By Hélène Galy and Claire Augros from WTW
In summer 2024, Europe hosted a cluster of sports events: Euro 2024, Le Tour de France, but all eyes were on the Olympics and Paralympics. With sudden concentrations of risk, large sports events push risk management and insurance to their limits and require specialized experience and preparedness for the unprecedented. This article reflects on what is involved, behind the scenes, to insure excellence in sport, when this ideal is confronted to the harsh reality of multiple pressures: climate, socio-political, technology and ESG.
Insuring excellence in sports
With 32 sports and 329 events across 35 venues, Paris 2024 Olympics would have required a complex insurance programme, and a clear way to share responsibilities. With no “one size fits all” solution, a bespoke design of interlinked insurance covers would have been necessary, supported by a wide range of expertise, combining local knowledge, links to a large panel of insurers and industry specialization. With so many eyes on these events, there is no room for failure, and a proven track record is essential.
The range of insurance needs showcases the diversity of solutions, from the obvious (protecting athletes with personal accident and illness insurance, protecting organisers with Directors & Officers cover, or protecting venues and operations with public liability insurance) to the more esoteric: for the 2022 FIFA world cup, Argentinian footballer Messi had the most expensive body part insurance in sports, with a $900m policy on his left foot.
It's easy to forget that when the final medals are awarded, athletes still need protection, individually, or through their sports federation. Despite well established insurance programmes, the growing popularity of women’s sport has underlined the need for a more gender-aware approach to protect sportswomen effectively. These Olympic Games are the first to reach gender parity, with equal numbers of male and female athletes. And yet sports equipment, clothing and training methods are often not designed specifically for women and may increase the risk of injuries – for example, there has been a disproportionate rate of Anterior cruciate ligament (ACL) injuries amongst professional women’s footballers in recent years. This reality underpins the launch of WTW’s Insurance for Women in Sport, designed specifically to protect sportswomen against loss of income due to injury or illness.
Olympic Games organizers are often determined to break new records. Paris 2024 challenged previous traditions of holding the opening ceremony in one stadium, staging it instead as a moving spectacle along 6km of the Seine on 26th July. The “Marathon pour tous” was be the first ever event in Olympic history open to the general public, with 40,048 runners. Both events brought unique security challenges and emphasised how insurers cannot simply rely on previous Olympics to assess and price risks. Insurance premiums are typically calculated by combining past loss experience, current risk profile and risk outlook. For such large and unusual events, history is a poor guide, and a specialized approach to risk will no doubt have been needed to price and place these unusual risks.
From one Olympiad to another, risks evolve and insurance programmes designed years ahead of the opening ceremony need to be flexible enough to adapt to the 2024 risk landscape. For example, Tokyo 2020 (held in 2021) had no in-person spectators due to COVID-19. In contrast, Paris expected up to 15 million visitors, including 2 million from abroad. This article provides more examples of the evolving risk landscape, from environmental pressures, to crowd safety, technology and reputational risk.
The heat is on: climate pressures on sports events
Paris 2024 aimed to be the greenest Olympics ever, with a range of practical measures: a geothermal cooling system for the Olympic village, reusing data centre heat for the Olympic swimming pool, and catering 60% plant based and 80% locally sourced.
These aspirations have clashed with the harsh reality of athletes prioritizing their performance over their carbon footprint. A month before the start, a few Olympic delegations announced they would pay for their own air-con units.
The threat of extreme heat for Olympians drove athletes from across 15 sports (including 11 Olympians) to team up with climate scientists and thermal physiologists and publish the report Rings of Fire II in June 2024. The UN predicts that 2024 will be the hottest year ever, with Europe the fastest-warming continent. Paris itself saw its average temperature rise by 3.1°C since 1924, when the last Olympics were set in France. Lord Seb Coe, four-time Olympic medalist and President of World Athletics, warns that “with global temperatures continuing to rise, climate change should increasingly be viewed as an existential threat to sport”. A separate recent review of the heat stress policies adopted by 32 international sports federations highlighted shortcomings of indices used, not necessarily fit for purpose for athletes.
The 2003 heatwave resulted in excess mortality estimated at 15,000 people in France alone, but a heatwave would not have to reach this intensity to affect athletes and spectators alike. After a rain-soaked opening ceremony, Paris 2024 had to contend with above normal temperature, yet organisers had anticipated this well: with free water access points everywhere and personal bottles allowed on the venues, this was a win-win from an ESG and liability-hedging point of view. Extreme weather risks to spectators are increasingly a concern for sports and concert venues, with organizers and fans often unprepared for the rising risks. The Euro 2024 match between Germany and Denmark was recently interrupted after some intense lightning (often a precursor to a hail storm). Despite the inconvenience to spectators, local authorities were acutely aware that Germany regularly sees severe convective storms with hail stones of 10cm diameter and were taking no chances about the safety of players and fans. This also happened for a beach volleyball match in Paris 2024. Even with public liability insurance in place, organizers have to take all necessary measures to protect individuals on their premises. Over the last year, spectators have been injured, or even killed, at sports or concert event due to heatwaves or severe convective storms. In 2023, smoke from wildfires led to concerts and sporting events to be cancelled in the U.S. and Canada. Paris 2024 football events were held in Nice, in the south of France. Over the last 30 years, Nice has seen 328 forest fires. Although risk to the stadium itself is low, fires in surrounding areas could have created disruption to spectator traffic and smoke pollution.
Without event cancellation insurance, organizers have few incentives to cancel or postpone. But cancellation is a last resort and comprehensive contingency plans can do a lot to mitigate risks. This previous articl looks at the iconic case of the Wimbledon tennis championship.
Crowd safety: socio-geopolitical and public health pressures
The geopolitical context on the eve of Paris 2024 (continuing conflict in Ukraine, tensions with Russia, conflict in the Middle East) made the Olympic & Paralympic Games in France an ideal playground for activism and terrorist attacks, dramatically raising security concerns to an unprecedented level.
The tradition of Olympic truce goes back to ancient Greece, yet there is a long record of sports getting embroiled in geopolitics Logistical and security challenges facing the hosts include dealing with travel congestion, protests and strikes over socio-economic issues and political tensions, and terrorism threats Many events took place in iconic, open venues difficult to secure, such as the opening ceremony which allowed 326,000 spectators along the Seine, which justified the heightened level of security, and a public-private partnership that involved 22,000 private security guards, 45,000 members of internal security forces and 18,000 military personnel. Sabotage of major railway lines the day before the opening ceremony were a stark reminder of the immense challenge of securing venues and all access routes.
With COVID-19 almost forgotten and spectators allowed back, Paris 2024 could have ended up as a super-spreader event. There is a precedent for Olympics being identified as a multiplier for viral epidemics: the 2016 Brazil Olympics were almost postponed because of concerns around Zika.
Related to Zika and also spread by mosquitos, dengue was closely monitored by French entomologist to reduce the risk. Although numbers were still low, cases so far in 2024 were already 12 times higher than in 2023. Global travel, urbanization, hotter and wetter weather driven by climate change, all contribute to changing the geographic spread of mosquitos, a trend monitored closely by the European Centre for Disease Prevention and Control. This will impact travel insurance and would also be an unwelcome souvenir as tourists go back to their countries.
The double-edged sword of technology
The controversy around the QR code digital pass is a good example of how technology and crowd safety overlap. The system implemented for access to a defined security perimeter in Paris for a short duration around the opening ceremony led residents to contest (unsuccessfully) the exceptional measure in front of the highest court in France. Considering the exceptional circumstances and heightened security risks, the digital pass process was confirmed, despite the curtailed freedom of movement.
An even more contentious measure was to allow by law, for the first time and as an experiment, the police and transport companies to use AI-powered live during the Olympics. From an insurer point of view, those technology revolutions are of course powerful risk mitigation tools. Still, given the high controversy around potential freedom‘s restrictions, the generalization of such an exceptional measure, beyond the initial and limited period, is yet not validated, and will be subject to the submission of an in-depth evaluation report.
Increasingly digitized processes can increase efficiency, yet be more susceptible to cybercrime. Tokyo 2020 had registered a record of 450 million cyber attacks, 2.5 times more than the number seen at the 2012 London Olympics. Given increased geopolitical tensions, Paris 2024 was expecting 10 times more cyber attacks than Tokyo 2020, with the underlying fear of a repeat of Olympic Destroyer’s cyber attack that targeted Pyeongchang Organization Committee on February 9, 2018 during the opening ceremony of the 2018 Winter Olympics, causing a shutdown of all systems during 12h and triggering an impressive remediation plan to almost seamlessly restore operations overnight.
Cyber protection is a very good example of how the insurance market has evolved over time to constantly adjust coverages and wordings to hedge underlying risks that any event organisers face, whether they are the flagship organizer or a smaller provider in the complex supply chains underpinning mega events, whether the source of risk is insider threats or a global IT outage such as the recent Crowstrike incident.
Sustainability and reputation risk: are large sports events good for business?
A recent report by the Council on Foreign Relations contrasted the skyrocketing costs of hosting the Olympics with unclear economic benefits. Paris 2024 may show whether the bidding process reforms have made hosting a better deal. The Olympic Agenda 2020 aims to deliver Games that are more responsible, sustainable and inclusive. For example, the construction-related carbon footprint for Paris 2024 should be lower, with 95% of the venues already built or temporary. Further innovative solutions for energy, food, transport and digital services will be there to stay, long after the Games.
An independent study estimates Paris 2024 will generate up to €11.1 billion in net economic benefits in the Paris region and 78% of suppliers are small and medium-sized businesses. Yet luxury brands such as haute couture have been worrying about the impact on their business, anticipating their usual shoppers may stay clear of Paris during the summer, a known “crowding out” effect.
Companies sponsoring the games can expect iconic visibility, as no other event can deliver the same drama, audiences and uplifting storylines. Sports sponsorship remains an attractive marketing option but with a changing line-up of stakeholders, some of them more unconventional. This is not without risks, and sports stars can also make the news for all the wrong reasons, highlighting the reputational risks of sponsorship on corporate brands.
Conclusion
Organizers of large sports events face a complex web of risks, which cannot be considered in isolation: the Copa America Final in Miami in July 2024 combined heat stress, crowd control challenges, disciplinary action over an alleged racist chant, and athlete injury. Beyond the wonderful show of sports, risk managers can look at those events as a great demonstration of the adaptability of insurance to the most ambitious and challenging circumstances. In light of those complexities, it won’t be long before organisers and insurers discuss the finer details of Los Angeles 2028. With 2030 Winter Games in view, France will not have to wait long before going back to work and leveraging the Paris 2024 recent experience.
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