Rethinking Risk for Live Events: A Major New Report

Rethinking Risk for Live Events: A Major New Report

Staging company executives are good at calculating the TCO (total cost of ownership) of the latest new projector or other piece of gear they’re thinking of acquiring for their arsenal of equipment. But when it comes to risk assessment and protection strategies are they doing the same diligence as when shopping for a new 40K lumen projector? That is the topic of an in-depth white paper just published, and available (no charge) to staging professionals working in corporate staging or on the entertainment side of the business. To access the white paper, click here.

The report– that looks at the costs of not doing the right kind of risk assessment– explains that even in a healthy market staging companies can only be profitable when the risks on the business/operations side are managed well. Because shifting industry dynamics, high-profile accidents with industry-wide repercussions, the increasing number of outdoor events, and escalating safety-related liability exposure have changed the business landscape. Only by being up to speed with the latest risk-reduction best practices can the staging company prepare for every contingency. Best practices include: examining the cost of not doing the right kind of risk assessment; moving insurance cost from an operating expense line item to a strategic expense; determining the right formula for insurance costs as a percentage of total costs; proper evaluation of RFQ’s when choosing among competing quotes for insurance coverage; and partnering with the right kind of insurance provider.

Here are just a few highlights from the white paper:

Indiana State Fair stage collapse, 2011.

The cost of not doing the right kind of risk assessment is potentially extremely high: disaster if the wrong claim or lawsuit hits a company. And the company could be wiped out (bankruptcy, and/or shuttering of the business) or worse– criminal charges if the incidents is egregious enough and coverage isn’t adequate.

Even as the North American concert business and corporate staging business are setting new industry records for growth, it’s a perilous landscape for even the most seasoned staging companies, not just for insurance risk but for shrinking margins, labor issues such as workers comp, and other factors unique to live event staging.

“There are so many more festivals,” says Steve Daniels, owner of staging company I-MAG Video A/V, Inc. “But is it all high cotton for the staging company? Not necessarily. There is less margin. And the landscape is different. A lot more video is now a part of almost all events. And video intensive usually means, lots of LED walls, and you can get hurt financially if you’re stuck with older heavier equipment.”

“The boom in business notwithstanding, it’s a perilous landscape for even the most seasoned staging companies. And the cost of not doing the right kind of risk assessment in this industry is a high cost indeed.”

  • Event service firms–whether in entertainment staging or corporate event staging– now face different cost structures, with increased and different business costs. One example: the new Affordable Care Act affects hiring of, and benefits for, staff. Under the Affordable Care Act, if an IC (independent contractor) works for a staging company on any consistent basis the law now requires the employer to offer health care coverage to that IC as if he/she were a full time employee. This has serious implications for AV event service firms who tend to hire the same technical experts over and over. So staging companies now have to examine the costs of new laws, rules and procedures for hiring only those firms who carry their own insurance and then determine if those companies are inherently more expensive over time to deal with (because they too, have rising costs, such as insurance) than dealing in the traditional way with individual freelancers.
  • In today’s world insurance is a major expense item for many staging companies. They need to determine what the costs could be if things go wrong (including worst case scenarios such as the Indiana State Fair stage collapse in 2011, pictured above). And they need to understand what insurance costs comprise a reasonable percentage of their operating expenses, based on what kind of services they offer.

In today’s world insurance is a major expense item for many staging companies. They need to determine what the costs could be if things go wrong (including worst case scenarios such as the Indiana State Fair stage collapse in 2011, pictured above). And they need to understand what insurance costs comprise a reasonable percentage of their operating expenses, based on what kind of services they offer.The white paper looks at the Indiana State Fair stage collapse in 2011. Before a scheduled performance by Sugarland at the Indiana State Fair in August 2011, a wind gust from an approaching severe thunderstorm hit the stage's temporary roof structure, causing it to collapse. Unfortunately, incidents like the Indiana State Fair stage collapse have been mirrored in other industry accidents. In 2012, criminal charges were brought against Toronto-based Optex Staging and Services following a scaffolding collapse at Toronto's Downsview Park hours before Radiohead was scheduled to play on June 16th, 2012. The Ontario Ministry of Labor laid thirteen criminal charges against three companies and one engineer in connection with the fatal stage collapse– Live Nation Canada Inc., Live Nation Ontario Concerts GP Inc., Optex Staging & Services Inc., and an unidentified engineer. The repercussions of that event, and other accidents in the staging world, are still being felt industry-wide.


Managing Risk: Best practices in live event staging

The paper looks at how those kinds of high-profile disasters in the staging world have moved the staging industry toward adopting new best practices to deal with risk. The insurance cost paradigm is now viewed differently by AV staging company executives. Insurance cost, they now believe, should change from an operating expense line item, to a necessary and strategic expense that should be looked at through the prism of “what if I don’t protect my company properly?”

The paper looks at how the right kind and amount of insurance needed should be determined by what your company does. Does your insurance provider understand your business? Does your insurance provider understand the different risk factors for a Tier II (rental with operator) compared to a Tier III (rental with operator plus staging)? Does your insurance how a promoter–someone who is responsible for the spectators, marketing, security and concessions of a concert or an event– is different from Tier II staging company or a Tier III event service firm who is just doing the rigging? The cost of insurance carried by a promoter may not be as high as the cost of insurance carried by a Tier III rigger, simply because the rating methodology is different.

The AV rental & staging market is experiencing a healthy boom. Business travel is up. Corporate meetings have bigger budgets again. And the “entertainment” part of the market is thriving with many more music tours and festivals than ever before. But when it comes assessing risks and costs associated with management, operation, staffing, and insurance, are stagers really doing all necessary due diligence? Many are not. AV staging companies and other live event producers must rethink all costs. Staging companies must ask, what is the cost of not doing the right kind of risk assessment? And then they must adopt new industry best practices to further alleviate both known and potential risks. To read the full white paper addressing all these issues, click here.