Management / Kidnapping: The next big risk
Kidnapping: The next big risk
3 August 2014 |
Companies face new challenges as kidnapping becomes “ugly and organised” in certain parts of the world, an expert warns. Nick Powis, a crisis consultancy manager at Marsh, an insurer that covers kidnapping, says that firms have good practices in the more established economies but that the greatest potential – and some of the biggest risks – can be found in the newer, “frontier” markets.
“We know about places like Pakistan, Iraq and Syria,” he says. “People really do dig in and spend a lot of money on their front-line mitigation. In Iraq there’s a lot of depth to people’s security layers. People do very often have good housekeeping in these territories. But you have less research in emerging territories like Mozambique.”
He warns that in areas such as these, the threat of kidnapping is becoming more of a concern. “There’s kidnapping that’s getting ugly and organised,” he says. “That could expand into the oil and gas sector. It can be quite challenging.”
He notes that kidnapping in newer markets can have a variety of forms and causes. “The spectrum of kidnapping is quite wide,” he says. “It could come for a number of reasons. It can come as a result of blackmail and extortion or be more spontaneous, or it can be totally targeted and the kidnappers could go after a key person in the business.”
And he claims that while certain industries such as the oil and gas sector have significant experience in dealing with kidnapping, some companies can leave their preparations “far too late”.
He says: “You should always map out your business and key relationships. But firms think it’s always a cost and never a benefit, so that layer tends to be added on far too late. Often it’s an incident or a near miss that causes them to take action.”
A number of the “frontier” markets – which are seen as having potential for huge growth but not being as stable as more developed options such as the BRICs – have been tainted by kidnapping.
Mozambique may have had a number of incidents in recent years, but it is not alone. Nigeria’s economic potential is attracting attention, but Boko Haram, a militant Islamist group, has made waves with a series of abductions, as well as bombings and murders.
Earlier this year more than 200 schoolgirls were abducted, with Boko Haram claiming responsibility. Bring Back Our Girls, a global campaign, has been calling for their return since then.
A number of the frontier markets are attracting businesses because of their abundant natural resources and the wealth rapidly generated from these. But Powis warns that this can attract “trouble”.
“The mining industry, the prospecting industry and oil and gas, they have got a lot of experience,” he says. “Historically it’s a bit of a pantomime. Wherever you find oil, you find trouble.”
He says some less experienced industries may need to learn quickly if they want to avoid problems in unpredictable countries – and that individuals can sometimes create risks through “ad hoc” travel. “These industries are quite strategic and they do drive that and they are willing to pay for it,” he says. “But you also get the financial services sector and they get a portfolio and it might involve these markets.
“I have also dealt with a couple of cases where businessmen and women may go to one territory on a task and then to another territory in an unplanned move. It can be somewhat ad hoc. They go from a somewhat benign area to deeper water. That sort of thing happens a lot, though it doesn’t always end up causing problems.”
Some industries seem to be taking kidnapping, and broader geopolitical risk, into account. A recent report, “Emerging and frontier markets: assessing risk and opportunity”, published by Cushman and Wakefield, a real estate firm, warns about the threats in newer markets.
It reads: “Recent political unrest in the Middle East and across the world has increased the security risks related to both corporate assets and also employees, especially in the emerging and frontier markets.
“Existing political systems in many countries are under pressure and states with poor governance and cultural tensions are susceptible to terrorism and other crimes, such as piracy, kidnapping and bombing. Operators of property must redesign and continually review their approach to many of these markets.”
For other industries, risks such as kidnapping are becoming more prominent. But Howis believes that some of these sectors are more experienced than people realise. “There are issues around deployment in a supply chain,” he says. “Supply chain management has probably got deeper and wider, but the industry has dealt with issues like these for a long time.”