Being aware, being prepared

How employers can be better equipped for potential employee abductions

Don’t play a round of golf at the same course every Saturday at noon. Definitely don’t take the same route to the office every day. And if you hold a high-profile position at a company in a high-risk area, always move with bodyguards — whether you’re running the firm’s foreign subsidiary or just in town for the day.

These kinds of tips could help employees avoid the risk of kidnapping in an increasingly global and volatile world beset by common criminals, organized gangs and even terrorists.  

Large multinationals with substantial overseas operations, such as those in oil and gas, mining and media, usually have experience handling risks such as kidnapping and extortion, and have strategies in place to mitigate them. However, companies heading abroad for the first time, whether to set up a subsidiary or to find suppliers, may not be fully prepared. 

All too often, companies don’t even realize the lapses in security that could place employees at risk of a kidnapping or leave them open to extortion. But simple steps can help companies protect both the bottom line and workers.

Building awareness
Companies need to educate employees about all types of threats. In some cases, these may be entirely fabricated. For instance, “virtual kidnappings” are a serious threat in Mexico and Argentina. In this scheme, kidnappers employ a variety of scams to convince the victim he is under duress. The kidnapper then directs the victim to turn off his cellphone and head to a hotel. The kidnapper then calls the victim’s relative or sponsor to demand a ransom. 

Since all communication with the victim has been cut off, the relative or sponsor well may pay the ransom. Employees who have been trained for this type of scenario will know what to do — ignore the kidnapper’s instructions and simply hang up the phone.

Other threats can be much more serious. Host-country nationals working for foreign companies are at risk of kidnapping or extortion as much as — if not more than — their foreign counterparts, and need to be part of company training programs. With a spacious home, late-model automobile and substantial income, the Mexican executive of a U.S. manufacturer operating in Mexico, for example, is as much a target as the company president visiting from the Chicago headquarters.

Companies and employees should also be wary of social media sites, whether corporate or personal, and err on the side of caution when posting information and photographs. They should never disclose travel plans online.

Planning ahead
Establishing a crisis management strategy — which includes the development of a plan, creation of an in-house crisis management team and selection of an external response firm — is an essential step in preparing to face kidnap and extortion risks.

The crisis management team’s core group should include, at a minimum, the CEO or her designated decision-maker; a co-ordinator (frequently the corporate security director or risk manager); and the general counsel. Other members should include the finance officer, to arrange for ransom; an HR specialist to oversee care for the hostage’s family; and a public relations specialist to handle press queries. The external response firm is on call to undertake negotiations with the criminals.

Even with the finest training, strongest security teams and most precise precautions, employees will be kidnapped and extortionists will demand seven-figure ransoms. Any company, of any size, whether it conducts business internationally or domestically, may be targeted for kidnapping or extortion. That’s where a crisis management team and kidnap, ransom and extortion insurance can make the difference, and help prevent injury or worse to the employee.

Look for a policy that encompasses all concerned: full- and part-time employees and their immediate relatives; and volunteers or independent contractors. The policy should also provide 24-hour coverage, whether the insured person is at work, at home or travelling for business or leisure.

An important part of the policy is access to a responder or response firm that has the expert knowledge needed to negotiate and help bring people home alive. Consider policies that cover the costs of any qualified risk response firm — giving the company flexibility — as well as the one retained by the insurance company.

Typically, the corporation works directly with the responder. The insurance carrier should not become involved until reimbursement is sought by the company.

The kidnap, ransom and extortion policy should reimburse the company for the substantial costs incurred in bringing an employee back alive and meeting the extortionists’ demands. This would include expenses such as the paid ransom; the cost of external public relations and legal consultants; interest incurred on a loan secured to meet the ransom demand; retraining costs; and medical fees and psychological counselling for the kidnapped person and her family.  

Some policies may even provide for a period of rest and rehabilitation for a family after a kidnapping incident to help them recover. The policy may also cover legal liability if the company is sued as a result of a kidnapping.

Finally, consider adding business interruption protection. Often overlooked in a kidnap, ransom and extortion policy, this coverage could help offset revenue losses if a manufacturing plant, for example, is shut down by a cartel group demanding a payment. 
While companies do need to be wary of terrorism-prone countries that grab media attention, locales closer to home are rife with risk as well. It comes down to a balance of risk and reward when people go abroad. Always consult with legal counsel, an insurance consultant or other expert to best determine what is needed to do to help protect employees. 

Employers should pursue new business opportunities, expand their global footprint and sell their product to the world.  But they shouldn’t be blindsided — be aware, be prepared. 

Christopher Arehart is a vice-president and global product manager of crime, kidnap and ransom, workplace violence expense and mail insurance at the Chubb Group of Insurance Companies. E.C. “Mike” Ackerman is CEO of the Ackerman Group.

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