Boardmasters Cancellation Raises Risk and Supply Chain Issues

We are delighted to feature a guest post from erstwhile Spend Matters Europe MD – Peter Smith.

Last Tuesday, the Boardmasters music festival in Newquay, Cornwall, due to take place later last week, was cancelled because of the weather forecast, which predicted high winds, torrential rain, plagues of frogs and locusts and generally apocalyptic conditions.

It was very disappointing news for 50,000 visitors who were due to attend, as well as many local businesses, traders who supply the event, and of course the musicians who would have played. And of course, above all for the organisers, for whom this must be devastating emotionally as well as financially after all the effort that must have gone into the event planning and delivery.

From a supply chain risk perspective, our immediate thoughts were “I do hope they had good insurance,” and “I wonder how the various contracts are worded.”  There must be contracts with the artists as well as suppliers, on-site traders, temporary staff – so will force majeure clauses kick in? Do the bands and musicians still get paid? or receive a proportion of their fee perhaps? Was anyone paid in advance? What about the presumably hired gear, much of which must already be on site – tents, security barriers, equipment and so on?  And the staff who would have been employed on site?

It’s all a real shame for everyone involved, and is also a reminder that we do appear to be entering a period of more extreme weather. Just a couple of weeks ago, I was sweltering at the side of the road, waiting for the AA, having broken down travelling north on the A1 (huge praise both for the AA and for Monarch Automotive in Peterborough, if I can do a quick commercial!). That turned out to be the hottest UK day ever, as Cambridge hit 37.8C (101F), and Germany, Belgium, and the Netherlands all had their hottest day ever too.

We can’t eliminate weather-related risks, clearly, but insurance is a key risk mitigation strategy, and cases like Boardmasters really do prove how essential a precaution it can be. Looking at supply chain risk more widely, there are four main approaches which should be considered:

  1. Avoid or eliminate the risk, so it stops being a problem
  2. Reduce or mitigate the risk, so it is less likely to happen or less serious if it does – through contingency planning, for instance
  3. Share or transfer risk, often to the supplier or via insurance
  4. Retain and accept risk – acknowledge it exists and simply “live with it”

Totally avoiding or eliminating a particular type of risk is difficult, it is worth saying. It is more often the case that we can reduce it, without it disappearing totally. For instance, consider the risk of supplier bankruptcy, which can have knock-on effects for customer organisations. We might address this by carrying out due diligence on prospective suppliers and refusing to work with those that look financially weak or suspect. But there might still be unexpected issues – we’ve seen a number of firms where accounting irregularities disguised the true position, for instance, such as Patisserie Valerie recently. That particular risk can’t be removed entirely.

Of course, risks around weather events have been around for as long as humankind has existed. But other risk categories are much more contemporary. Cyber risk simply didn’t exist 50 years ago, yet now it is occupying the minds of executives including at the highest levels. That may be risks around system failure (as I write this, BA is having problems with their check-in systems), but perhaps even higher on the agenda there are risks connected with third parties – hackers, cyber-criminals and the like – who can cause huge damage to organisations. Indeed, it was reported recently that the UK’s largest forensic services firm paid a ransom to hackers who brought their IT systems to a standstill – a very worrying precedent for everyone.

Anyway, our commiserations to everyone affected by the Boardmasters cancellation. We’re regulars at Reading Festival, coming up over August Bank Holiday weekend, and although we commute rather than camp, I’m keeping everything firmly crossed for the weather in two weeks’ time!

(Peter is chairing the risk methods Supply Chain Risk Management Summit in Hamburg on October 13thtake a look here if you are interested in attending).

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