Mitigating risk in the meetings and event sector is imperative to good business practice, explains Danielle Puceta.
The meetings & events (M&E) planning process often involves bringing together numerous external suppliers, multiple internal resources, and often results in significant spending. Bringing together these components in an informal way, lacking process and control, can potentially leave an organisation open to a wide variety of risk.
Consider this: most companies these days would not allow an employee to buy their own laptops, mobile phones or spend outside of the travel policy; however, there are a surprising number of organisations allowing employees to spend a significant amount on M&E, often without establishing processes and policies to manage risk and resources.
American Express Meetings & Events recently commissioned a study looking into M&E risk exposure and mitigation. This was a two-dimensional study with approximately half the respondents being meeting planners and the other half leaders (defined as leaders in meetings, procurement, finance, marketing, sales or meeting budget holders). The results indicated that 51 per cent of planners and 43 per cent of leaders do not believe risk is properly mitigated in their organisation. Further, 68 per cent of leaders said transparency of all data is a top priority; however 85 per cent of planners still simply use Excel for their budget tracking.
Both leaders and planners cited legal/regulatory and financial categories as the most important risk mitigation areas.
Organisations, particularly multi-national companies, are increasingly subject to complex regulation, from the likes of the Sarbanes-Oxley Act which imposes various governance and reporting standards on US public companies (and their international subsidiaries), through to country-specific government-imposed regulations.
According to the research, 37 per cent of planners currently do not forward ancillary (e.g. ground, AV, entertainment, etc) contracts for further review to a manager or another person. Perhaps more worryingly, 23 per cent of meeting planners sign their own contracts but only six per cent of leaders state that planners are allowed to sign contracts.
At the extreme end, the danger to an organisation of not managing legal and regulatory risk can result in heavy fines, loss of reputation or even legal action. However, an organisation can realise significant benefits by taking simple steps such as formalising financial controls and document management.
In respect to budgets, 52 percent of planners said they do not receive a budget when meeting planning begins, but 82 percent of leaders said that providing a budget is either a guideline or a requirement within their organisations. The survey also reveals that organisations are unnecessarily wasting financial resources by not using available credits.
Thirty-six per cent of planners said they are unlikely or neutral on using available credits and 50 per cent of leaders said that their policy does not require the use of available credits. Visibility is also an issue highlighted in the survey: 27 per cent of leaders are unable to track meeting expenses and 32 per cent of leaders are unable to report all meeting expenses.
The key risk to an organisation in not efficiently managing financial processes and reporting is unnecessary spending or missing the opportunity for savings. By implementing policies and processes, such as the following, an organisation can minimise financial risk around M&E:
- Provide the technology or online tools to enable meeting requesters to create estimated budgets.
- Develop a process to identify available credits at the onset of sourcing each meeting and share these throughout the organisation. Track available credits, and update policies to include processes to use credits.
- Input all forecasted budgets and actual expenses in an M&E technology tool, then mandate the use of a Meeting Card or corporate purchasing card for all meeting expenses. Develop standard general ledger codes to track these meeting expenses.
Complacency in risk management can have serious financial, regulatory and reputational consequences. In order to avoid the pitfalls of risk exposure, it is important that M&E activity takes place within a formal, enterprise-wide meetings management program, which enables proper visibility and control of spending and activities. m