The Hot Air Balloon Festival Incident: Why Enhanced Due Diligence is Non-Negotiable

The incident at the Hong Kong International Hot Air Balloon Festival highlights the significant operational and reputational risks faced by both corporate sponsors and government departments when event organizers are not properly vetted. The incident—characterized by the organizer’s lack of a license, inadequate venue planning, and absence of contingency measures, together with a history where the event’s director coincided with one of Hong Kong’s most high-profile event failures—resulted in public dissatisfaction, financial losses, and damage to both corporate and city reputations.

Key Risk Exposures:
📌 Questionable Credentials of the Organizer
• Registered address was shared with an accounting firm, with no independent office.
• Claims of “8 years of preparation” yet failed to obtain basic permits.
📌 Director with a History of High-Profile Event Failure
• The Director of the organizer was involved in a major scandal and public outrage due to previous event failure.

These risks could have been mitigated through the following basic due diligence steps:
🔍 Business Verification: Confirm substantive operations beyond a registered address at a secretarial firm.
🔍 Litigation Record Search: Identify potential financial difficulties or compliance violations.
🔍 Qualification Verification: License and qualification ownership and validity
🔍 Media Search: Evaluate the organizer’s track record and public reputation.
🔍 Director Due Diligence: Investigate the track record and past affiliations of key executives, such as the event director in role during the incident period.

Key Takeaways:
💡 Sponsors should conduct active due diligence on partners to protect brand integrity.
💡 Government bodies should engage early with high-risk events, providing warnings or discouraging unviable proposals.
💡 Public interest protection: Although ticket holders received refunds, their lost time and experience cannot be recovered—preventive measures are far superior to post-incident remedies.

For sponsors and regulators alike, enhanced due diligence must become a mandatory process to enable proactive risk management.