Terrorism to kidnapping: Biggest World Cup risks

As the soccer World Cup kicks off in Sao Paolo, billions of dollars are riding on the success of the event. But it's not just the sponsors that have splashed the cash on the tournament; according to underwriter Beazley, insurers have around $5 billion riding on the event.

That's because the scale of the event – with an estimated 600,000 visitors due to descend on Brazil and teams from 31 countries playing 64 matches across the country – means that there's plenty that could go wrong.

Many potential disasters - like terrorism or kidnap - sound extreme. But if they do happen, they are seriously costly.

"If such an event were realized, the cost would be enormous," stressed Ralph Koijen, professor of finance at London Business School. "That's why those potentially affected will take out insurance."

Insuring against a whole range of possible events at major sporting events is big business, according to Robert Boland, professor of sports management at New York University.

"It's particularly important at this World Cup, because the most important outcome for Brazil is actually reputational," he told CNBC. "It's possibly most at risk if anything goes wrong, but Brazil also has a lot to gain."

So what might go wrong at this year's World Cup? Using its experience of providing insurance for large sporting events, Beazley outlines the biggest risks – and how much they are likely to be insured for.

—By CNBC's Katrina Bishop

Civil unrest, an outbreak of disease or even public transport issues could see key games – or even the whole tournament – canceled, according to Beazley.

Given TV rights and sponsorship costs, the event's organizers are likely to have bought $1.25 billion of protection against this eventuality. Meanwhile, companies involved in hospitality and merchandise are estimated to have coughed up $500 million in cancellation cover.

"Strikes and social unrest could lead to delays, if not cancellations, which would cause problems when it comes to television schedules," Boland said.

"The good news is that the World Cup is a month-long event. So, yes, there's plenty that could go wrong - but there's also more time to work with."

Terrorism – such as a coordinated attack on a number of venues – would have high costs for the insurance industry. Beazley estimates that organizers will have spent around $1 billion on physical damage cover, and $200 million on liability insurance covering individuals.

"This is a very real risk, and one that the World Cup organizers will be taking very seriously, especially after the Boston marathon bombing," Boland told CNBC.

"It's now not just about protecting those taking part. You have to make sure spectators and everyone else is safe too."

With block-bookings made months – if not years - in advance, hotels have a lot to lose from any last-minute changes in timetable and venue. Around $110 million will have been spent by hotels to protect themselves against this eventuality, Beazley estimates.

From accidents to delays, there's a lot that can go wrong when it comes to preparing the 12 soccer stadiums across Brazil for their moment in spotlight. According to the underwriter, some $500 million is likely to be spent on material damage cover, with a further $200 million splashed out to protect against delays.

"If there's a problem with a stadium and a game has to be moved, that's a serious operation," Koijen said. "The cost associated with moving games to a new location is huge."

Boland said one of the major risks when it came to infrastructure issues was the threat to Brazil's reputation as a country that can host major sporting events -- such as the Olympics in Rio in 2016.

"For a period of time you have the world's attention - it's a money-can't-buy opportunity for Brazil," he said. "If their stadiums aren't up to it, it could hit their reputation and prevent visitors from returning."

Some of the world's most high-profile soccer stars will be in Brazil, and kidnap is a "significant risk to the players' partners, families and team entourage," the underwriter claims. As such, it estimates that teams will have each taken out insurance of $25 million to cover kidnap and ransom of their most well-known players.

"Kidnap might seem really unlikely, but if it happened it would be disastrous - both for the club involved and for the whole tournament," Koijen stressed.

Serious injury can make or break a soccer player's career, and Beazley estimates that top players' clubs are likely to have bought insurance to cover personal accident, loss of player income, payroll protection and even transfer value cover. This could cost clubs around $140 million per star player.

Boland, who used to be a sports agent, said insuring against injury is a cost that both individual players and clubs will bear.

"If you're a top player like Argentina's Lionel Messi this sort of insurance is something you would definitely care about," he told CNBC. "The problem is, you can reach a point when you're earning so much you become uninsurable."

World Cup promotions might seem too good to be true – and for the companies that launch them, sometimes they are. To protect themselves against the (sometimes unexpected) cost of someone winning the big prize, or when a promotion is more popular than expected, companies will have taken out insurance worth $150 million, according to Beazley.

Ticketing companies are at risk from a data breach which could seriously harm their brand and result in significant financial losses. As such, Beazley estimates that each major ticketing agency is likely to have spent over $100 million on data breach insurance.

Boland highlighted that Brazil's banks are also at risk. "Cyberattacks can almost become a different type of terrorism - economic terrorism," he said. "A lot of money will be transferred through Brazilian banks. As such, the World Cup could be a target for cyber criminals."

"This type of insurance is growing rapidly," Koijen said, adding that the massive data breach at Target had drawn attention to the issue.

"It showed the damage to companies can be huge if something like that happens," he said.