All set for the best show in town

There is little doubt the opening ceremony that kicks off Rio 2016 will be a show stopper… but a great deal of planning has gone into ensuring the show goes on.

It’s been years in the planning and the fever and excitement is already building as Brazil prepares to kick off the 2016 Summer Olympic Games in Rio de Janeiro on August 5 in the Maracanã Stadium. But with concerns over the Zika virus and potential for social unrest in a country beset by economic and political upheaval, the event organizers are gearing up to respond to unpredictable and potentially disruptive forces.

At the time of writing, officials were reassuring athletes and visitors that Rio was a safe city to visit in spite of the Zika outbreak. However, given the suspected link between the mosquito-borne virus and microcephaly in babies, the advice from scientists was for pregnant women to stay away.

Kicking off with a bang

Three renowned film directors are the creative force behind the Opening Ceremony, which is promising to include lots of color, spectacle and pyrotechnics. Rio – a city renowned for its beautiful beaches, colorful and electric carnival and iconic statue of Christ the Redeemer – is set to provide a stunning backdrop.

Fernando Meirelles, director of the City of God and The Constant Gardener, has however estimated Rio will spend one-tenth of what was spent on London’s Opening Ceremony, given the Olympics are taking place “in a country where we need sanitation and education”. Social unrest ahead of the 2014 World Cup in Brazil was a lesson the Olympic Organizing Committee is taking on board.

The organizers are keen to ensure nothing disrupts the Games, as the eyes of the world are on Brazil and Rio. Staging what is arguably the world’s biggest sporting event requires meticulous planning and high attention to risk management, security and business continuity planning.

A great deal of expensive equipment is involved in putting on a big show like the Games, particularly during the Opening and Closing ceremonies, including audiovisual and lighting equipment. Combine that with the huge crowds of people, visiting dignitaries, inevitable pyrotechnics and it is clear the exposures are significant.

In the case of the unforeseen happening, the organizers will ensure contingencies are in place. This includes having alternative venues on standby and necessary investment in logistics and infrastructure to ensure athletes can get from A to B. The Olympic rowing, for instance, will be held at Lake Rodrigo de Freitas, but this venue could also be called upon as a contingency for the sailing events, although fewer spectators would be able to attend.

“The Rugby World Cup in New Zealand is a perfect example,” explains Elizabeth Seeger, a contingency underwriter at Hiscox. “About six months prior to the tournament opening, there was a highly destructive earthquake in Christchurch. They had the capacity in other venues to reschedule those matches, so they didn’t actually have to use an entirely new venue but they could spread the Christchurch scheduled matches to the other existing venues.”

Insuring for the unexpected

Helping to fund these back-up plans and provide indemnification if those fail, is the highly specialist contingency, or event cancellation, insurance market. Limits on policies for a major event like the Olympics can be greater than $3bn. Terrorism is typically excluded, but can be written back in. Major sports events have been disrupted in recent years, but rarely cancelled entirely.

An exception includes the Bahrain Grand Prix in 2011, which was cancelled due to the Arab Spring. In the history of the Games only two have ever been cancelled. This was during the two World Wars, while in 1908 they were relocated from Rome to London. Usually, given the high level of contingency planning, changes can be made to ensure major events go ahead.

“We cover if the insured event is cancelled or abandoned or postponed due to a covered peril or a peril that is beyond the control of the insured,” explains Seeger. “This includes perils like weather, flood, communicable disease, war, terrorism or a venue fire that’s not caused by building problems.” “So it’s an all encompassing policy for all those types of events you couldn’t possibly imagine,” she continues. “Things that happen that we can’t even imagine, talking about them today.”

Should Zika reach pandemic levels, this could in theory trigger such policies. “Pandemic is a cover we’ve looked at for many years because we’ve had problems with Foot and Mouth in the U.K. which impacted a lot of events in the countryside,” explains Seeger. “We’ve also had SARS, avian flu and swine flu, all of which have caused quite a lot of events to be cancelled if they are in those territories.”

“A major global pandemic could affect an event, whether the athletes travelling to the event, or actually closing down the venue itself,” she continues. “But the current virus is different because it’s caused by a mosquito bite, rather than something like SARS or avian flu where they had significant human-to-human transmission.”

Numerous stakeholders are impacted if an event is delayed or cancelled. “Contingency insurance will indemnify anybody with a financial interest in the event – from the main sport’s governing body through to the local organizing committee, the event sponsors and broadcasters,” says Seeger.

Terrorist threat

Because they are high profile in nature, events such as the Olympic Games can inevitably attract the attention of terrorists. The bombing of the 1996 Atlanta Olympic Games and tragic deaths at the 1972 Munich Olympics are examples of this. Even the threat of terrorism can cause disruption. There were security concerns surrounding the 2014 Sochi Winter Olympics after two suicide bomb attacks in nearby Volgograd. Gay rights protesters also targeted the Games, which were protected by over 37,000 Russian police and troops. With the 2018 winter Olympics due to take place in South Korea, safety is likely to be a concern given recent nuclear testing in North Korea.

In recent years, cyber risks have also become an issue. Operators of the 2008 Games in Beijing reportedly received 12 million cyber attacks a day. The Brazilian Cyber Defense Center announced last year that Brazil would have nearly 200 specialists, military personnel and technicians “working on cyber protection” during the 2016 Games.

In spite of these exposures, there is strong appetite to provide contingency insurance for the Olympics and other major events, says Seeger. “This is because they are so well run. When the countries or cities bid for these major games, the bid document they have to put together now covers all of those organizational and risk management issues. So we know in advance whether they need spare venues for instance… that will all be covered in the original bid document.”

 

April 2016