning. Plans should be in place to ensure an event can proceed or be rescheduled should something go wrong.

Budgets – are these fixed and have the unrecoverable items been identified should the event be cancelled?

Comprehensive budgets should be in place and any unrecoverable items identified early, in case the event needs to be cancelled. The right insurance can mitigate these losses.

Sponsors and official partners - are revenues from these sources protected should the event be cancelled or relocated? 

Given the huge sums involved in global sport, particularly at the Olympics, revenue from sponsors and partners should be protected in case of event cancellation, delay or relocation.

Key insurance products to consider:   

Cancellation and Non-Appearance 

This is vital for organisers of any tournament or major event. Some of the risks covered could include: damage or destruction of the venue, unavoidable travel delay, national mourning/enforced reduced attendance, terrorism, communicable disease, non-appearance

Adverse Weather and Natural Disasters

The challenge of coping with natural disasters is a significant risk in Japan.

The country is used to dealing with extreme weather and the threat of event cancellation could have significant financial and organisational implications. It’s worth remembering that in 2011 an earthquake hit Christchurch in New Zealand, forcing eight games at that year’s Rugby World Cup to be moved to other cities. Many ticket holders had to be refunded – not to mention the money spent on switching venues and changing travel arrangements.

Public and Employer’s Liability 

Organisers can be open to all kinds of legal action during a major sporting event. Exhibitors and suppliers may require their own Employer Liability and Public Liability cover.

Contractual Bonus and Sales Promotion 

The days of the Olympics being a tournament for amateur athletes are long gone. In 2020, gold medallists in the blue riband events can expect huge sponsorship and endorsement opportunities and may also be able to collect bonuses for their success. Are national associations covered for the extra costs required? 

In addition, brands are always on the lookout to increase sales and market share, and by running promotions linked to the success of teams or nations at major tournaments are a great way of doing this.  All the exposures from promotional activity can be risk-managed utilising contractual bonus, prize indemnity and over redemption expertise.