6 Critical Risks Facing the Entertainment Industry

New business models, theft of IP, reputation and violent acts are some of the top risks facing the industry today.
By: | August 2, 2018 • 4 min read

In an industry that seeks to captivate, shock, inspire and amuse audiences of every stripe, some risk-taking is certainly essential — but likely among the most difficult to manage. Here are the top risks — some established and some emerging — facing the entertainment industry today:

1) Reputation

In the entertainment industry, a performer’s image is just as important as their genuine talent (if not more so). Bad behavior is punished with negative press, merchandise boycotts and declining sales.


In worst-case scenarios, stars lose their work altogether. Take the recent example of Roseanne Barr. After successfully revitalizing her original 1990s sitcom “Roseanne,” the new show was cancelled before the end of its first season after the namesake star published a racist Tweet. Not only will the incident cost her future work, but it also eliminated the livelihoods of her fellow cast mates and crew.

ABC, which aired the show, may have saved some face by acting swiftly in its cancellation of the show, but reputation risk generated by TV stars certainly extends to the entities that distribute their content as well.

2) Cyber

Cyber risk takes on multiple forms in the entertainment industry. Streaming services like Netflix, Hulu and Spotify are reliant on uninterrupted service. A cyber attack that renders those platforms inaccessible could anger advertisers seeking a certain amount of visibility and will certainly frustrate viewers paying a monthly membership fee for on-demand content.

Theft and leaking of intellectual property are other top concerns. Netflix and HBO both suffered hacks and subsequent leaking of popular TV show plots in 2017. In 2014, cyber thieves stole large stores of data, which included a full feature film that had yet to be released, private emails between executives that derided colleagues and clients, and financial data including salaries and severance costs.

Losses like these can cause a company to lose market share due to reputation damage and interrupted revenue.

3) Violence

Paris. Manchester. Las Vegas. All are grim demonstrations of the vulnerability of entertainment industry events to violent acts. Anywhere a lot of people are gathered in a confined space, there’s an opportunity for a mass casualty event.

Failure to take [extra precautions] could lead to victims holding event organizers liable for injuries or deaths caused by an attack.

Safety is always top-of-mind for event organizers, but they have had to take greater precautions in recent years as the frequency of attacks seems to escalate. This includes banning backpacks and other bags larger than a purse, conducting random searches, increasing security presence, and developing more detailed emergency response and evacuation plans. Failure to take these steps could lead to victims holding event organizers liable for injuries or deaths caused by an attack.

And while no evidence supports this link, it’s possible that high-profile attacks can induce public anxiety about large crowds for at least a short period of time. Performance and event producers may find ticket sales dipping, especially in the wake of a highly-publicized attack.

4) New Business Models

Advances in technology have help content creators eliminate the middleman and push their work directly to consumers across a variety of platforms. User-friendly production software enables aspiring starts to create high-quality content and deliver it to consumers via YouTube, Instagram, Facebook or their own websites.

Entertainment companies now have to figure out how to diversify and compete on smaller scales.

When anyone with basic technical skills and self-starting ambition can get their creative work in front of an internet audience, the competition heats up. Even established talent has to find new ways to connect with audiences, distribute content, and market themselves. Increasingly, this means interfacing more directly with consumers via social media posts, pushing new content directly to streaming services rather than focusing on physical albums or DVDs first.

More platforms means creators can appeal to niche audiences and established distributors, which traditionally focused on the content and marketing that would appeal to the broadest swath of consumers. Entertainment companies now have to figure out how to diversify and compete on smaller scales.

5) Talent Risk

The success of most entertainment companies is dependent on its stars. The artists and performers that audiences pay to see and listen to. But when so much of an album, a movie or television shoot, or a concert revolves around an individual, that individual presents as much risk as opportunity.


If for any reason a star can’t fulfill his or her duties, production companies have to scramble for a Plan B. Those reasons can encompass everything from sickness, injury or death to pregnancy to arrest to something as simple as getting stuck an at airport. Entertainment companies typically carry cast insurance to cover extra expenses associated with executing Plan B, but changing plans last-minute can introduce or elevate other existing risks.

Entertainment companies typically carry cast insurance to cover extra expenses associated with executing Plan B, but changing plans last-minute can introduce or elevate other existing risks.

Take Gal Gadot, the leading actress who was five months pregnant while shooting some additional scenes for “Wonder Woman.” While she wasn’t preforming any dangerous stunts, safety nonetheless becomes an even greater concern. And more work was needed on the back end to hide her growing belly. According to Entertainment Weekly, “the costume department had to cut a section out of the front of her costume and replace it with green cloth so her figure could be altered in postproduction.”

6) Third-Party Liability

Entertainment companies, whether in the business of producing or distributing content or putting on shows, regularly contract with third parties to get it all done. As such, they bear responsibility for providing safe work environments and for protecting contractors’ and vendors’ private data, which results in third party liability exposure.

Especially when it comes to events like concerts or festivals, organizers can also be held liable for any property damage caused by spectators. &

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Workers' Comp

Do You Have Employees or Gig Workers?

The number of gig economy workers is growing in the U.S. But their classification as contractors leaves many without workers’ comp, unemployment protection or other benefits.
By: and | July 30, 2018 • 5 min read

A growing number of Americans earn their living in the gig economy without employer-provided benefits and protections such as workers’ compensation.


With the proliferation of on-demand services powered by digital platforms, questions surrounding who does and does not actually work in the gig economy continue to vex stakeholders. Courts and legislators are being asked to decide what constitutes an employee and what constitutes an independent contractor, or gig worker.

The issues are how the worker is paid and who controls the work process, said Bobby Bollinger, a North Carolina attorney specializing in workers’ compensation law with a client roster in the trucking industry.

The common law test, he said, the same one the IRS uses, considers “whose tools and whose materials are used. Whether the employer is telling the worker how to do the job on a minute-to-minute basis. Whether the worker is paid by the hour or by the job. Whether he’s free to work for someone else.”

Legal challenges have occurred, starting with lawsuits against transportation network companies (TNCs) like Uber and Lyft. Several court cases in recent years have come down on the side of allowing such companies to continue classifying drivers as independent contractors.

Those decisions are significant for TNCs, because the gig model relies on the lower labor cost of independent contractors. Classification as an employee adds at least 30 percent to labor costs.

The issues lie with how a worker is paid and who controls the work process. — Bobby Bollinger, a North Carolina attorney

However, a March 2018 California Supreme Court ruling in a case involving delivery drivers for Dynamex went the other way. The Dynamex decision places heavy emphasis on whether the worker is performing a core function of the business.

Under the Dynamex court’s standard, an electrician called to fix a wiring problem at an Uber office would be considered a general contractor. But a driver providing rides to customers would be part of the company’s central mission and therefore an employee.

Despite the California ruling, a Philadelphia court a month later declined to follow suit, ruling that Uber’s limousine drivers are independent contractors, not employees. So a definitive answer remains elusive.

A Legislative Movement

Misclassification of workers as independent contractors introduces risks to both employers and workers, said Matt Zender, vice president, workers’ compensation product manager, AmTrust.

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered.”

Misclassifying workers opens a “Pandora’s box” for employers, said Richard R. Meneghello, partner, Fisher Phillips.

Issues include tax liabilities, claims for minimum wage and overtime violations, workers’ comp benefits, civil labor law rights and wrongful termination suits.

The motive for companies seeking the contractor definition is clear: They don’t have to pay for benefits, said Meneghello. “But from a legal perspective, it’s not so easy to turn the workforce into contractors.”

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered in the eyes of the state.” — Matt Zender, vice president, workers’ compensation product manager, AmTrust

It’s about to get easier, however. In 2016, Handy — which is being sued in five states for misclassification of workers — drafted a N.Y. bill to establish a program where gig-economy companies would pay 2.5 percent of workers’ income into individual health savings accounts, yet would classify them as independent contractors.

Unions and worker advocacy groups argue the program would rob workers of rights and protections. So Handy moved on to eight other states where it would be more likely to win.


So far, the Handy bills have passed one house of the legislature in Georgia and Colorado; passed both houses in Iowa and Tennessee; and been signed into law in Kentucky, Utah and Indiana. A similar bill was also introduced in Alabama.

The bills’ language says all workers who find jobs through a website or mobile app are independent contractors, as long as the company running the digital platform does not control schedules, prohibit them from working elsewhere and meets other criteria. Two bills exclude transportation network companies such as Uber.

These laws could have far-reaching consequences. Traditional service companies will struggle to compete with start-ups paying minimal labor costs.

Opponents warn that the Handy bills are so broad that a service company need only launch an app for customers to contract services, and they’d be free to re-classify their employees as independent contractors — leaving workers without social security, health insurance or the protections of unemployment insurance or workers’ comp.

That could destabilize social safety nets as well as shrink available workers’ comp premiums.

A New Classification

Independent contractors need to buy their own insurance, including workers’ compensation. But many don’t, said Hart Brown, executive vice president, COO, Firestorm. They may not realize that in the case of an accident, their personal car and health insurance won’t engage, Brown said.

Matt Zender, vice president, workers’ compensation product manager, AmTrust

Workers’ compensation for gig workers can be hard to find. Some state-sponsored funds provide self-employed contractors’ coverage.  Policies can be expensive though in some high-risk occupations, such as roofing, said Bollinger.

The gig system, where a worker does several different jobs for several different companies, breaks down without portable benefits, said Brown. Portable benefits would follow workers from one workplace engagement to another.

What a portable benefits program would look like is unclear, he said, but some combination of employers, independent contractors and intermediaries (such as a digital platform business or staffing agency) would contribute to the program based on a percentage of each transaction.

There is movement toward portable benefits legislation. The Aspen Institute proposed portable benefits where companies contribute to workers’ benefits based on how much an employee works for them. Uber and SEI together proposed a portable benefits bill to the Washington State Legislature.


Senator Mark Warner (D. VA) introduced the Portable Benefits for Independent Workers Pilot Program Act for the study of portable benefits, and Congresswoman Suzan DelBene (D. WA) introduced a House companion bill.

Meneghello is skeptical of portable benefits as a long-term solution. “They’re a good first step,” he said, “but they paper over the problem. We need a new category of workers.”

A portable benefits model would open opportunities for the growing Insurtech market. Brad Smith, CEO, Intuit, estimates the gig economy to be about 34 percent of the workforce in 2018, growing to 43 percent by 2020.

The insurance industry reinvented itself from a risk transfer mechanism to a risk management mechanism, Brown said, and now it’s reinventing itself again as risk educator to a new hybrid market. &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected] Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]