Late last year, market research firm TechNavio issued an extensive report predicting that the global events market would grow by $614bn by 2026. Much of that growth (34%) is expected to come from Europe, with the rise in corporate events identified as a key driver.
This level of growth, by anyone’s estimations, is remarkable. And while the projections are exciting, the events still have to happen, and, unfortunately, there are a whole host of issues that can bring even the best-planned event to its knees.
“Should the unforeseen happen, and your event be cancelled, not only will you have written off expenses involved in its preparation, but also potentially any associated profit that helps drive the business for the rest of the year,” says Neil Paddon, head of contingency at Tokio Marine HCC.
The headline growth figures suggest a huge amount of enthusiasm for new events across the board as businesses try to rebound after Covid, but what the numbers may be disguising is the impact of inflation.
Inflation has cut its way through most of the global economy, and of course the events sector is no different. But while organisers may be confident that their operations can absorb this inflationary pressure, how many would be so confident if their event had to be cancelled?
“Everything is becoming more and more expensive, and when you consider something like a business exhibition, the cost of everything – materials to build stands, rent venue space, travel costs, etc – has gone through the roof,” says Laurent Couard, head of specialty France at Tokio Marine HCC.
Couard continues: “This creates an added risk as the potential costs the event organiser would have to absorb, should the event be cancelled, will have increased significantly. As the cost of inflation increases, so too does the value of insurance.”
This inflation issue is only the latest in a long line of risks that can throw the events market off course. In the last three years alone it has had to contend with Covid, supply chain issues, the war in Ukraine and now energy shortages and price increases.
What is rapidly becoming clear is that regardless of how the events sector comes through these challenges – and it has done remarkably well so far – there is a sense of inevitability that the next shock is just around the corner.
“The value of our event cancellation proposition has never been clearer, with a wider realisation that the events industry is vitally important to connect businesses to one another and also contribute to the success of the wider economy,” says Paddon.
“What is also abundantly clear is that every year, new risks are emerging and the events sector must be able to respond, whatever those risks are and however they manifest themselves,” he adds.
“Where once organisers may have thought of event insurance as optional, it is now fast-becoming a ‘must-have’. The only way the costs of a cancelled event can be recouped is by having the right insurance in place,” he continues.
One way in which event organisers have tried to adapt and mitigate these risks is to switch to virtual or hybrid events, as many did during and after the pandemic. Many organisers experienced virtual events for the first time during the pandemic, and a survey at the time found that 71% of event planners intended to continue with digital events in some form, even when live events returned.
But as Couard suggests, even virtual events are exposed to significant risk.
“The growth of virtual events is really exciting to see as they open up a huge range of creative possibilities for organisers. But, as we all know from experience, relying on computer systems to work without any glitches is a high risk in itself,” he says.
“So, when organisers opt for a virtual approach, they mitigate some risk but take on different ones. The necessary support is out there, however, as there are risk experts, like Tokio Marine HCC, who spend every working day identifying and mitigating these risks on the client’s behalf,” he adds.
The events market is thriving, as the growth projections suggest. But that growth doesn’t come without risk, and with the world showing no signs of settling down, event insurance is rapidly becoming an integral and essential element of any event budget.
Anthony Osterrieth – [email protected]
Neil Paddon – [email protected]
Laurent Couard – [email protected]