Wish you weren’t there?

Being an entrepreneur is, of course, all about taking risks but carving out a business empire in some of the more “lively” parts of the world can mean putting more than your money on the line. EN investigates.

As Western economies splutter and wheeze, entrepreneurs are increasingly tempted to go further
afield to achieve greatness. There are massive opportunities out there for the intrepid business explorer, but there can also be some genuine dangers – and we don’t just mean getting poked in the eye by a cocktail umbrella.

Kidnapping for ransom is a daily occurrence in some parts of the world. So any business person aiming to become a globalised go-getter would be remiss if they did not take the time to understand the very real risks.

Exactly what is the scale of the problem? PMI Health Group, the UK’s largest independently owned provider of employee healthcare and risk management services, says that over 12,000 kidnappings are reported each year in more than 40 countries.

“It’s mainly within places like Asia, Latin America, Africa and Russia,” Chris Beardshall, a global account executive with the company, tells EN.

“Mexico City holds the current crown, as it were, as the most likely place to come across this sort of thing.”

Rowlands & Hames, a Lancashire-based chartered insurance broker that works in this area, estimates there have been 30,000 kidnappings in the past two years, resulting in the payment of ransoms worth over $1bn.

“In 2011, 37 per cent of kidnaps have been in Latin America and Central America; 32 per cent are in Africa, predominantly Nigeria, and you’ve got this little bit now started in Somalia,” says managing director John Isles.

“Asia-Pacific, that’s 21 per cent – that tends to be around the Philippines; and the Middle East in actual fact is only seven per cent.”

He adds that while one mightexpect places like Afghanistan to be a kidnap and ransom hotspot, it lacks the “systems” to use abduction for financial gain.

“In the Middle East, most kidnaps are political,” Isles says.

“In Latin America and Africa, that’s money. In Central America and Latin America it’s almost an industry. Mexico, for example, had 5,000 kidnappings last year.”

Indeed, according to think tank the Foreign Policy Centre, economic kidnap is not just an industry, it is one of the fastest-growing industries on the planet.

Therefore, Isles notes, kidnapping and ransom is not just a risk for multinational corporations.

“Where there’s an industry in it, let’s say South America and Central America, the expectations of the kidnappers are ‘reasonable’ because they say, well, let’s go for $50,000, we’ll get that. There’s no point asking for $5 million,” he explains.

“It does mean that for anybody on business, they know that your firm is very likely to be able to afford that kind of money.”

There’s also no typical profile for a target. In some hotspots, like Nigeria, the focus is on oil and gas workers but Isles says in countries with a “massive gap” between the haves and have-nots, the risk could apply to any business traveller who sticks out a mile and looks like there’s somebody, somewhere who would pay to get them back.

Brian Hay, co-founder and chief executive of logistics provider Cardinal Maritime, which ships freight to and from more than 90 countries, says, “Although business people only make up a small proportion of the approximately 10,000 people kidnapped around the world each year, they are seen as a vulnerable group.

“The exposure risk for business is huge. British people stand out and are perceived as being symbols of wealth.”

He adds that in some countries, business travellers can be seen as “fair prey” by the deprived and disaffected.

“There is often resentment toward foreign plundering of national resources,” Hay explains.

“For this reason, oil companies tend to be most vulnerable, but any company sending staff abroad on a short- or long-term basis is exposed.”

It is also a misconception that the bad guys prefer to target CEOs, he warns. After all, it is much easier to abduct an ordinary employee who gets less protection.

And with Britain’s entrepreneurs and SMEs being encouraged to boost exports, particularly to emerging
economies like Brazil, Russia and India, where Isles says kidnapping and ransom is a problem, more and more companies are opening themselves up to the small – but very real – danger of economic kidnap.

It is important to note that, if something should happen, the Government’s official stance is that it will not pay ransoms.

“Very much the onus or responsibility of dealing with kidnappers is on the employers or indeed the families of the victims,” says Beardshall.

However, businesses do not have to face the situation alone. There is a growing market for kidnap and ransom insurance, which can help with to deal with the extremely delicate – and potentially expensive – process of liaising with the local authorities and negotiating with captors to engineer a release.

Rowlands & Hames says it has seen demand for this type of cover increase 100 per cent in the past couple of years.

Isles believes this is partly down to “an increase in knowledge” about the risk of economic kidnapping due to high-profile cases, such as the abduction of tourist Judith Tebbutt and the recent snatching of two Medecins Sans Frontières doctors near the Kenya-Somalia border.

“It’s focused people’s mind to answer the question, ‘If this happened to one of my members of staff, what on earth would I do?’” Beardshall adds.

Despite this, Isles argues that awareness of kidnap protection among smaller firms is very patchy and while most FTSE 100 companies will probably have a specific policy in place, many SMEs “just won’t give it a thought”.

“There are lots of firms doing business with the BRIC countries, like Russia and India, and I guarantee a large percentage of them won’t even have considered it,” he adds.

However, says Beardshall, whether your firm is a seasoned globetrotter or just planning a one-off trip, you need to assess the exposure to risk in different parts of the world.

“It’s really a duty of care from an employer’s perspective,” he explains.

“If a business travel policy is enough to tick the box, fine. But we would always raise [a kidnap and ransom policy] as a discussion point to say, have you considered this?”

Beardshall notes that some standard business travel policies will have provisions for kidnap and ransom but the protection they offer can be “very, very limited” and the “higher-risk locations tend to be excluded”.

A specialist policy will be set up on an indemnity basis, so the insured company or individual is reimbursed once expenses have been incurred.

In the immediate aftermath of a kidnapping,that could include the payment of a ransom. Cover usually applies to ransoms lost, destroyed or confiscated during delivery, but companies must have the money upfront.

Insurance could also pay for a reward for the capture of the kidnappers and for the specialist consultants whose tactical advice can be essential in securing a victim’s safe return.

In addition, policies usually help with business costs, such as public relations fees, and offer protection against loss of profit as a direct result of abduction through, say, a decline in trade in a particular jurisdiction.

Many policies will typically have provisions for the long-term effects of akidnapping too, which make for a sobering read.

For example, Rowlands & Hames can cover up to five years’ salary for a kidnapped worker, including pension contributions and average bonuses. It also offers protection against financial loss caused by an “inability to attend to finances”, which covers failure to renew contracts, exercise share options or meet loan and mortgage commitments while in captivity.

Then there is support with medical and rehabilitation costs, not only for the victim but also anyone else involved in handling the crisis or hostage negotiation. This can pay for counselling, psychological and neurological treatment or even cosmetic surgery.

Furthermore, some policies will offer help with retraining if the traumatic experience of a kidnap means a former hostage has to adapt to changes in their job or make a complete change of career once they are released.

On the employer’s side, kidnap and ransom cover will typically offer some protection against subsequent legal action because of the kidnapping, extortion or wrongful detention.

Finally, there is cover for what the cold language of the insurance industry describes as “personal accidental losses” caused by a kidnap – that is to say dismemberment, permanent total disability and death.

Isles says an annual kidnap and ransom policy can be put in place for around £750 and oneoff cover is available for approximately £500 if you or your staff are just making a single trip to cross the Ts and dot the lowercase Js on a new contract.

But if you have cover, it is essential to keep it hush-hush.

“Some [policies] have a confidential secrecy clause in them and you can actually breach that clause because if you go around saying, oh well I’m alright, I’ve got a kidnap policy, you might as well just put up a big red flag,” he comments.

Obviously certain people within the company will need to be told the policy exists,otherwise no one will know what to do if and when it is needed, but information should be given on a strictly need-to-know basis. In many cases that need does not extend to the individuals who are covered – and would obviously be likely to spill the beans under pressure from their abductors.

Beardshall believes specialist insurance is crucial in a crisis as, if a ransom situation develops, it is the expert consultants who become the “focal point” of release efforts, not the company or the victim’s family.

“From an employer’s point-ofview, it would be a really difficult situation as to what should they do and being put under that sort of pressure,” he says.

“They’ve got no reasonable understanding of if they do pay [a ransom] that their employee is going to be returned to them – and there’s the actual mechanics of it, does somebody just go out there
with a suitcase of money? “Whereas the consultants, they’ll know what to say, what’s reasonable and what’s not reasonable. They deal with it day in, day out and it’s what they’re good at.”

Insurance can also provide experts who offer pre-travel help to minimise the risk of becoming a target. One of PMI Health Group’s insurance providers, Chubb, has for 33 years retained the Ackerman Group, a Miami-based risk analysis and security specialist staffed by ex-soldiers, Special Forces and FBI personnel, to provide pre-travel briefings.

“It’s things like when you’re turning up to the airport, don’t come along with your logo showing on your jacket, for example. Straightforward stuff so people are fully prepared,” Beardshall says.

If the risk of kidnap is extreme, a company could opt to have its own security detail on the ground. DW-OZ Security operations manager Barry Macguire, who has a background in counterterrorism, says, “You’ll find it’s a lot cheaper to take a security company from England with you than actually hiring a security firm in the places that you’re in.

“But always make sure they’re a reputable company.

Research them first. “You never know; if you’re to use a security company in Nigeria or Somalia or anywhere like that, you don’t know if the person that’s guarding you is also working for the people that are going to kidnap you.”

Often, of course, you won’t need a private army to do business and a just few dos and don’ts will suffice.

Obviously, check travel advice beforehand. The Foreign & Commonwealth Office (FCO) provides guidance on all countries and will issue specific warnings about kidnap risk. In January, for example, it said there was an increased threat in parts of Mali, Niger and Mauritania.

However, FCO advice tends to be tailored towards tourists and, if you have business in Nigeria or a contract in Iraq, a blanket “we advise against all travel” won’t be that useful.

Beardshall says a comprehensive kidnap and ransom policy, on the other hand, could provide accessto specialised, up-to-date information on countries, as well as individual provinces and cities.

One provider of such briefings, Red 24, uses around-the-clock global, national and local newsfeeds, contacts on the ground and expert analysis of crime levels, terrorism, threat of conflict, political stability, infrastructure condition and levels of kidnapping to compile individual risk profiles. Each nation, region or city is given a straightforward rating: green denotes low risk, orange medium risk, red high risk and black extreme risk.

Red 24 advises against all travel to areas in this last category, but can offer remote and on-the-ground support for those who do.

Now all this might have you thinking that you’re going to sever all ties with the outside world and conduct business from the safety of hiding under your bed but, as Nick Ross used to say, don’t have nightmares.

In reality, the most unpleasant experience of an international business trip will probably be the lumpy hotel bed. After all, set against last year’s 10,000 to 12,000 kidnappings worldwide is the fact that in the 12 months to August, Britons made 6.6 million overseas business trips.

As Isles says, the chances of you or your employees falling victim to economic kidnapping are, like the chances of your premises burning down, extremely remote – but in both cases it’s better to have protection and never need it than to get caught cold by a bolt from the blue.

“It’s very, very unlikely that it’s going to happen but if it does happen, you need to be ready,” he says. “For relatively low cost, it’s peace of mind.”

Don’t leave yourself a hostage to fortune.

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