The meetings & events (M&E) planning process often involves bringing together numerous external suppliers, multiple internal resources, and often results in significant spending. Bringing together these components in an informal way, lacking process and control, can potentially leave an organization open to a wide variety of risk.
Consider this: most companies these days would not allow an employee to buy their own laptops, mobile phones or spend outside of the travel policy; however, there are a surprising number of organizations allowing employees to spend a significant amount on M&E, often without establishing processes and policies to manage risk and resources.
American Express Meetings & Events conducted a study on M&E risk exposure and mitigation in 2013 and continues to monitor trends associated with risk and meetings. The report was based on a two-dimensional study with approximately half the respondents being meeting planners and the other half leaders (defined as leaders in meetings, procurement, finance, marketing, sales or meeting budget holders). The results indicated that approximately half of planners and leaders do not believe risk is properly mitigated in their organization. Further, the majority of leaders said transparency of all data is a top priority; whereas most planners still simply use Excel for their budget tracking.
Both leaders and planners cited legal/regulatory and financial categories as the most important risk mitigation areas for meetings management.
Organizations, particularly multi-national companies, are increasingly subject to complex regulation, from the likes of the Sarbanes-Oxley Act which imposes various governance and reporting standards on U.S. public companies (and their international subsidiaries), through to country-specific government-imposed regulations. This creates increased risk as one-third of planners indicate they are signing their own ancillary (e.g., ground, AV, entertainment etc) contracts without further review from a manager or another person. Perhaps more worryingly, almost a quarter of meeting planners sign their own contracts but only a very small percentage of leaders state that planners are allowed to sign contracts.
Organizations can realize significant benefits by taking reasonably simple steps such as formalizing financial controls and document management. For example, developing standard addendums and review processes for ancillary contracts, and developing a contract signing authorization matrix outlining the appropriate levels of staff who are authorized to sign contracts can help limit a company’s exposure to unnecessary regulatory risk.
With respect to budgets the majority of planners indicate they typically do not receive a budget when meeting planning begins, while most leaders indicate this is a guideline or requirement within their organizations. The survey also reveals that organizations are unnecessarily wasting financial resources by not using available credits. Thirty-six percent of planners said they are unlikely to use or are unaware of available credits and 50 percent of leaders said that their policy does not require the use of available credits. Visibility is also an issue highlighted in the survey: 32 percent of leaders are unable to report all meeting expenses.
The key risk to an organization in not efficiently managing financial processes and reporting is unnecessary spending or missing the opportunity for savings. Implementation of the following policies and processes and help an organization minimize financial risk around M&E:
- Provide the technology or online tools to enable meeting requesters to create estimated budgets
- Develop a process to identify available credits at the onset of sourcing each meeting and share these throughout the organization. Track available credits, and update policies to include processes to use credits
- Input all forecasted budgets and actual expenses in an M&E technology tool, then mandate the use of a Meeting Card or corporate purchasing card for all meeting expenses. Develop standard General Ledger codes to track these meeting expenses.
Complacency in risk management can have serious financial, regulatory and reputational consequences. In order to avoid the pitfalls of risk exposure, it is important that M&E activity takes place within a formal, enterprise-wide meetings management program, which enables proper visibility and control of spending and activities.
Sponsored by American Express Global Business Travel
American Express Global Business Travel (“GBT”) is a joint venture that is not wholly-owned by American Express Company or any of its subsidiaries (“American Express”). “American Express Global Business Travel”, “American Express” and the American Express logo are trademarks of American Express, and are used under limited license. “American Express Meetings & Events” is a service provided by American Express Global Business Travel.