Attraction is a double-edged sword. Success in the sports and entertainment industries depends on drawing a crowd. But in doing so, organizations must confront a sad truth that the popularity of their events may also draw those intent on causing harm.
Attracting violence
Many of the most high-profile acts of violence in modern history have occurred at live events. The association between terrorism and sports dates back to 1972 with the assault on the Israeli Olympic team in Munich, and the theme continued with the 1996 Olympics attack in Atlanta through to the Boston Marathon bombing in 2013. Terrorist groups and individuals have targeted athletes, spectators and the corporate or government sponsors of these competitions.
These bad actors have also exploited vulnerabilities within the performing arts industry. Some attackers have explicitly targeted the nature of events – such as the 2016 mass shooting at a gay nightclub in Orlando, Florida, or the 2017 bombing following an Ariana Grande concert at the Manchester Arena, U.K. Other acts have appeared more random in their intent: the assaults on the Route 91 Harvest Festival in Las Vegas (2017) and at the Borderline Bar and Grill in Thousand Oaks, California, for instance. And while these incidents may differ in motive, they all cause catastrophic loss of life and injury.
The risk post-COVID-19
The COVID-19-enforced lockdowns produced a welcome respite from violence at sports and entertainment venues, as events around the world were put on pause. With the rollout of mass vaccination programs, however, authorities have allowed audiences back. In the second half of 2021 alone we will see the rescheduled Olympic Games, the Paralympic Games and the Euros, along with annual staples on the sports calendar such as Wimbledon, The U.S. Open Tennis Championship and T20 World Cup Cricket. The music festival circuit also returns from its hiatus, with Bonnaroo, Lollapalooza and Coachella all slated to take place throughout the summer.
This raises the obvious concern: Just how secure will events be post-COVID-19? The UN cites evidence suggesting an increase in radicalization in the population over the last 12 months. With people having spent a significant amount of time away from school, employment and other social activities, the accessing of extremist content online has increased, according to a UN Security Council Counter-Terrorism Committee report. The UN further warns that the impact of COVID-19 emergency measures such as lockdowns, have “the potential to increase underlying grievances,” which can further draw people to terrorist causes.
These factors, combined with the soft-target nature of live events, concern organizations, performers and audiences alike, but the true extent of exposure to organizations in the industry may not be obvious at first. Risk managers will be aware that in the aftermath of an attack – terrorist or otherwise – there will likely be a suspension of operations, but when exactly would it be appropriate to reopen? What kind of lawsuits will need to be defended against? What will be the long-term impact on revenue?
The risks to organizations are wide-ranging, including nine-figure settlements, protracted loss of revenue or even demolition. Some governments are also signaling statutory liabilities for venues that fail to keep patrons safe. In the U.K., consultations between lawmakers and industry bodies seem to be moving toward establishing a duty to protect, obliging those managing premises in the sports and entertainment industries to train staff to respond to incidents of violence and establish incident response plans. In this vein, Martyn’s Law – named after a victim of the Manchester Arena bombing – may eventually impose penalties on organizations that fail to adhere to best practice.
If Martyn’s Law threatens U.K. businesses with a stick, the U.S. Support Anti-Terrorism by Fostering Effective Technologies Act (SAFETY Act) provides a carrot. In establishing liability protections for certified anti-terrorism systems, the SAFETY Act provides welcome respite to the significant legal exposures organizations face following acts of violence.
Insurance coverage options
A truly comprehensive approach when confronting the risk of violence will necessarily involve elements of prevention preparedness, crisis management and long-term victim care. Risk managers must consider that the narrow confines of the Terrorism Risk Insurance Act (TRIA) coverage, available within traditional property and casualty (P&C) programs, may prove insufficient to their needs.
TRIA coverage simply extends the protection provided in the policy it attaches to – generally indemnifying physical loss and business interruption costs during the time it takes to repair this damage. In any case, this protection will apply only to defined and certified acts of terrorism as defined by the law. But in many cases, the motives behind acts of violence may be entirely unknown, as was the case with the MGM shooting, for instance. When it comes to crisis management assistance or proactive victim support, policyholders may find their coverage lacking.
The good news, then, is that recent innovations within the specialty insurance marketplace can help establish a more comprehensive risk management program.
Active assailant coverage, for instance, provides round-the-clock access to specialty crisis response personnel experienced in assisting policyholders in navigating through the aftermath of traumatic events, from providing public relations services to liaising with law enforcement on the policyholder’s behalf. The product also offers primary insurance protection to fund victim-care costs and business continuity expenses as well as covering more traditional property, business interruption and liability exposures to cover any gaps within and/or protect corporations’ broader P&C programs.
Such specialty policies go beyond simple indemnity to provide valuable pre-loss resources to organizations facing significant duty-of-care obligations, from table-top active shooter simulations to choke-point modeling.
Risk managers are also now able to find in this marketplace coverage for risks that were previously deemed uninsurable. Certain terrorism policies can plug an often dangerous gap within any stadium or arena risk management program – exposure to attacks of a nuclear and/or biochemical nature. Equally, a lingering concern for many companies in the sports and entertainment industries – how to protect against a drop in revenue following an attack in the absence of the kind of property damage required to trigger traditional insurance coverage – is resolved through the purchase of new non-physical damage extended business interruption insurance policies.
These innovations speak to a broader trend that the terrorism and political violence insurance marketplace has undergone in recent years, having moved beyond basic indemnity products designed to fund rebuilding efforts, to serving as an integral partner to risk management teams before, during and after periods of crisis. The sports and entertainment sectors have demonstrated remarkable resiliency to survive a year of lockdowns, but the world post-COVID-19 will present new threats. Available coverage from the terrorism and political violence insurance marketplace can assist with the industry’s recovery, delivering expertise when it’s needed and protection for what matters the most.
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