We all have moments that perplex us in our personal lives and our professional lives. Over the years my team and I helped numerous Fortune 500 companies develop travel and strategic meetings management programs. Yet, I am still perplexed by one thing; many companies seem reluctant to take more seriously the risks associated with corporate meetings and events and put in place a comprehensive program to mitigate them, preferring instead to implement their programs piecemeal or not at all, turning a blind eye to the realities of the risks they are accepting.
The stakes of not managing meeting risks are high. Corporations leave themselves exposed to significant brand damage, financial penalties and losses, lawsuits, loss of intellectual property, duty-of-care failures, employee safety and security lapses, embezzlement and bribery. Given all that is at stake, it is baffling that corporations have not worked harder to implement the comprehensive programs needed to mitigate these risks and avoid these outcomes.
There are six categories of strategic risk in a corporate meetings and events program, each with specific threats.
• Duty of care addresses risks that can endanger employee safety and expose an organization's brand. This category refers to safety concerns, such as knowing where employees are in order to evacuate them during emergencies, making sure they are not driving in the middle of the night if their flights arrive late and preventing overconsumption of alcohol at corporate events, which could lead to injury, death or harassment complaints. Duty-of-care risks also can expose an organization's brand when intellectual property is left at a hotel and finds its way into a competitor's hands or into the public domain. Exposure also can come about because of poor optics of a meeting—think AIG and pheasant hunts.
• Regulatory violations can expose an organization to government penalties for failing to comply with the terms of regulations like the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. Enforcement bodies look at T&E and gifts for foreign officials as well as potential cash facilitation payments and the improper distribution of cash disbursements and honoraria. For example, in 2013 the Chinese government accused GlaxoSmithKline of using its travel agency to offer bribes in the form of junkets to officials. This is a regulatory violation and exposed GSK's brand to considerable damage resulting in lost revenue.
• An organization can be put at risk when staff without proper signing authority commit to contracts above their signing limits.
• Fiduciary breaches include missed savings opportunities and improper use of funds. Missed savings opportunities occur when employees who source venues do not negotiate the rates or have insufficient negotiation experience. Improper use of funds occurs when meeting owners or stakeholders receive rewards or incentive merchandise from venues, or if the meetings program is not sufficiently monitored to catch embezzlement by employees through fraud schemes.
• Excessive cancellation and attrition penalties can lead to financial risk, since up to 25 percent of all meetings are canceled.
• Inaccurate data entry in meetings tracking systems can lead to improper reporting to executives, government compliance monitors and security providers, who use attendee information for emergency evacuation purposes.
Each of these risk categories can leave an organization exposed, which in turn can lead to significant financial loss, negative media coverage, prosecution and fines, injuries or fatalities to employees or third parties, litigation including class-action lawsuits and incarceration of leadership, and senior leaders being forced to leave an organization.
Many of these risks can be mitigated through the creation of a well-thought-out SMMP that brings policy, sourcing and planning processes and procedures and a meetings technology system together to mitigate risk. First, policy is developed to address the risks identified above. Then it is integrated into processes used by the corporation's internal or external meeting staff, and finally the processes are integrated into the organization's meetings technology system's workflow, making it very difficult for meeting stakeholders to violate policy.
I hope organizations will take this caution seriously and take the necessary steps to reduce their exposure. Until then, I likely will continue to remain perplexed about the subject of corporate meetings and events.
Hervé Sedky is the owner of Klio Travel Ventures. A 22-year veteran of American Express, he formerly served as senior vice president of global business travel, which included Amex's meetings and events division.
This op-ed originally appeared in the February 2014 edition of Travel Procurement.