DO YOU NEED AN EXECUTIVE PROTECTION PROGRAM?

Many companies, including major corporations, have a number of physical security programs but no specific executive protection strategy or program. In this blog, Christian West and Brian Jantzen shed light on the three questions that corporations need to ask when considering whether to set up an EP program.

The decision to set up a corporate executive protection (EP) program is not a simple one. While good programs across a variety of companies share many similarities, the paths leading to the decision to establish them are as varied as the companies themselves.

Why companies choose to set up executive protection programs: To mitigate assessed risks: There are a number of factors that influence whether corporations decide to provide a special degree of protection for some of its principals. In essence, however, all of these factors have to do with the three basic questions of risk assessment and mitigation.

What would be the impact, or loss, if something occurred to one or more of the company’s principals?
What is the probability of that loss occurring?
How can we best mitigate the risk?
Risk assessment and mitigation are the foundation of every EP program, and should inform all corporate EP strategies. While a “how to” of risk assessment is beyond the scope of this article, we will take a quick look at each of the three central questions – and return to more risk assessment details later.

Impact of loss

The potential losses related to a corporate principal being harmed are many and varied. Obviously, the most important are the personal consequences of any harm to the individual and his or her family.

Beyond that, however, lie other interests of the company and its shareholders. That is why the corporation’s board of directors typically considers a spectrum of factors when deciding whether to mandate an EP program for one or more of its principals.

One factor is shareholder value. If a corporation’s reputation and competitiveness are closely associated with one or two high-profile individuals, then the company’s perceived value – and actual share price – can be immediately affected if something happens to those individuals.

Duty of care is another issue. If individuals working for the corporation are exposed to personal risk as part of their jobs, then executive protection may in some cases be considered a duty of care since it could mitigate a reasonable and foreseeable risk.

Another potential “loss”, which is often overlooked, has to do with productivity. Few boards would expect a well-remunerated top executive to spend time making his or her own travel arrangements. But what about the time execs spend while travelling moving between airports, hotels and meetings? Secure travel logistics, a key component of many EP programs, not only keeps executives safer while on the road, it also enables them to boost productivity by staying focused on the job rather than dealing with rental cars and taxi queues.

It is impossible to make blanket statements about the possible impact on a corporation should something occur to some of its principals: there are just too many variables that need to be considered. A detailed risk analysis can, however, make things more clear for boards and management – and should be a part of every EP strategy.

Probability of Risk

The assessment of risk probability for a corporate principal is affected by a number of factors.

Specific threats from persons of interest to the principal or his/her family are typically at the top of the list, and need to be perceived and analyzed to keep people safe now and in future. Understandably, such threats are often a part of the company’s decision to instigate an EP program. However, we know from experience – and from the Secret Service’s “Exceptional Case Study Project” – that those who pose the biggest threats are rarely those who actually make direct threats. This means that assessing risk probability entails more than recording actual threats; it should also encompass proactive intelligence to identify probable and possible persons and groups of interest.

For reasons that include everything from crime and income inequality to terrorism and road traffic, risk is perceived to be greater in some cities and countries than in others. An investment banker traveling to Bogotá is more at risk than one traveling to Boston. And while we’re on the topic of travel, do you know what the biggest single risk while traveling is? Getting hurt in a road accident while driving in a car. Secure transportation is an important part of executive protection.

Another key indicator of risk probability is prominence. The more prominent a corporation and its principals, the more likely they are to be approached by persons of interest. These interactions range from slight to enormous invasions of privacy; they include troublesome but largely innocuous exchanges with strangers (you’re rich, I’m not – how about giving me some of your money?); they can also be outright hostile (kidnapping of the principal or his family). There are tools to evaluate the relative prominence of various principals, and these should be used in assessing the probability of risk.

Everything else being equal, furthermore, some industries are more prominent than others. This, too should be taken into consideration when assessing risk. For example, the oil and gas industry is under close scrutiny from many quarters, not all of them friendly. The number of persons, disaffected or otherwise, who take an interest in a petroleum company and its principals is likely to be higher than those who keep an eye on a food company. Until someone has a beef with the food company’s products, that is.

Mitigating Risk

Risk mitigation is not the same as risk elimination. Like everything else that has to do with risk assessment, there are no absolutes that hold true for mitigating risk.

Yes, we would dramatically reduce risk to the principal if we required him or her never to travel and to remain ensconced in a fortress of a corporate headquarters. But is this realistic?

Conversely, mustering a formidable force to accompany execs on their travels would allow safe mobility, but is not an attractive option. For most companies, setting up the equivalent of the US Marines to protect key principals is neither desirable nor feasible.

Mitigating risk is what EP is all about. It is a question of striking the right balance between many factors. To mention a few: the relative probability of perceived and possible threats, the principal’s lifestyle and travel needs, corporate organization and culture, available resources and budgets.

The “how” of risk mitigation is the “who, what, when, where and how” of executive protection. Who should be protected, and by whom? What are the elements of that protection? When, where and how should protection take place? How should an EP program be organized, managed and evaluated? These are all questions that need to be answered in a corporate EP strategy.

Toward a Corporate EP Strategy

We conclude this article by returning to our original question. Does your company need an EP program? Sorry, but we believe there is no straightforward answer. Every corporate security officer – and ultimately every corporate board of directors – needs to consider this for themselves in light of their EP strategy.

Because whether it is written down or not, every company does have a corporate EP strategy.

Some corporations simply figure that the chances of anything happening to their principals are negligible, and that they’d easily be able to deal with his or her loss if something did happen. That is also a strategy.

Corporate decision makers should take the time to learn about the many ways that EP programs can be customized to fit the company’s specific needs. Otherwise, they risk adopting a generic or outdated strategy based on inaccurate assumptions – and results can be more frustrating than they are effective.

Those companies that do make the effort to proactively create a corporate EP strategy take a different approach. First, they make an active decision to face the three basic questions of risk assessment and mitigation outlined above. Then, they consider their options and choose the path that best suits them.

In our experience, few corporations – including even large, international ones – have faced all of the questions we discuss above in a coherent way. Even fewer have created a corporate EP strategy. Although corporate EP is growing, both in terms of the number of companies using it in one way or another and professionalism, in most companies it has yet to reach anywhere near the levels of expertise found in other corporate functions such as finance, HR, sales or marketing. (None of whom, by the way, who would dream of operating without a strategy!)