Friday, August 22, 2014

Tip of the Day: Organizational Inability to Anticipate Foreseeability and Collective Risks

Today's Tip of the Day is crucially important because it goes to the heart of a global company's inability to anticipate foreseeability, which is directly connected to the senior management of any global organization's failure to "alert, warn, advise and look after the welfare of their their most important resource: their people.

As I have said so often in the past, "planning and anticipation" are two of the most critical functions that fall within the scope of senior managers of any organization. In fact, it is these two functions that make up a significant % of managers' time. 

This shortfall prevails when global companies lack vision; concern for the safety of their staff and assets; and focused will to implement effective security policies, procedures, training, services, and infrastructure to safeguard travelers and expatriates (and families) abroad. 

Threats such as nonviolent and violent crime against travelers and expatriates, trade secret compromises, truck hijackings, labor conflict, theft, and acts of terrorism must be addressed, as should business continuity following natural disasters and political unrest.

Case studies cited earlier show that criminal and terrorists acts abroad are foreseeable events. 

Consequently, global organizations should confer with legal counsel on the liability risk that employers face when they assign employees abroad. This conference is essential where there are known and unanticipated risks of violent crime and terrorist acts against foreign interests and where an established international security program designed to manage risk fails to exist. 

For a global company to adequately safeguard its executives, staff, facilities, intellectual property, products, and sensitive information in an emerging nation, its security budget should be roughly 5-10% of its annual operating budget, although this can vary dependent upon the industry, staffing and collective risks.

Anything less may result in unexpected injuries, deaths, costs, or losses that could adversely impact annual profits, including wrongful injury and death litigation.

Ideally, the essential components of an international security program for an organization that sends staff abroad on temporary or long-term assignments should include:

1.  Policies and procedures re: comprehensive international travel and expatriate security support;

2.   A formal communication plan educating staff on threats the subsidiary could face abroad, how to respond, and the organization’s vital support role;

3. Comprehensive health care and medical evacuation coverage for travelers, expatriates, and family members;

4. A crisis management plan that lists the organization’s strategy for responding to emergencies, to include short-term or long-term evacuation of staff; and

5.  Predetermined resources that can respond to on-site/off-site emergencies in emerging nations in which expatriates, local staff, and travelers are situated.

An example of poor risk management by a global company occurred in México some years ago when the company hastily contracted for security guards to protect a 20,000-square-foot warehouse containing pharmaceutical merchandise worth $4 million. 

The company failed to check references or to thoroughly vet and screen the bona-fides of the security firm. 

Worse, the security firm had no formal, ratified contract with contract guard company that stipulated liabilities, negligent acts and loss of material resources.

Within a matter of weeks, a major break-in occurred at the pharmaceutical's warehouse. A contract guard who was surreptitiously working with a criminal gang shot and killed an armed security guard, who was seemingly unaware of the conspiracy at play.

The thieves stole nearly $2.5 million in merchandise that was later sold on the black market for nearly $1 million. 

The victimized company quickly realized that paying two guards minimum wage and having no redundant security (e.g., roving supervisors, intrusion alarms, covert and declared surveillance camera footage, etc. caused it to suffer a significant material loss in addition to the loss of life of one security guard. Worse, the security company who contracted for guard services ultimately went into bankruptcy.

A second case-study of equally deficient risk management protocols involved the theft of Perú’s priceless tumi mochica, a pure gold ceremonial knife used by the Moche, a pre-Inca civilization, for the human sacrifice of its adversaries. 

The ritual, performed some 1,500 years ago, was conducted with surgical precision whereby the face of the victim was peeled away and the heart removed while the victim was still alive. 

The one original tumi was considered a masterpiece of Mochica metalwork. Needless to say, the tumi was stolen in 1983 from a museum in Cuzco (near Macchu Pichua) that was protected by local guards who were employed at minimum wage.

The thieves later melted the tumi down for its gold content before they were eventually arrested, convicted and imprisoned. 

The tumi was priceless to the Peruvians! 

The tumi mochica was lost forever as a direct result of flawed risk management at a museum whose holdings were priceless, despite their flawed loss prevention program.

In the end, the protection of archaeological assets or anything of value really DO matter! page152image1968page152image1696page152image1424page152image1152page152image880page151image16312page151image16040page151image15768