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March Madness is officially upon us. Basketball fans up and down the country are glued to their screens watching the best and brightest college stars battle it out to become NCAA Division I champions. By the time the final four meet at the US Bank stadium in Minneapolis, there will have been 67 games played over 19 days … and a whole lot of fan fervor.
It takes a lot of hard work behind the scenes to make March Madness a slam dunk success. A huge network of experts is engaged in a complex and comprehensive operation, ensuring the safety of the players, the teams’ staff, fans and performers, as well as an uninterrupted TV broadcast. They have to manage and mitigate traditional risks like crowd safety and event cancellation, as well as emerging risks like domestic terrorism, loan gunmen and cyberattacks.
“From an insurance perspective, the two main aspects are the traditional physical risks - including the auditoriums, players, staff and crowd safety – and the cancellation risk. The big-ticket items revolve around the final four because that’s when the really big TV revenues are attached to the games. That’s where the real money kicks in,” said Peter Williams, global product lead of live entertainment at Allianz Global Corporate & Specialty (AGCS).
“When the tournament reaches the final four, it’s crunch time with regards to cancellation risk. If a game has to be rescheduled, that could have a major impact on TV revenues. For example, if the final was due to be played on a Saturday evening but it was cancelled due to bad weather and rescheduled for a Tuesday afternoon, that’s not going to be good for TV revenues. The tournament is never going to be completely cancelled because the division needs a champion. It’s rather like the Super Bowl in that way. So, what we essentially look at as an insurance company is what might cause games to be postponed or moved.”
A lot of this comes down to the physical risk, explained Williams. If an auditorium catches fire the day before a big game, the fixture will need to be rescheduled and potentially moved. Likewise, if there’s an extreme weather event which delays one of the teams or prevents adequate civil authority and risk management at the auditorium, a game might have to be postponed or moved. However, Williams pointed out that the facilities and staff involved in March Madness are first-class and are well-drilled in terms of safety and risk management. They have clear procedures in place with regards to fire safety, auditorium ingress and egress, security checks, and rescheduling.
“Unfortunately, we live in a world where domestic terrorism and loan gunmen are serious exposures that we must pay attention to,” Williams told Insurance Business. “Any large event, whether it’s a sporting even like March Madness, a rock concert or a music festival, has this exposure today. The local police, the FBI and homeland security are all very much in the forefront of protecting those events. In addition, the individual basketball teams will have security people on staff (many of whom will be ex-serving law enforcement officers) and they all liaise very closely. As an insurance company, we rely on the professionalism of those security officers to limit the exposure of terrorism and loan gunmen.
“Another issue that has come to the forefront is cybercrime. We’re starting to see cyberattacks at large sporting events, a lot of which revolve around people hacking into the ticketing system to try and steal tickets or people trying to hack into the auditorium systems. As March Madness is a college event, it will be interesting to see if there’s an increase in cyberattacks from younger generations who consider it a challenge to launch an attack on an opposing team or auditorium. It’s an exposure that organizers are very conscious of, but, at the moment, the attacks aren’t too sophisticated.”
Despite the wide range of exposures, Williams still describes March Madness as “a superior risk.” It’s extremely well-managed by a very professional team that well and truly “have their eye on the ball,” he added.
