2010 Vancouver Olympics: managing the risk

2010 Vancouver Olympics: managing the risk – a cloud of emotion hung heavily over the opening ceremonies of the 2010 Winter Olympics, the result of the fatality on the luge run mere hours before.

Issues of insurance and risk management had been carefully designed and reviewed for years.  But that was now thrust to the forefront as Vancouver Organizing Committee (VANOC) officials were confronted with allegations that the fatal accident was caused by negligent deficiencies in the track design.

Context: this was the first death in the sport of luging in 35 years, and the first Olympic fatality in the sport since 1964.  For VANOC and their liability insurer, the incident now shifts from the arena of competition to that of possible litigation.

Most other risk management initiatives are less dramatic: insuring against event cancellation and uncooperative weather; liability insurance protection for event security; insuring against property damage of facilities and venues.  Much of this coverage is placed through Lloyd’s in London.

Other insurance implications to the Games:

• Insurance has been arranged to reimburse major broadcasters for lost advertising revenue if event transmission is interrupted or lost.

• The province’s public automobile insurer is bracing itself for increase in vehicle accidents brought on by the heavier volumes of traffic, compounded by the introduction of foreign drivers.  Some estimates project a 30% increase in collisions.
• Because this is Canada, much attention has been focused on hockey.  The burning question: will the NHL commit to the Sochi 2014 Games in Russia?  One significant factor contributing to the NHL’s reluctance is the cost to insure NHL players’ contracts for injuries sustained by players playing for their country, but while under contract to an NHL team.  Naturally the players with the largest contracts, are also most attractive to their national teams.  (Sidney Crosby of Canada and Alexander Ovechkin of Russia are each paid approximately $9 million per year to play in the NHL).
• Sponsors, advertisers and vendors from large global corporations to street vendors have been acquiring insurance to protect against their risk of loss.

The preparation and financial support for this global event is staggering: total cost of the Games is $6 billion (including all infrastructure improvements for the region).

As with daily life, whenever the financial stakes are high, insurance is a critical component in supporting the investment.