The Business of Gold: Paris Olympics 2024 and the Financial Playbook

993 Words | 4 Min Read

This week, we delve into the 2024 Paris Olympics, a grand showcase of athletic prowess that also presents significant business and economic insights. As Paris hosts the Games for the third time, the event has encountered unexpected hurdles, including sabotage attempts on its railways and a major power blackout. These incidents underscore critical lessons in budgeting, risk management, and the role of accounting professionals in large-scale events.

Fun Fact

Did you know that the Olympic Games have a long history of unusual sports? In the early 1900s, the Olympics featured events like “live pigeon shooting,” where competitors aimed at actual birds! Thankfully, modern Games are a bit more animal-friendly. 🐦🎯

Current Affairs

The 2024 Paris Olympics: Business Insights and Key Points

The 2024 Summer Olympics in Paris offers not just a spectacle of athletic excellence but also a significant event from a business and economic perspective. With Paris hosting the Games for the third time, there are numerous lessons and opportunities for accounting students and professionals, especially in light of the obstacles the event has faced so far such as sabotage attempts on Parisian railways.

Risk Prevention And Disaster Recourse

The budget for the sport extravaganza is roughly just under $10 Billion and this absurd figure raises questions of how to manage the funds to suit all stakeholders from the financers themselves, to the athletes and even the spectators.

The funding is sourced from a combination of public and private investments, including sponsorships, broadcasting rights, and ticket sales. Accounting professionals must understand the complexities of managing such large-scale budgets, including cost allocation with a specific importance on emergency fund allocation and disaster prevention for such large-scale and high-stake events.

This is evident in the failure of the games to provide a proper disaster recourse after numerous railways were sabotaged and paralysed. The saboteurs targeted the high-speed TGV lines Atlantique, Est and Nord, which run from Paris to Bordeaux, Strasbourg and Lille respectively.

The sabotage was highly effective, leaving hundreds of travelers stranded and delayed, preventing many from attending the opening ceremony. This not only harmed the event's revenue-generating capacity but also cast a negative light on its planning and organisation.

Further incidents involving attacks on French telecommunication lines followed suit, destablising the fibre optic networks of several service providers in Paris.

Alongside these sabotage attempts, Paris found itself in an almost complete blackout as power sources failed and left the city in darkness just 24 hours after the opening ceremony.

Although the latter disasters have been dealt with in a much hastier manner, the question of how a $10 billion budget fails to provide for risk prevention and recourse strategies.

This highlights the importance of many chartered accounting competencies for students and aspiring professionals to focus on:

• Identifying Vulnerabilities: Effective budgeting starts with a thorough risk assessment to identify potential vulnerabilities. This includes analysing historical data, current threats, and emerging risks. For the Paris Olympics, understanding the potential for sabotage and power failures should have been part of the initial planning phase.

• Proactive Measures: Allocating a portion of the budget to proactive risk mitigation strategies is essential. This can include investing in advanced security systems, redundant power supplies, and robust cybersecurity measures. In the case of the Paris Olympics, a dedicated budget for securing telecommunication and power infrastructure could have prevented or minimised the impact of the sabotage.

• Emergency Funds: Setting aside contingency funds to address unforeseen events is crucial. These funds ensure that immediate actions can be taken without disrupting the overall financial plan. For large-scale events like the Olympics, having a well-funded contingency plan can help manage crises more effectively and maintain public confidence.

• Insurance Coverage: Comprehensive insurance policies tailored to cover a wide range of risks can provide a financial safety net. Understanding the types of coverage available and their costs should be a priority in the budgeting process.

Sustainability and ESG Reporting

On a brighter note, the event has shown the biggest stride toward sustainability and ESG Reporting of any prior event and practically every other major sport event to date.

• Green Accounting: Paris 2024 aims to be the most sustainable Olympics ever, with a focus on reducing carbon emissions and promoting renewable energy. This provides a real-world case study for green accounting practices, including carbon accounting, sustainability reporting, and the integration of ESG factors into financial statements.

• Legacy Projects: Post-Games, many venues will be repurposed for community use. This highlights the importance of capitalising assets and recognising long-term liabilities in financial reporting.

This underscores the growing emphasis on sustainability in European and American countries, a focus that has been somewhat lacking in South Africa. While it may not yet seem like a top priority locally, sustainability is a critical factor in foreign investment decisions, influencing whether investors view the South African market as viable for expansion or continued presence seen by the disinvestment by companies such as Shell . Aspiring chartered accountants are key to bridging this gap, driving positive change, and introducing innovative solutions to advance sustainability efforts in South Africa.

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