Aon and Manchester United: Risk aware not risk averse

Risk is a concept deeply embedded in the operational structure of Manchester United.

While awareness has been developed through necessity, generating understanding of what those risks truly entail is an important area of Aon’s activity with the club.

And while primary decisions on risk are made at the top of the business, mitigation approaches and strategic thinking run through the everyday operations of personnel across the entire organisation.

The idea of Enterprise Risk Management is alive and well at Manchester United, according to Aon Risk Solutions UK chief executive Jim Herbert.

“Manchester United is an organisation that works to a set of values rather than just a set of rules,” he says.

“So every interaction I have ever had with them [regarding risk] has been in a similar vein – with people literally from reception through to the team itself.

“They are a very risk aware organisation, I don’t think they are risk averse.”

Herbert says his Aon Risk Solutions unit works closely with Manchester United on conventional risks – the type you see with any organisation that has assets and liabilities and people to protect.

“That is fundamental to what we do,” he says. “We work in the emerging risks area, such as cyber risk.

“I think fundamentally, one of the misconceptions that people have is that our job is to avoid risk – whereas what our role really means is enabling people to take on risk.

“It is about trying to make sure that we understand the risks so that we work to mitigate risk where possible and transfer it, but also to allow Manchester United and our other clients to actually take informed risk decisions in the areas of risk. That is what we are here to do, that is the objective that we have when we are working with Manchester United.”

With so many risks to consider, prioritising them in terms of scale is important.

“As a director, some of the risks we face at the club are enough to keep you lying awake at night,” says Manchester United Group Managing Director Richard Arnold.

Right at the top, he says, is ground safety.

Average home games attract around 76,000 supporters but the ground capacity is swelled further by the 5,000 plus personnel who work at Manchester United’s Old Trafford stadium on match day.

“The work that goes into making sure everyone goes home safe and sound is actually our number one priority,” says Arnold.

“Winning on the pitch has to come second.”

He adds: “Think about getting 80,000 people into a stadium at the end of a day, in the half dark, feeding them – all the health and safety issues that go with that such as food poisoning. You also have 500 staff that are either stood on concrete stairwells or perhaps right next to a really hot fat fryer. Our business is littered with risk.”

Apart from safety and security there are numerous other crucial risk considerations with which the club needs to contend.

Financial security is key among them.

“For this club to be as successful as it has been in the past 138 years for the next 138 years and thereafter, it is very important that we make sure our business is successful off the pitch,” says Arnold.

“The work that we need to do in terms of managing that well is crucial – making sure that the controls on our finances make the money flow as it should and that the money is there when we want to buy the next world famous star.”

Arnold adds: “Manchester United’s mission is to be the most successful football team in the world both on and off the pitch. There’s a very virtuous circle that if you are successful off the pitch that ensures your future and ability to invest in training facilities, the best talent in world, through to the quality of our coaches and the quality of our players. You have to have financial success in the modern game to have on-pitch success and that investment is very important.

Aon experts work alongside Manchester United to manage their financial risks in what is effectively a unique environment, according to the club’s financial controller Tim Williams.

“One of the things we work on with Aon is to avoid drains on our capital – ensuring business continuity, taking a bit more of a strategic approach to business interruption,” Williams says.

“We actually have a relatively standard risk management programme to avoid that drain on our capital and for the protection of our financial and non-financial resources.

“We deal with this in quite an extraordinary environment because we are a football club. There are only 20 of us in the entire country doing what we do and at the level that we do it there are three or four and maybe five in Europe.

“We do work with Aon on things such as the World Aware Programme for our travel, maybe slightly more innovative approaches opposite our underwriters in terms of business continuity and business interruption. We are continually maintaining that dialogue, to look for other areas of risk and also other areas where we may need to manage risk. That is the most important thing and putting to one side issues of insolvency – I can’t speak for other football clubs, I can only speak about the strong set of financial results we have just turned out.”

While Aon does not dictate Manchester United’s commercial strategies, the expertise of the company, and chief executive Greg Case in particular, has been instrumental in helping the club expand its vision.

During partnership negotiations in New York, Case laid out his vision to Arnold about how Manchester United should align their commercial opportunities.

“Greg sat down with me and said ‘Listen, you should be looking at this part of your commercial business with regard to credit cards and affinity cards,” says Arnold. “You should be having a credit card in every country in the world.’ Greg, who sits on the board of Discover Cards, was able to provide us with a detailed insight on this, so that spirit of the partnership has been one that has worked together right from the beginning and certainly from our side we are very appreciative that it has gone beyond advising and introductions for other parts of our business …

“… Much of the international expansion has been through what we refer to as regional deals – they are not visible unless you are in a specific market and in that market we would have a credit card, a phone company and a soft drink company – those three conduct a lot of activity, they connect repeatedly with fans in their pockets, whether in the wallet or in the phone, the two things you touch most in the day – and they allow us to conduct lots of activities directly with those fans that then stimulates the relationship – it causes them to engage with us and engage with our top-tier partners constantly exposed to imagery of the shirt, be that in commercial activity, be that in the media activity they conduct with us so those activities we conduct regionally drive the exposure level of our top-tier partners.”

Case himself sees Manchester United driving its own commercial agenda, with Aon working alongside in an advisory capacity.

“Manchester United is not only an incredibly successful football club but also it is an incredibly successful business,” Case says. “This is not Aon’s strategy, it is Manchester United’s strategy – so they are going to drive that. What I would say is that they’ve helped us build great trust in them so we know that they are going to run that ecosystem in the best possible way. So that’s how we fit into the picture.

“The commercial aspects and the strategy are Manchester United’s, much the same as the M&A strategy of Aon is Aon’s. It’s Manchester United’s strategy and we are doing our best to support it wherever we can.”

From whichever way the Aon-Manchester United partnership is looked at, it is apparent that the connection between these two giant businesses goes beyond that of a traditional business relationship.

And it is this that is clearly instrumental to its success.

Manchester United know and understand the importance of risk to every aspect of their business and have chosen a partner to not only advise but also to work with them through each stage of every process.

“One of the things that has characterised this relationship from the beginning has been the intimacy in terms of the amount of understanding between the two teams,” says Arnold.

“We were a client before we were partners. We had that help in terms of making sure that not only the cover is in place but also more importantly the processes and procedures and the work that has gone in to make sure you minimise the risk before you get into the point of covering it.”