Risk

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Risk Opportunities Surrounding Soccer World Cup
2010 A Presentation of the Paper Commissioned
by IRMSA by Tony Twine Director Senior
Economist Econometrix (Pty) Ltd 17th October 2006
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Report Structure

• Objectives Definitions
• A Brief Overview of the History of World Cup
  Tournaments
• Risk Scanning Methodology
• Analysing and Compartmentalising the Risks
• Sources of Risk
• Potential Loss Occurring Events
• Potential Impacts
• Risk Probabilities
• Opportunities Arising from the Tournament
• Grouping Opportunity Types
• Sectoral Approach to the Opportunities
• Highly Ranked Opportunities
• Summary and Conclusions

Note tables diagrams in this presentation are
numbered as per the original report
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Report Objectives

• The report sets out to provide a broad overview
  of the risks and opportunities that present
  themselves for and to various environmental
  sub-divisions that make up the structures and
  activities of life in South Africa, and an
  exhaustive, if rather broad, list of economic
  sectors within the country.

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Definition Of Risk Used In This Report

• Risk is the potential for or threat of loss
• Concentrates on commercial losses linked to the
  SWC Tournament and its environment
• Includes less tangible losses of, say, image
• Image loss could have deferred or latent future
  commercial impacts

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Contextualising Soccer World Cup Tournaments

• First SWC tournament held in Uruguay in 1930
• Uruguay and Chile (1962) are the only smaller
  economies than SA to have hosted the SWC
• 1960 provides a rough benchmark separating the
  modern opulence of the game from earlier poorer
  status
• Chile and SA the only middle income economies to
  have hosted the modern game
• USA, Brazil, Argentine, Mexico have hosted with
  larger geographic surface areas than SA
• SA presents as physically large, with small
  economic infrastructure
• Germany is 29 the size of SA, 92 the size of
  Zimbabwe
• SA has relatively thin ICT infrastructure

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Relative And Absolute Risks

• All potential venues for SCW have risks attached
• Some risks are common, some unique to particular
  locations
• FIFA would be insane not to arrange fallback
  hosts for an event this large
• The existence of fallbacks does not imply
  intensions to use them

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A Ballgame At A New Quantum Level

• Rugby World Cup 1995
• World Summit on Sustainable Development 2002
• Cricket World Cup 2003
• SWC 2010 will be at least as large as all 3
  combined, possibly as much as twice as large
• 450 000 foreign match spectators expected
• Add-on numbers could raise this by 50-100
• Germany deployed 300 000 own and neigbouring
  police in 2006

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The Timing Of Risk

• Three periods to be considered
• The preparation and run-up to the tournament
• The duration of the tournament
• The wined-down and post tournament period
• The origins and types of risks alter as each
  period progresses

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Risks Will

• Emerge and receive at different times
• Have an origin that is not a risk itself
• Have a probability of occurrence
• Have a set of consequences
• Possibly e part of a chain of contingencies that
  would be difficult to imagine or predict

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Sources Of Risk

• Pestle analysis employed to categorise
  environmental sources of risk
• Simply a nominating device
• No regard for risk type, timing, consequence or
  probability
• Lists are probably not exhaustive
• Participants in risk management need to expand
  lists to focus on their own responsibilities

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The Scanning Device Used To Avoid A Messy
Mind-Dumb
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Sources Of Risk
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Loss Occurring Events Possibly Emanating From
These Sources
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Rating Risk Types
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Risks With Catastrophic Consequences

• War
• System crashers
• Communications failure

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Risks With Severe Consequences

• Insurrection
• Hostage taking
• Capital Loss
• Death
• Bad communication
• Acts of God
• Power failures
• Transport
• System failures

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Risks With Disruptive Consequences

• Demonstrations
• Political power plays
• Travel economy
• Fraud
• Exploitation
• Travel distances

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Avoid Making Probability Assumptions Like These

• The greater the severity of impact of a risk, the
  less likely it is to occur
• Conversely, the less the impact, the greater the
  probability of an event occurring
• Individual risks are independent events, each
  with its own probability of occurrence
• Individual risks are independent of pace and time
  
• Any two contingent risks have a greater
  probability of occurring together than they do of
  occurring independently

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Opportunity Types Expected From Tthe Tournament

• International marketing
• Domestic marketing
• Short term sales
• Long term sales
• Short term employment
• Long term employment
• Investment
• Hangover threat

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Sectoral Approach To Opportunity Analysis

• Analysis uses expanded single-digit SIC code
  economic sectors
• Tabulated qualitative analysis of sectoral
  opportunities under previous list
• Largest opportunities appear to be offered in the
  tertiary, or service sectors
• SAs biggest sustained international marketing
  opportunity ever
• Domestic marketing opportunities galore
• Short term sales opportunities before and during
  tournament exceed obvious long term opportunities
• Employment opportunities are in line with sales
  opportunities immediately above
• Investment opportunities in some sectors, but
  beware of excess capacity after SWC
• Also beware of excess inventories both during and
  after the tournament

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QUESTIONS ANSWERS