FOLLOW

FOLLOW

SHARE

Dangerous Liaison

The cost of doing business in a volatile world includes security precautions.

1Aug


Mexico City, Dec. 10, 1997--An American who is a leading hotel executive in Mexico has been abducted in the beach resort of Acapulco, the first publicly known kidnapping of an American citizen in the crime wave that has terrorized Mexico.--The New York Times


Just when the developing world seemed safe for capitalism, rising incidents of assault, robbery, kidnappings, and riots threaten executives who travel to the world's trouble spots in search of profits. As the New York Times and other news organizations testify, crumbling power structures, currency devaluations, and widening gulfs between have and have-not populations plague some of the most promising markets.


Certainly the danger of violent crime should be kept in perspective. Most Americans travel unmolested to remote parts of the world that offer great financial opportunities along with new and rewarding cultural perspectives. To ignore the risks, however, is derelict. "I would say without a doubt that the world is a more dangerous place in which to travel and conduct business than just five years ago," says vice president and manager of risk services Gary Salmans of London-based Sedgwick Plc. "In many developing nations, like Mexico and Brazil, crime has increased significantly, and in others, such as Indonesia, recent events have created the most unstable situations in decades."


Everyone fears the most rare and tragic of circumstances: the fatal terrorist attack. Such a horror struck last November in Karachi, Pakistan. Islamic terrorists ambushed and shot to death four Union Texas Petroleum Holdings internal auditors while they were on their way to work. The attack might have been preventable, says one security expert, had the Houston-based oil and gas company followed a few low-cost and low-effort rules, such as instructing employees to drive a different way to work each day, or possibly canceling nonessential visits to high-risk areas, as Karachi was at the time and remains today. The families of the four victims have sued Union Texas for wrongful death and negligence, asking for an unspecified amount of damages.



Obvious Targets

Despite reports of terrorism, random crime and assaults pose the greatest threats. "Americans are obvious targets for crime when they act like Americans," warns Salmans. Distinctly American clothing, jewelry, watches, corporate luggage tags, and loud speaking voices all identify candidates for violent crime. Travelers are most at risk at airports and in the vicinity of hotels, restaurants, and tourist sites.


So-called fast-food kidnappings have multiplied, especially in Latin America. In these encounters, armed assailants steal valuables, then force their victims to withdraw as much cash as their plastic cards will allow from automated teller machines. Thieves have been known to hold victims past midnight in order to steal an extra day's withdrawals. Victims who escape without physical harm count themselves lucky. Travelers who rely on their own false sense of re-sourcefulness would do well to remember the shooting death of Cushman & Wakefield executive Peter Zarate, a former U.S. Navy Seal who was killed last December during a taxi robbery in Mexico.


Global companies like General Electric, General Motors, and Boeing already train their globe-trotting executives and expatriates to cope with volatile climates. Besides shrinking the overarching risk of personal tragedy, such training programs guard companies against financial losses arising from business disruptions and lawsuits by employees caught in the line of fire.


"Most business disruption occurs because the senior management team is drawn into a crisis they've never given a thought to before, and the core business goes to hell in the meantime," says Bob Hoffman, director of operations at Control Risks Group, in Washington, D.C. "It may sound cold, but there are ways to manage crises like kidnappings, detentions by local authorities, extortion threats, and so on, that allow companies to handle them and still pay attention to their business."


Executives who travel on behalf of smaller companies with less international experience tend to receive less preparation than their counterparts at multinationals. Only about 1 in 10 middle-market companies exposed to overseas risks provides formal training aimed at reducing vulnerability to violence and crime, reports Kent Miller, a senior vice president with Cigna Property and Casualty. But awareness is growing, he finds, thanks to more reports of robbery, assaults, and kidnappings. "Smaller companies are starting to take these threats seriously," he says.



Taking Precautions

Kidnappings of executives and their families have soared in several nations--mainly Colombia, Mexico, Brazil, and the Philippines. Most of these incidents ensnare well-to-do and middle-class locals, such as business owners, politicians, land owners, and bankers. Usually, they end safely once a ransom has been paid. Perhaps a dozen such kidnappings a year involve American citizens, say security experts. Among foreigners visiting all locations, about 600 kidnappings have taken place since 1990, according to kidnap negotiation experts at Control Risks.


Cigna is one of several U.S. insurance companies that provide insurance coverage against the criminal calamities that may befall traveling executives. Other providers are Fireman's Fund, American International Group, and Chubb. Lloyds of London, the venerable British institution, underwrites three-fourths of the world's kidnapping and ransom (or K&R) coverage. All told, reports Sedgwick, premiums for K&R insurance amounted to roughly $120 million in 1997, a 20 percent increase since 1993. Rates vary, but $5,000 will ordinarily cover one or two executives against limited risk. Blanket coverage in high- risk areas cost $20,000 and up.


But insurance is merely a back-stop when preventive measures fail. High-profile executives should take extra precautions, especially in regions where anti-American sentiments run strong. Control Risks's Hoffman encourages all prominent U.S. businesspeople on business trips to Russia to arrange for some kind of personal-security detail while there. "Russia is a very dangerous place these days, with a lot of random violent crime by street gangs, and a lot of extortion and other types of crime by more-organized criminal elements. Bodyguards and organized transportation is a very good idea."


In matters of personal protection, local authorities are not always reliable. Consider the visit last year by the CFO of a midsized U.S. manufacturer to the company's operations in Mexico's Morelos state. At the time of the visit, the state had been suffering a wave of kidnappings, abetted, it later turned out, by the state's top anti-kidnapping law- enforcement official and, allegedly, the state's governor, Jorge Carrillo Olea (who has since resigned). Forewarned, the company turned to Mexican federal officials for police protection--resulting in a security detail more than two-dozen strong. Only the most brazen and determined criminals would challenge such a formidable defense. Not surprisingly, the CFO's visit went off without a hitch.



Show of Strength

"We are high profile enough in Mexico that we needed to take extra precautions," says the CFO. "We were fortunate, though, that we have close relations with people in the national government who we could turn to for help. Otherwise, we would have had to turn to private bodyguards and such, which is much more expensive and complicated."


With or without the right connections, few deterrents match a show of strength, says Frank Johns, director of Pinkerton Global Intelligence Services, in Arlington, Virginia. "Often, the name of the game overseas is not just to avoid crime but to force it to go elsewhere through a show of strength and impregnability," says the Pinkerton man. "You don't wish harm on your neighbor, of course, but criminals are drawn to easy targets. So it's key not to be one."


Not all precautions require large investments. "Avoiding crime is mostly common sense combined with good information," Johns declares. "Much of what we tell people initially is so obvious they don't think about it." Traveling with a companion, for example, lowers the chance of a crime by nearly half. Familiarity with a city and its neighborhoods alerts visitors to danger zones. Use only cabs and car services operated by entities with reliable track records known to travel agents or hotel officials. Above all, Johns warns, travelers must remain on guard at all times. "Bad things tend to happen," he says, "when people get comfortable in risky settings."


Overconfidence only causes risks to multiply. "I'm always surprised at the number of companies with international operations and sales forces that have given virtually zero thought to security," says Hoffmann. "They figure nothing bad has happened yet, so it probably won't." So either prepare and prevent- -or knock on wood.


----------------------------------------------- --------------------------------- Terrorism's Top Tier



Three-fourths of global terrorism occurs in 20 countries.


(Chart omitted)



Forewarned is Forearmed


Education and common sense can lower risks when traveling. Travel security experts suggest a few basic tips.Stay in touch. Make your itinerary available to a handful of discrete colleagues; keep them posted.


Loose laptops sink ships. Empty all laptops of confidential or sensitive information. Instead, keep the data on a disk.


Locate places of refuge. Know in advance where to find hospitals, doctors, police stations, and embassies or consulates of the United States or friendly countries.


Keep a low profile. Where risks are prevalent, dress down, remove or mask corporate luggage tags, and--especially at airports--avoid pushy locals offering assistance with luggage, transportation, and currency exchange.


Safety in numbers. Avoid traveling alone. If solitary travel is absolutely necessary, at least skip unplanned side trips to locations where security is doubtful.


Stay flexible. If exposed to travel risks for an extended period, avoid predictable patterns of behavior. Vary routes between work and residence. Dine in different locations.


Identify trouble spots. Both the Bureau of Consular Affairs and the Overseas Advisory Council publish travel advisories. Pinkerton Global Intelligence Services, in Arlington, Virginia; Kroll Associates, in New York; and Control Risks Group, in Washington, D.C., supply updates on worldwide criminal activity, political tensions, and terrorism. Brigham Young University, in Salt Lake City, produces a cultural and political guide series for nearly every nation.

Comments

comments powered byDisqus
Wrestlingring

Read next:

Becoming a Value Integrator: A CFO Journey

i