Rising from the ashes of a pandemic

“The SRE sector has undergone a massive transformation. The way that people consume media, interact from a retail perspective, and even travel to perform their daily duties have fundamentally changed. Consider some simple examples - how exhibitions that used to rely on foot traffic and networking had to shift to virtual events, how conferences had to evolve from in-person events to live streams and the subsequent technology investments necessary to facilitate this, live music concerts, theatre productions and sporting events that collapsed entirely and the massive impact this had on livelihoods.

“It is only now, some two years into the pandemic, that we are seeing signs of recovery.  But even then, this recovery is painstakingly slow.  In many instances, the pre-COVID models may no longer meet the needs of consumers whose buying behaviour and wants and needs have been radically and permanently reshaped by the pandemic. More people are comfortable staying home and getting their entertainment streamed to them, working from home and meeting and networking online and via video conferencing platforms has become entrenched. This trend is fuelling the ‘on-demand phenomenon’ in the SRE sector that has entirely reshaped when, where and how work and entertainment takes place,” explains Philip Cronje, Strategic Account Manager in Aon’s Commercial Risk Solutions division.

Findings in Aon’s latest Global Risk Management Survey corroborates the state of the SRE market with the following top seven risks facing the industry:

1. Business Interruption
2. Pandemic Risk/Health Crises
3. Economic Slowdown/Slow Recovery
4. Cyber Attacks/Data Breach
5. Damage to Reputation
6. Cash Flow/Liquidity Risk
7. Increasing Competition

It is vital that the SRE sector remains agile to fuel innovation and drive growth and recovery.  As one example, South Africa’s local film industry has been identified by government as a sector with excellent potential for growth and a catalyst for direct and indirect employment of people from different sectors of the economy.

• With an annual contribution to the fiscus in excess of R2.5-billion (US$360 million) and direct employment of more than 8,500 workers, the Gauteng film industry plays a significant role in the provincial economy. And, given the nature of the industry, thousands more are employed as freelancers.
• There are an estimated 25,000 people working in the SA film and video industry with more content being consumed in South Africa than anywhere else on the continent. South Africa is also a leader in film production, satellite distribution and interactive content.
• Foreign filmmakers have long recognised and made use of South Africa’s diverse and unique filming locations, as well as lower production costs compared with the USA and Europe due to our favourable exchange rates and labour arbitrage benefits.

“Many companies have had to take their business models back to the drawing board, reinventing their business approaches to optimise the opportunities presented by the pandemic.  One of the biggest emerging trends is that of hybrid events that cater to both the individual who is comfortable attending an event in-person, and those who prefer to stream the event into their homes and offices. Over the last two years, much refinement has gone into providing the tools and support for hybrid events that allow SRE companies to pivot in either direction, in line with their unique circumstances as well as those of the customers and audiences they serve. The role players in the SRE industry have had to reimagine their hybrid delivery models that cater for a fluid spectrum of options, realising them as an opportunity to achieve greater innovation and growth levels by being flexible, digital and responsive to the needs of customers,” says Cronje. 

At the same time, as businesses in the SRE sector step outside their normal business models, new and entirely evolved risks also need to be factored into the equation.

“Venue owners need to reconsider their cancellation and booking policies in line with a hybrid model of in-person and virtual events. Another example is the current trend of organisations moving away from traditional marketing platforms to using social media influencers and celebrities to test products, vehicles, fashion items or services, capitalising on their social networks reach to create exposure. In doing so, you are also aligning your brand with the influencer in question with potential reputational risk exposures becoming front and centre – insurance for ‘death and disgrace’ if things go awry now becomes non-negotiable,” Cronje illustrates.

“Technology is also expanding exponentially in the SRE space.  Virtual events now have no geographic bounds in terms of target markets or location, which means markets expand tremendously – but what does this mean for supply chain risks and the many grey areas surrounding copyright, data protection and regional legislation?”

“There is also integration of more augmented/virtual reality in the SRE space.  Augmented reality tools can be used for product demonstrations, networking, entertainment, online tours and more. But it also puts the SRE industry squarely in the sights of cyber criminals who are already at work trying to exploit the system with the threat of data breaches, ransomware and the like,” Cronje explains.

“Without doubt the SRE industry needs to continue pushing the envelope and innovating itself back into recovery and growth in a radically changed operating environment.  At the same time, there needs to be the recognition and understanding that when business models change, the risks that businesses are exposed to change and evolve too. We are now dealing with a world and risks that are sharply divided into pre- and post-COVID times.  It is imperative that businesses engage with an experienced risk advisor in the SRE space to comprehensively understand and collaboratively approach the business and consumer landscape that COVID-19 has left in its wake,” says Cronje.

“Traditional risk and insurance approaches cannot be amplified to the present situation, as this is a completely new phenomenon, unprecedented in scope and nature. The full and long-term impact for the SRE sector is still unfolding and will continue to do so for months as new business models role out. Pre-empting the potential new risks your business could face in such an environment, as well as the traditional risks that may now become more prominent and inter-connected, is best done with the support and insights of an SRE risk specialist. Aon’s professional SRE brokers bring a wealth of forward-looking data and insights based on the changed realities of your business model, rather than a retrospective analysis of pre-covid circumstances, enabling you to make better decisions around all aspects of your evolving risks, and for what your business needs next,” Cronje concludes.