Sports Risk Management

For decades, the game of football (also known as soccer in some places) has been known to be a crowd-puller. Take one tournament for instance, The FIFA World Cup, which is scheduled to happen after every four years.

The build up to this tournament is intense, a lot of resources ranging from time, personnel, finances etc. are invested just to make this month-long event one worth remembering.

Then we have other tournaments and sporting events such as the UEFA European Football Championship, Africa Cup of Nations, UEFA Champions League, Absa Premiership, English Premiership, Six Nations Rugby, Cricket World Cup, Australian Tennis Open, and Formula 1.

The list is endless. At all these sporting events, thousands of jubilant fans fill the stadiums to full capacity expecting to experience a moment of a lifetime.

However, what is important to note is that sporting events normally have to deal with terrorism, weather, event type, result, hooliganism, riot, anarchy and stampede risks, only to mention a few.

All these risks and others have the capability to disrupt the much loved game but the risk of this happening is very minimal in the eyes of the committed fans.

For example, in the UK, no matter how cold and snowy it becomes, football fans are willing and prepared to ignore the cold weather and throng the stadiums in thousands.

The threat and fear of them suffering a cold or getting influenza is nothing compared to the cost of missing the much-loved and beautiful coveted game of football.

However, as we all know, risk is inherent in all aspects of life. Though it is impossible to completely eliminate risk, through careful planning, it can be managed.

Just like the business environment, the world of sports is inherently full of risks and these too need to be identified, assessed, monitored and managed.

I deeply regret what happened at the football match in Egypt on Wednesday night. Egypt’s worst soccer violence claimed at least 74 lives in the northern city of Port Said, plunging the nation into rage and prompting protests and clashes with police in the capital. According to reports:

“At least 1000 people were injured in the violence on Wednesday 1 February 2012 when soccer fans invaded the pitch in the Mediterranean city after local team al-Masry beat Cairo’s Al Ahli, Egypt’s most successful club 3-1.

Hundreds of al-Masry supporters surged across the the pitch to the visitors’ end and panicked Ahli fans dashed for exit. But the steel doors were bolted shut and dozens were crushed to death in the stampede”.

What started as a night to enjoy a game of football ended up in disaster. I don’t think many of the fans from both teams saw this coming. As mentioned earlier on, even though risk is inherent in all aspects of life, there is still the need to effectively and efficiently manage it.

This is not the first time a stadium disaster has claimed lives of innocent victims and injured thousands. According to Reuters, the information source company, here is a look at some of the major disasters in soccer stadiums since 1960:

• May 1964 – PERU: In one of the worst ever soccer disasters, more than 300 fans died and 500 were injured in a riot during an Olympic qualifying match in Lima.

• January 1971 – BRITAIN: Sixty-six people died in a crush at Ibrox stadium in Glasgow as they were leaving a match between Rangers and Celtic.

• October 1982 – RUSSIA: Fans were crushed as they left a UEFA Cup tie between Moscow Spartak and Dutch side HFC Haarlem at the Luzhniki stadium in Moscow. Officials from the former Soviet Union did not disclose the tragedy for years. When they did, the authorities gave an official death toll of 66 although the number who died could have been as high as 340.

• May 1985 – BRITAIN: At least 56 people were killed and more than 200 injured when fire broke out in the stands at Bradford.

• May 1985 – BELGIUM: Thirty-nine fans, mostly Italians, died in rioting before the European Cup Final between Italy’s Juventus and English club Liverpool at the Heysel Stadium in Brussels.

• March 1988 – NEPAL: A stampede towards locked exits in a hailstorm at the stadium in Kathmandu killed more than 90 fans.

• April 1989 – BRITAIN: Ninety-six people were killed and at least 200 injured in Britain’s worst sports disaster after a crowd surge crushed packed fans against barriers at the English F.A. Cup semifinal match between Liverpool and Nottingham Forest at the Hillsborough stadium in Sheffield.

• October 1996 – GUATEMALA: Up to 82 people died when an avalanche of fans tumbled down seats and stairs at a World Cup qualifying match between Guatemala and Costa Rica in Guatemala City.

• April 2001 – SOUTH AFRICA: At least 43 people were crushed to death when fans tried to force their way into Johannesburg’s huge Ellis Park stadium during a top South African league match.

• May 2001 – GHANA: Around 126 people were killed in a stampede at Accra’s main soccer stadium when police fired teargas at rioting fans.

• February 2012 – EGYPT: Fans rioted at the end of a match in Port Said when the local team al-Masry beat Al Ahli, one of Egypt’s most successful clubs. At least 74 people were killed and more than 1,000 people injured.

From the above sporting stadium disasters, we learn that:

1. Every Sports Club must have Risk Assessment: This involves carefully examining what could go wrong and cause harm to the members, fans, property or equipment during club activities. Even though many hazards are unavoidable, it is important that as a club you take satisfactory precautions that the risk of harm is small.

According to (Decker, 2001), a good sport risk management approach involves performing three assessments:

  1. Threat Assessment
  2. Vulnerability Assessment
  3. Criticality Assessment

As a sports club manager, performing these assessments will help you:

  • Identify the hazards
  • Decide who may be harmed and how
  • Evaluate the risks and decide precautions
  • Record your findings and implement them
  • Review your assessment and update it

2. Conducting inspections of the facility is critical: Since most of these stadiums are used week-in-week-out, over time, as a result of pressure exerted on these facilities, they will start to wear out.

Regular inspections involve checking and adding lighting as well as enhancing communication networks. If the facilities are not properly attended to, a similar disaster like the October 1996 in Guatamela City would be inevitable.

3. Implementing access controls is necessary: Had the exit in Port Said stadium not been bolted and shut, the loss could have been minimal. It has been noted that, those who died and those who were injured did so because they couldn’t escape the stampede.

By taking advantage of technology, sports club managers need to ensure that access to the stadium can be monitored and managed from another secure location. Had this been the case in Egypt, the fans would have easily exited the stadium.

Using CCTV security cameras also helps locate problematic sections of the stadium. Access controls also involve checking backpacks and enhancing background checks. Access controls are also important in case of fire.

4. Maintaining close contact with law enforcement representatives regarding possible threats is necessary: Reports coming from Egypt indicate that the build-up to the match was tense but the level of security was thin.

Managers need to ensure that there is proper security in terms of police, healthcare practitioners and other law enforcing agents to control the situation should violence escalate.

5. Developing or updating emergency responses and evacuation plans is very important: Risk management is all about being proactive as opposed to being reactive, thus, there is need to have disaster management plans in place at all times.

These plans should not be left accumulating dust in cabinets but should regularly be updated. Sports club managers should regularly review their risk registers and perform what-if-analysis to gauge their vulnerability and the criticality of different disaster scenarios.

Above all, we learn that identifying the greatest threats, eliminating and reducing vulnerabilities will help minimize risk at sport events.

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The Art of Risk Management

This is the title of the article by BCG published a few years ago. The article discusses the principles that should govern the approach to risk management by companies of all shapes and sizes.

The authors make several points with which I agree. Here are some excerpts:

  • Risk management is essential in today’s volatile economy. In a continuously changing economic environment, companies cannot assume a stable risk landscape.
  • Stop thinking of risk management as primarily a regulatory issue. Embed risk management in the mindset of the broader organization.
  • Risk management is a value-creating activity that is an essential part of the strategic conversation inside the company. The goal of that discussion should not be to eliminate or minimize risk but to use it to create a competitive advantage.
  • Risk management starts at the top. The organization needs to demonstrate that it has made risk management a high priority and an integral part of the decision-making process by appointing a dedicated risk leader who reports back frequently to the CEO and the board to discuss the latest trends and any changes in the company’s risk scenarios.
  • Risk cannot be managed from an ivory tower. Risk Management should not exist in isolation from the rest of the organization, with an insufficiently granular understanding of the actual business-specific risks the company faces. To avoid this outcome, integrate risk management into the company’s entire routine management processes, including planning, capital allocation, controlling, and reporting.
    • Understand the scope of the risks the company faces.
    • Plan for how the company will manage those risks.
    • Act to mitigate the risks or take advantage of strategic opportunities.
  • Avoid relying on black boxes. Although sometimes appropriate, over-reliance on complex metrics or models can muddy the risk management process, turning it from a transparent management activity into a frustrating black box. The appropriate level of complexity is company-specific and depends on the industry, business model, availability of data, level of experience, and mandatory legal requirements.
  • Align risk management with a company’s overall business strategy. Companies need to identify all relevant risks – not just those that can be easily quantified. Some of the relevant risks for a company may be those that are qualitative and especially difficult to quantify.
  • Risk management is more than a policy; it is a culture. The objective of a company’s risk-management system should be not only to enforce new policies but also to create a risk-aware culture that addresses risks proactively, not reactively, and manages them to create new sources of competitive advantage.
  • Effective risk management depends on the free flow of information throughout the organization. Unless employees at all levels of the organization are actively involved in the risk management process, it will be difficult to maintain the unrestricted flow of information. This can result in the most important data getting buried in one part of the organization unavailable to other parts of the business.
  • Risk management deals with uncertain futures. As a result, the goal should not be to develop precise metrics or future outcomes but to strive for a general understanding of the probabilities and potential impact of various trends or scenarios on business performance and enable decision-makers to confront the uncertain nature of risk and act accordingly.
  • Risk management is never about finding “the answer.” Rather, it is about continually refining the organization’s assumptions about the future and its understanding of the implications of those assumptions for the company’s business. Assumptions about risk often change quickly, so the relevant parameters, probabilities, impacts, and correlations should be revisited frequently.
  • It is possible to prepare for unknown risks by building an organization that so excels at crisis management that it is resilient even in situations in which it is blindsided by unprecedented challenges. For example, through developing the ability to detect, capture, and exploit information patterns as well as to think outside existing frameworks and risk landscapes.
  • Avoid the downside, but don’t forget the upside. Companies should use risk management also to identify new opportunities and to exploit them systematically. For example, scenario planning should be used to define not only worst-case scenarios but also best-case scenarios. Think in advance about how a company can make the best use of the latest market developments and trends and ultimately make the right decisions.

I enjoyed reading the article and highly recommend it.

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Leading in Uncertain Times

One of the biggest challenges facing business leaders today is making the right decisions that will ensure their organizations succeed, survive, and remain competitive in an increasingly uncertain and complex environment.

A recent post, The best way to lead in uncertain times may be to throw out the playbook, by Strategy+Business has several good points.

The article is about the COVID-19 pandemic, how global companies navigated through the crisis, and how best to prepare for future disruptions. Here are some key points and my comments.

  • Rather than follow a rigid blueprint, executives must help organizations focus on sensing and responding to unpredictable market conditions.
    • Comment: Senior leaders play a vital role in providing clarity about the organization’s strategic direction, creating alignment on key priorities to ensure the achievement of enterprise objectives, and ensuring the business model is continuously evolving to create and capture value in the face of uncertainty. They must not rest on their laurels and stick to the beliefs and paradigms that got them to where they are today and hope they will carry them through tomorrow. Regulatory changes, new products, competition, markets, technologies, and shifts in customer behavior are upending many outdated assumptions about business success. Thus, the businesses you have today are different from the ones you will need in the future hence the importance of continuously sensing changes in the global economy. Employees and teams often feed off the energy of their leaders and tend to focus their attention where the leader focuses attention. If the leader is comfortable with current business practices and rarely embraces the future or challenges the status quo, then the team is highly likely to follow suit.
  • When it became clear that supply chains and other operations would fracture, organizations began scenario planning to shift production sources, relocate employees, and secure key supplies.
    • Comment: Instead of using scenario planning to anticipate the future and prepare for different outcomes, it seems most of the surveyed organizations used scenario planning as a reactionary tool. Don’t wait for a crisis or a shift in the market to start thinking about the future. The world is always changing. As I wrote in The Resilient Organization, acknowledge that the future is a range of possible outcomes, learn and develop capabilities to map out multiple future scenarios, develop an optimal strategy for each of those scenarios, then continually test the effectiveness of these strategies. This does not necessarily mean that every change in the market will impact your business. Identify early warnings of what might be important and pay closer attention to those signals. In other words, learn to separate the signals from the noise.
  • The pandemic forced the organization’s senior management team to re-examine how all decisions were made.
    • Comment: Bureaucracy has for a very long time stood in the way of innovation and agility. To remain innovative and adapt quickly in a fast-changing world, the organization must have nimble leadership and an empowered workforce where employees at all levels can dream up new ideas and bring them to life. Identifying and acting on emerging threats and potential opportunities is not the job of the leader alone but every team member. To quote Rita McGrath, in her book Seeing Around Corners, she writes, “Being able to detect weak signals that things are changing requires more eyes and ears throughout the organization. The critical information that informs decision-making is often locked in individual brains.” In addition to the internal environment, the leader must also connect with the external environment (customers, competitors, regulators, and other stakeholders), looking for what is changing and how.
  • It’s worthwhile for leaders of any team to absorb the lessons of sense-respond-adapt, even if there is no emergency at hand.
  • Sensing: Treat the far-flung parts of your enterprise as listening stations. The question leaders must ask is, “What are we learning from our interactions beyond the usual information about costs and sales?” Train your people to listen for potentially significant anomalies and ensure that important information is not trapped in organizational silos.
    • Comment: Cost and sales data are lagging indicators that reveal the consequences or outcomes of past activities and decisions. Although this information can help leaders spot trends by looking at patterns over time, it doesn’t help understand the future and inform what needs to be done for the numbers to tell a different story. In addition to lagging indicators, pay attention to current and leading indicators and understand the relationship between these indicators and outcomes.
  • Responding: Improve communication across intra- and inter-organizational boundaries. Leaders should view business continuity as an essential function that acts as connective tissue for the enterprise.
    • Comment: In addition to creating mechanisms that allow the free flow of information both inside and outside the organization, decision-makers should also be comfortable receiving information that challenges their personal view of the world, even if it’s not what they want to hear. Create a culture of psychological safety where people are not afraid to share bad news for fear of getting punished, but rather are acknowledged and rewarded for speaking up. Leveraging the diversity of thought enables leaders to anticipate the future as an organization, decide what to do about it collectively, and then mobilize the organization to do what’s necessary.
  • Adapting: Challenge assumptions, and question orthodoxies. There’s always the temptation to mitigate threats simply by applying existing practices harder and faster. One way to get at those deeper issues and encourage double-loop learning is to ask, “What needs to be true for this to be the right approach?”
    • Comment: In an increasingly uncertain environment, it’s difficult to survive and thrive with an old business model or outdated technologies. Many businesses fail because they continue doing the same thing for too long, and they don’t respond quickly enough and effectively when conditions change. As a leader, stay curious and connected to the external environment, look for market shifts, understand what needs to be regularly refreshed and reimagined, adopt new technologies and capabilities, and adapt in ordinary times but also during times of transition. Unfortunately for many leaders, it’s just more convenient for them to continually downplay the fact that conditions are changing than take the appropriate course of action that drives business success.

How are you preparing your organization for potential future disruptions?

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The Collaborative Organization

These days the term collaboration has become synonymous with organizational culture, creativity, innovation, increased productivity, and success.

Let’s look at the COVID-19 pandemic as an example. At the peak of the crisis, several companies instructed their workers to adopt remote working as a health and safety precautionary measure.

Two years into the pandemic, they are now asking their employees back to the office full time or are planning to adopt a hybrid model.

The need to preserve our collaborative culture and accelerate innovation are two of the top benefits being cited by organizational and team leaders for bringing workers back.

Collaboration is indeed essential for the achievement of team goals, functional objectives, and the overall success of the organization.

Today’s breakthrough innovations are emerging from many interacting teams and collaborative relationships.

When teams, functions, and organizations collaborate, the whole is greater than the sum of its parts; group genius emerges, and creativity unfolds.

But, what makes a successful collaboration? What are the key enabling conditions?

  • It extends beyond the boundaries of the organization. Business success is a function of internal and external relationships. Instead of viewing your business in vacuo, understand that you are part of an ecosystem. External to your organization, who do you need to partner with to enhance your value creation processes, achieve/exceed your objectives, or successfully execute your strategy?
  • Ensure the objectives are clear and there is shared understanding by everyone. Unclear objectives are one of the topmost barriers to team and organizational performance.
  • Foster a culture that encourages opinions and ideas that challenge the consensus. People should feel free to share their ideas and not hold back for fear of others penalizing them or thinking less of them. Collaboration is hindered when one or two people dominate the discussion, are arrogant, or don’t think they can learn anything from others.
  • Groups perform more effective under certain circumstances, and less effective under others. There is a tendency to fixate on certain topics of discussion amongst groups which often leaves members distracted from their ideas. To reduce the negative effects of topic fixation, members of the group should be given periods to work alone and switch constantly between individual activity and group interaction.
  • Effective collaboration can happen if the people involved come from diverse backgrounds and possess complementary skills to prevent conformity. The best collective decisions or creative ideas are often a product of different bodies of knowledge, multiple opinions, disagreement, and divergent thought processes, not consensus or compromise.
  • New technologies are making collaboration easier than ever, enabling us to increase our reach and broaden our network. Although new technology helps, it will not make your organization collaborative without the right culture and values in place. First, define what you want to achieve through collaboration then use these tools to promote creative collaboration.

How else are you championing collaboration within your organization to create value and succeed?

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