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Holiday Party Risk Management Checklist

By Sheila Roberts, ARM and Alan Schreibman, ARM

Company-sponsored holiday parties can present a wide range of loss exposures for any organization. Because such events usually are infrequent — sometimes only once a year — they often get little if any scrutiny from a risk management perspective. But because potentially large exposures can exist, it is prudent to periodically assess the exposure such events pose and determine the extent to which the organization is protected. Here’s a simple checklist to get you started.

Liquor

The most common and significant risk associated with company-sponsored parties or events is the serving of alcoholic beverages and the employer’s resulting liability or workers compensation loss exposure. Serving alcoholic beverages may increase the likelihood that some employees will become obnoxious, belligerent or make comments or behave in a way that others consider offensive or sexually harassing. Also, if a party attendee becomes intoxicated and is injured or killed while driving home, the injured person or their heirs may claim the employer was responsible.

Although most standard CGL policies provide “host liquor liability” coverage, many employers are rethinking whether the serving of alcohol is appropriate as an office or work-related function. If alcohol is to be served, consider limiting the number of drinks or the amount of time drinks are served.

Premises

Always give some thought to the purpose of the party and who will be attending. Is the party for employees only or will it be open to spouses, customers, vendors and other guests? Because the company owes a high standard of care to invitees, make sure the premises is of appropriate size, clean and free from hazards and obstructions. The shop floor is usually a poor venue for a party and even some office space may not be appropriate. Offsite facilities, such as a reputable hotel or banquet room, may provide safer and more comfortable surroundings.

Transportation

The question of whether the company should provide transportation sometimes arises when events are held away from the company premise. As a rule of thumb, it usually is a good idea to avoid providing transportation unless there is some overriding reason to do so. Providing employees or other guests with transportation or recruiting employees to use their own vehicles to transport other attendees only increases the employers-liability exposure from accidents that might occur on the way to or from the event.

Consider making attendance at the party strictly voluntary, and have employees drive themselves. If you must provide transportation, consider hiring a driver with the vehicle. Hiring a van or bus with a driver transfers most of the automobile-liability exposure to the rental or charter company. But be sure to have the employer named as an additional insured on the rental company’s business auto policy, if possible, and obtain a certificate of insurance evidencing coverage and acceptable limits.

Rental And Service Agreements

Review any service or rental agreement carefully. Some hotels may require you to sign service agreements that contain onerous hold harmless and indemnity provisions that make you responsible for losses over which you may have no control.

Conclusion

While the planning of company parties may be limited to the holiday season, the risks associated with company social events could be present at other times during the year. Consider the potential risks involved in other events such as company picnics, retirement parties, etc. Employers should at least carefully assess the exposures such activities create and the insurance limitations, if any, of business insurance policies. 

ABOUT THE AUTHORS

Sheila Roberts, ARM, and Alan Schreibman, ARM, are California-based risk management consultants. They each have over 20 years of insurance and risk management experience.

riskVue | The webzine for risk management professionals
November 2003