Risk management Winter Olympics style

Like so many of us, the managing director of the Sydney-based RQA Product Risk Institute Steve Hather (pictured) is watching the Sochi 2014 Winter Olympics with great interest.

But his passion is not for the skiing or the skating – for Hather, it’s all about the food and drink.

Hather is a specialist in the development and implementation of crisis management and risk management programs, particularly in the food and beverage industry. And he has told StrategicRISK that suppliers to the Sochi Winter Olympics would be keenly aware that the quality of their products was a key risk.

“Obviously having consistently good quality product available during the Games helps prevent damage to your reputation,” he said. “If you supply poor product to athletes – or worse make them sick – that will be picked up quickly via social media and you can find your brand in trouble.

“Most companies also want to make sure the media centre and village are well supported. They don’t want the world’s media talking in negative terms about their product.”

Hather, who worked for The Coca-Cola Company for almost a decade and has contributed professionally to many of the Summer and Winter Olympics since 1996, as well as other major international events including FIFA World Cups and UEFA European Football Championships, said another key risk was tampering.

“Sochi has received terrorist threats, and food and beverage is a potential delivery mechanism,” he said. “Most food and beverage companies therefore have robust processes to protect production and distribution to prevent tampering of their products.”

Hather has some serious experience in this area, his first Olympic experience being the 1996 summer Olympics in Atlanta when he was seconded to the Federal Bureau of Investigation to help set up its Olympic Intelligence Centre.

“I was also supporting the NSW police in the creation of the Olympic Intelligence Centre for the 2000 Olympics in Sydney before joining Coca-Cola,” he said.

Supplier risks

Coca-Cola and McDonald’s are worldwide sponsors of, and suppliers of food and beverages to, the Olympics. Then there are smaller firms like Nuova Simonelli, an Italian company that supplies the coffee machines used at the Olympics. 

“While companies like Coca-Cola have robust security programs around their supply, production and distribution systems, smaller suppliers may need to beef up their programs around the Games to ensure contaminated product – either accidental or intentional – is not introduced into the Olympics,” Hather said.

“Having enough product to meet the increased demand in what is normally a relatively small market means enhanced logistics as well as production.”

Hather believes that while all suppliers share certain key risks, some face additional challenges.

“High-profile sponsors will still have all the operational risks, but will also have a series of reputation risks they will trying to manage,” he said.

“Major events provide a unique opportunity for them to bring in key customers and provide them with an Olympic experience. We are talking about senior executives from some of the world’s largest companies, and clearly the safety and security of these people – and often their families – is paramount.

“They also want to make sure the experience is as smooth as possible, so sitting in a traffic jam for hours is not going to cut it. They tend therefore to arrange their own logistics to ensure the experience goes smoothly.”

Activist groups

With the world’s media attention focused on one spot for a short period of time, it is tempting for activist groups for to take advantage of major events, Hather explained.

“Greenpeace for example led a campaign around the use of hydrocarbons in refrigerants targeted at Coca-Cola in the lead up to the Sydney Olympics,” he said. “Coca-Cola responded by bringing forward some of the work they were doing in new refrigerant technology.

“In Sochi, sponsors are being pressured to influence the Russian government to soften their attitude to gay rights. There is always a risk that some activists will take things past the point of peaceful protest.”

Indeed, the detention of a gay rights activist, environmental activists and members of the Russian punk group Pussy Riot in Sochi in recent days has raised political tensions at the event.

Ambush marketing is another a key risk for Games sponsors, Hather explained: “Brand association with a successful Games is a key asset and one that sponsors pay a lot for. Despite this, competitor companies are being associated with the Games even though they are not sponsors.

“Pepsi and Red Bull for example are not sponsors but continually score well in terms of association with the Games, eroding Coca-Cola’s investment. Of course, this is often not intentional ambush marketing.

“The International Olympic Committee has strengthened its support for Games sponsors after years of companies like Nike and Red Bull conducting what might be described as ‘aggressive advertising’ around the Olympics.”

Managing key risks

Hather said that risk management principles had, to varying degrees, become central to major event planning. “They help planners identify, assess and evaluate risks and direct limited resources to managing key risks,” he said.

“Sydney really led the thinking in this area, balancing Sydney and Australia’s reputation as a free, friendly and welcoming environment with the need to use relatively limited resources to establish robust safety and security measures.”

And the fundamentals of risk management apply to both every day operations and special events, Hather said.

“Major events like the Olympics however can introduce some additional risks and increase the impact or consequences of the event,” he said.

“I think the key learning from the Olympics is the importance of smart management systems. Having robust systems to prevent incidents from occurring is always critical, but the Olympics also really drive home the need for effective response systems.”

Hather added that, beyond the Olympics, general food safety was very much top of mind for consumers following a spate of food-related incidents.

“A poor response [to a food-safety crisis] will very quickly escalate, while an effective response can actually enhance your reputation whether it be during an Olympics or in every day operations,” he said.