Magazine article Risk Management

Special Events Coverage Often a Tug-of-War

Magazine article Risk Management

Special Events Coverage Often a Tug-of-War

Article excerpt

Most people who attend parties at corporate facilities or company picnics in public parks probably give little thought to how the facility owners and users divide the risks, responsibilities and insurance issues associated with the event.

For municipalities, renting out stadiums or community centers to business groups represents a delicate balancing act. Cities may welcome the rental income, but careful attention must be paid to identifying and managing the potential exposures. The sponsors or promoters will be responsible for certain risks. Whether they want to pack 20,000 music fans into an arena or to introduce a new product in a prestigious auditorium, sponsors have to consider whether their desire to use a particular space is worth assuming the exposures.

"Both parties have to determine a fair and reasonable risk allocation," said Scott Lange, director of risk management for Microsoft Corp. in Redmond, Washington, at the annual Public Risk Management Association (PRIMA) conference. "Each deal has many unique factors." How do you determine where one party's responsibilities end and another's begin? "It's not reasonable to expect someone else to take all of the risk. Each party should bear and control its own risks," Mr. Lange said.

Determining the potential exposures must begin with the proposed event and its sponsor. A civic group meeting at a community center will usually have fewer exposures than an outdoor music festival, but both events have risks that need to be addressed, said William Cody, senior vice president of Entertainment Brokers International in Los Angeles.

In many instances, both parties generally try to assume as little risk as possible. For example, many municipalities require event sponsors to sign blanket indemnifications or hold harmless agreements, or to meet insurance requirements that do not consider the nature of the event. Sponsors of heavy-metal rock concerts and ice-skating exhibitions are often presented with off-the-shelf contracts that release municipalities from any possibility of liability.

There are so many potential variables with special events that using a garden-variety strategy for covering all liabilities can easily lead to problems. If a dispute is litigated, the failure of either party to account for specific differences among promoters or types of events can alter the interpretation of contract provisions. …

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