Top Risks Facing Sports and Entertainment Organizations

November 28, 2023 19 mins

Top Risks Facing Sports and Entertainment Organizations

Top Risks Facing Sports and Entertainment Organizations

Sports and Entertainment industry respondents to our Global Risk Management Survey (GRMS) ranked damage to brand or reputation and business interruption as their two most critical risks.

The sports and entertainment industry — which includes media, events and recreational activities — faces a complex and volatile environment. The COVID-19 pandemic laid bare long-standing challenges, and some entities buckled under the loss of business. Even the organizations that weathered the difficulties dealt with ever-more-stretched budgets and creative talent. And the industry still seems to be feeling the pinch.

The industry battled from the beginning of the pandemic, when live events and filming were shut down, to the other side, but our latest survey results show that confidence around risk readiness has been significantly affected compared to the sentiment in other industries, falling seven percentage points in 2023 from 47 percent in 2021. Only the public sector saw a greater drop, of nine percentage points. 

Out of the 16 industries we surveyed, the sports and entertainment sector is one of only two that still considers pandemic risk and health crises a top 10 risk. This is notable, considering the risk ranks 32nd in the overall global results. Its continued inclusion suggests that the industry has seen its risk readiness confidence dented. 

Ultimately, creativity and consumer demand for entertainment and connection have won out, at least for now, but risks continue to loom. Sports and entertainment was the only industry to rank damage to brand or reputation as its number one risk in 2023. Business interruption, cyber attack or data breach, increasing competition and vendor management or third-party risk round out the industry’s top five in 2023, with failure to attract and retain top talent a noticeable absentee, in another departure from other industries.

Current Risks

The sports and entertainment sector relies on emotional purchases and is competing for discretionary spend, thereby making it heavily driven by image and consumer confidence. This makes reputation and brand management particularly important — but also more difficult to manage. A company’s ability to communicate effectively and act quickly is crucial. In this highly volatile, fast-paced world, a single disruptive event can rapidly undermine a business’s reputation. Indeed, organizations need to minimize damage to brand and reputation, even though many events are outside their direct control.

Top 10 Current Risks
  1. Damage to Brand or Reputation
  2. Business Interruption
  3. Cyber Attack or Data Breach
  4. Increasing Competition
  5. Vendor Management or Third-Party Risk
  6. Third-Party Liability (e.g., E&O)
  7. Economic Slowdown or Slow Recovery
  8. Rapidly Changing Market Trends
  9. Failure to Innovate or Meet Customer Needs
  10. Pandemic Risk or Health Crises

An increasing number of external factors are now forcing sports and entertainment organizations to focus on reputation risk. One such factor is the amplification and interconnectivity of social media and a 24-7 news cycle. Companies now need to think about market exposure across various regulatory landscapes, cultural norms and stakeholder expectations. This shifting landscape includes constantly changing consumer preferences regarding transparency and ethical behavior; dynamic regulatory landscapes and increased scrutiny of corporate behavior and accountability; data privacy concerns from mishandling customer data, which could result in regulatory backlash; and a new era of globalization that reshapes value chains. Additionally, cultural considerations such as local legislation that is widely viewed as discriminatory or unfair can trigger direct or indirect boycotts and should be accounted for.

If the industry has a mantra, it is “The show must go on.” But the plethora of risks that could result in a show or event being abandoned continues to expand and become more unpredictable. This is reflected in the risk the industry has ranked second: business interruption. This risk has historically been driven by standard property perils such as fires, windstorms and earthquakes. But non-standard perils — including off-premises incidents such as a gas main break two miles from a venue and the recent SAG-AFTRA and writers’ union strikes — could also halt business operations.

More grimly, the recent events in the Middle East reflect the increased threat of a terrorism event, which could not only make a facility unusable because of damage but also affect an entity’s brand. Pre-event safety and risk control are extremely important if sports and entertainment businesses are to avoid incidents with potentially devastating impacts. Contingency plans also play an important role.

Cyber attack or data breach is once again in the top five risks, consistent with other industries. Sports and entertainment organizations around the world increasingly possess personally identifiable information about consumers. Regulations such as the General Data Protection Regulation can make breaches — already harmful to brands and reputations — expensive as well. 

As noted, the sports and entertainment industry is one of only two industries that included pandemic risk or health crises in its top 10 current risks (the other is hospitality, travel and leisure). Given how dependent many operations in the sports and entertainment industry are on people gathering in specific locations, fears surrounding disruptive health events still resonate among executives. The paradigm shift that the pandemic ushered in for the industry has many lingering impacts, one of which is the understanding that such a crisis could easily happen again. 

The industry is seeing consolidation in some segments, such as acquisitions of production companies and venues. But one of the fastest-growing entertainment and media sectors is virtual reality, which represents a major competition risk for more traditional sports and entertainment organizations. 

Organizations in the sports and entertainment industry often rely on an array of third-party companies to support the delivery of certain services, which comes with the side effect of increased risk. Vendor-related events such as a failure to deliver goods or services as contracted or a cyber attack can create knock-on impacts to brand and reputation. Thus, vendor selection is a critical skill set in risk management.

Underrated Risks

Weather and natural disasters did not make this industry’s list of top current risks, but the threat of weather and natural catastrophe has become more consistent and ever more complex. Until recently, it would have been hard to imagine how wildfires in Canada could make the air in New York City so polluted that events had to be canceled or postponed, but both 2022 and 2023 saw some of the worst Canadian wildfires on record. 

Consider snowfall and the ski industry. Several ski resorts in the western United States saw record snowfall in the 2022-2023 season, some topping 800 inches. Although this seems a boon, it also made it difficult for workers and skiers to reach the resorts. Later, in the spring, runoff from the melting snow created significant flooding — itself a risk for events — because infrastructure such as reservoirs was not designed to handle such high volumes. Conversely, record-high winter temperatures closed some European ski resorts in the same season, due to lack of snow. Similarly, other events such as a volcanic eruption could cause travel delays, take businesses by surprise and hinder event attendance and feasibility. 

Artificial intelligence (AI) and virtual reality are reshaping the way creators make content and how employees and independent contractors perform their craft. One of the inciting factors of the 2023 Hollywood writers’ and actors’ union strikes was creators’ and performers’ concern that emerging technologies such as AI could replace or diminish the need for human talent. As of this writing, the studios have agreed to limit the use of AI and employ a minimum number of writers for different content formats, but start-ups are sure to continue to try to shake up the industry. 

Intellectual property is crucial to the sports and entertainment industry. Today, intangible assets — primarily in the form of IP — represent 90 percent of the value of the S&P 500. Media companies with a wealth of IP should have a deep understanding of their IP and how it can be protected, but in an industry in which access to capital is paramount to continued operations, more important is how this IP can be leveraged as a strategic tool to enable greater access to capital through methods such as IP-backed lending.

Tech or system failure, linked inextricably to failure to innovate or meet customer needs, is another underrated risk. Massive pay-per-view events have struggled to deliver the promised impact due to bandwidth challenges and equipment failures. Such incidents result in refunds and, even more damaging, a poor brand experience. And with many third parties involved in delivering content, it becomes nearly impossible for the viewing public to understand what has happened or which organization is at fault.

Cash flow or liquidity risk also merits more consideration. Many economies are under threat of a recession, and advertisers have responded by pulling back spending. The past 25 years have seen massive consolidation, many rounds of changes and shifts in consumer preferences, but the quest for ears and eyeballs has not changed. 

Disruptive technologies did not break the top five this year, but an increasingly pressing issue is how venues, attractions, concert tours, sporting events and content companies can stay on top of the rapidly evolving technology landscape to keep consumers engaged. Disruptive technologies can pose a risk to growth, but they can also create further risks in the form of ransomware, cyber attacks and brand risk. Organizations looking to innovate should remain aware of how their risk exposure evolves as they tinker with their offerings.

Finally, the sports and entertainment industry is one of only four sectors that does not rank failure to attract or retain top talent in its top 10. Following a mass workforce exodus during the COVID-19 pandemic, the industry has struggled to rebuild that workforce in the face of significant increases in staffing costs and pressure to enhance environmental, social and governance and corporate social responsibility to attract young talent.

Losses and preparedness

Fewer than 30 percent of Sports and Entertainment industry respondents suffered a loss due to the risks in the top ten, and only four in ten have plans in place to respond to them.

  • 28%

    average percentage of respondents who indicated risks in the top ten contributed to a loss for their organization in the 12 months prior to the survey.

    Source: Aon's 2023 Global Risk Management Survey

  • 40%

    average percentage of respondents who stated their organizations have set up a plan to respond to risks in the top ten.

    Source: Aon's 2023 Global Risk Management Survey

Future Risks

Cyber attack or data breach is predicted to become more pressing, moving up two places to be ranked as the number one future risk by sports and entertainment respondents, in line with many other surveyed industries. As the sports and entertainment industry becomes more dependent on technology and technological innovation, the threat that cyber attacks or compromised data can pose for organizations grows ever greater. Not only can cyber attacks shut down key operations such as online sales and ticket processing, but they could also expose sensitive information that may put a business and its customers at risk.

Top 10 Future Risks
  1. Cyber Attack or Data Breach
  2. Business Interruption
  3. Increasing Competition
  4. Economic Slowdown or Slow Recovery
  5. Damage to Brand or Reputation
  6. Regulatory or Legislative Changes
  7. Geopolitical Volatility
  8. Counterparty Credit Risk
  9. Theft
  10. Climate Change

Increasing competition and rapidly changing market trends reflect the threat of failing to adapt in this industry, with competitors scrambling to outperform one another at an increasing pace to maintain relevance with consumers. This can also impact cyber risk, as organizations in the industry expand their third-party supplier networks to offer new experiences in pursuit of a competitive edge.

Making an appearance in the future top 10 at number seven is geopolitical risk, which is ranked higher in sports and entertainment than in any other industry in the 2023 survey. This risk is especially notable for this industry because it is tied to different physical locations that attract consumers from countries and territories around the world, amplifying the risk of geopolitical crises and terrorism. The music festival in Israel that was targeted by a politically motivated attack highlights the threat of terrorism risk. 

The interplay between economic slowdown or slow recovery and geopolitical volatility creates even greater uncertainty. Economic conditions are known to change unpredictably in the midst of geopolitical instability. Therefore, the conflicts in Europe and the Middle East are likely to have a ripple effect across the global economy. While these impacts will be felt across multiple sectors, the effect they may have on the sports and entertainment industry should not be understated. 


Despite being a key concern both now and in the future, only 9 percent of sports and entertainment organizations stated they had quantified their cyber exposure.

Source: Aon's 2023 Global Risk Management Survey

How Can Sports and Entertainment Organizations Mitigate These Risks Effectively?

Financial and operational discipline will be vital to addressing the top risks for the sports and entertainment industry. 

First, periodic reviews and updates of all IP and associated risks and opportunities can help decision makers identify and quantify them on the balance sheet. 

In their operations, decision makers should make sure to align the risk function with IT and legal so the three functions can collaborate and communicate openly and continuously about goals and challenges. Regular tabletop exercises can help keep the organization ready to respond to unexpected or adverse events.

Live events can benefit from similar preparation. Threat assessments, drills, rehearsing responses and undercover assessments are key to refining the process and coordinating staff, third-party contractors, law enforcement and customers.

Events that affect brand and reputation can be completely out of an organization’s control. This is where decisive decision making based on data and rapid response communication models can be critical to protecting shareholder value and minimizing commercial impact.

As a company’s digital presence expands — and as cyber criminals become more advanced — the cyber risks it faces grow and become more sophisticated. There are two courses of action: protection and prevention. For protection, cyber insurance is critical to an organization’s overall cyber-risk management strategy. It is intended to provide organizations with better protection against the financial risk posed by cyber security threats such as ransomware and data breaches. It is now possible to model and understand potential threats and identify and quantify probable cyber losses, helping organization make better decisions on their cyber-risk appetite and appropriate levels of cyber-risk transfer. When it comes to prevention, there are a number of solutions available to help increase cyber resilience across the full cyber life cycle. Leaders will need to realize that “either/or” is not an appropriate strategy — a combination of pre- and post-event planning is essential.

When addressing the risk of an economic slowdown, one tool U.S. organizations can use to improve corporate efficiency is the provision in the U.S. Setting Every Community Up for Retirement Enhancement Act of 2019. This allows employers to pool their defined contribution plan assets to take advantage of increased scale. Such pooled employer plans (PEPs) may achieve significant savings for the companies that sponsor the plans and the current or past employees who participate in them. A PEP may also reduce compliance duties borne by the employer and limit exposure to fiduciary claims.

General Disclaimer
This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent, or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss caused by reliance on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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