Bell Ringer

What is the sale price of an item that is $179.99 and is 15% off?

Sit in your ASSIGNED seats.

Bell Ringer Answer

$179.99 * 15% (0.15) = $26.9985 $27.00$179.99 - $27.00 = $$152.99

Agenda

Bell Ringer / Attendance / HousekeepingDiscuss weekly scheduleRisk Management Lecture and Discussion

Take Notes (YELLOW STARRED SLIDES ARE IMPORTANT)

Left-Hand Side Activity

Learning Objectives

Define risk and describe the categories and classifications of risk.

Name and describe four strategies for risk management.

Risk

The possibility of financial gain or loss or personal injury. Financial loss can occur if a business does not

make a profit and has to close, resulting in the loss of all of the money the owners and investors have used to start the business.

Personal injury can occur if a business does not take the appropriate safety precautions.

Types of Risks

NaturalEconomicHuman

Natural

Risks that are a result from natural causes such as the weather. Hurricane Katrina resulted in New Orleans

population to decrease by 80%

Hurricane Sandy

Economic Risks

Risks that occur from changes in overall business conditions. When many people are without jobs, they spend

less money on sporting and entertainment goods. The sporting and entertainment industry has the

risk of not selling merchandise or tickets.

Human Risks

Risks caused by human mistakes as well as by the unpredictability of customers, employees, or the work environment.

Sources of Inventory Shortages

48%

32%

15%

5%

Employee TheftShopliftingAdminstrative and paper errorVendor fraud

Other Categories of RisksGain or Loss

Pure Risk risks when there is a possibility of a loss, but no chance to gain from the event. Flood closes a golf resort

Speculative Risk risks that occur when gains or losses are possible. NBA team comes to Louisville

Other Categories of RiskControllable Risk

Controllable Risk risks that can be prevented or reduced in frequency. Sprinklers to reduce fire damage

Uncontrollable Risk events that keep a business from continuing such as the weather. Tornado blows away a dome

Other Categories of RisksInsurable Risk

Insurable Risk pure risks that could exist for a large number of businesses, includes those for which the probability and amount of loss is predictable. Fire Insurance

Uninsurable Risk risks that occur when the chances of risk cannot be predicted or when the amount of loss cannot be estimated. Louisville Bat’s have a losing season and fans do not

come out to watch.

Risk Management

There are no methods to completely safeguard a business from risk; however, marketers must develop risk management strategies to ensure all probable risk are addressed.

Risk Management a strategy to offset business risks. Risk management is a systematic process of managing an

organization’s risk exposure to achieve objectives in a manner consistent with public interest, human safety, environmental factors, and the law.

Risk Avoidance

Avoiding risky situation takes planning on the part of sports and entertainment marketers.

A business could be successfully sued if it has not taken steps to ensure compliance with safety laws that limit the liability for injury.

Liable the business is legally responsible for damages and might have to pay for the medical costs and other losses suffered by the injured person.

Managing Potential Risk

Businesses can handle risk by different methods: Purchasing insurance

Property, Liability, Theft Risk Transfer

Transferring risk to another company or the consumer Hires a company to host a firework display, include a disclaimer at

the bottom of tickets

Implement employee training / background checks Product warranties Risk retention

Setting aside funds to use in case of a loss

Risky Situations

Indiana State Fair – Payout Fan Falls at Turner Field – Video

Man Falls at RiverFront StadiumAmusement Park InjuriesThe Station Nightclub

Identify the Category of Risk:

Identify the Category of Risk:

http://www.youtube.com/watch?v=6a37f5WROis

Identify the Category of Risk:

Pure or Speculative?

Nike Be True Collection

Controllable or Uncontrollable Risk?

Insurable or Uninsurable?

Ticket Prices Rise as Attendance DropsDolphins Attendance

Brainstorm:

What risks do NFL teams have to prepare for during the season?

Risks:

Not drafting good players – low ticket salesSafety Concerns (Escalators, Steep Seats,

Appropriate Railing)Low ticket sales due to the economyLockout (Ref or Players)Weather if you do not have a dome

Left-Hand Activity (Part 1)

Age Distribution Graph

DisneyAccording to Disney spokesperson Kim Prunty, “The warning signs

indicate that ‘Mission: Space’ is not for every guest.” Epcot brochures available in English, German, and other languages warn visitors that riders of ‘Mission: Space’ and ‘Test Track’ should be in good health and free from high blood pressure, heart, back or neck problems, motion sickness, or other conditions that could be aggravated by this adventure.” There were 13 signs in the ‘Mission: Space’ cue that warn guests of certain medical conditions to not ride. A four-year-old boy died in June 2005 and a 49 year-old German tourist suffered a stroke and late died in April 2006 after riding ‘Mission: Space’ While two have died almost 9 million people have ridden since its 2003 opening.

What risk do people assume when they board a ride at a theme park. What responsibility does the theme park have to the riders?

Left-Hand Activity (Part 2)

List four steps a sports venue could take to avoid risk injury to fans attending games?