Crisis management - Governance Institute of Australia

Crisis Management - Kidnap, Ransom & Extortion
Who are Liberty International Underwriters (LIU)
Liberty International Underwriters (LIU) is part of the Boston-based
Liberty Mutual Insurance Company, a leading global insurers,
established in 1912.
Headquartered in Sydney, LIU Asia Pacific began its operation in
Australia in 1999, and has since established offices in Brisbane,
Melbourne, Adelaide and Perth. The company is licensed and
regulated in Australia.
What is Crisis Management
Crisis management is the process by which an
organization deals with a major event that threatens to
harm the organization, its stakeholders, or the general
What we see when a Crisis Event occurs
• Crisis interrupts operations where management is unprepared to
deal with the event
• Social media / media/ regulatory authorities –how to deal with
• Key persons not present in the initial stages of a crisis
• Companies having to close their door when an incident is not well
What Insurers can do?
• Dedicated claim and underwriting staff who have handled a
number of crisis management event
• Provide tailor made solutions to your insurance policy which best
suits your business
• Specialist consultants are available as part of the insurance policy
• Pre incident credit is available as part of the policy to assist
clients with pre incident training
• About Intelligent Risks (IR) Pty Ltd
• Emerging Australian business opportunities
• Kidnap, Ransom and Extortion (KRE)
• Other Crisis Management
• Crisis Management Tools
About Intelligent Risks
• IR is Australia’s leading international management services
consultancy specialising in providing risk management, security
and crisis management services to clients
• IR has personnel in Australia, China, Jordan, Qatar, Thailand, the
UK and the US; and has successfully delivered projects in over 90
• IR is the Asia-Pacific crisis responder for LIU and several other
Underwriters; providing a 24/7 crisis response service
• Experience providing risk assessment, crisis planning, training,
and KRE response services to clients in high-risk countries
Emerging Australian business opportunities
• There are increasingly strong imperatives for Australian
companies to operate in medium to high risk environments.
• This is in part being driven by:
– Limited organic growth opportunities in many sectors in Australia
– Increasing demand for natural resources such as hydrocarbons,
rare metals, base metals
– Growth in the affluence and size of the middle classes in the
BRIC countries
– Increased consumer spending and related opportunities in many
developing nations
The Good, the Bad and the Ugly
A number of Australian and international
companies go into challenging markets and
environments fully prepared
However many go into challenging markets
and environments with a lack of
knowledge of the threats, governance
issues, risk management and dealing with
the local operational challenges
We have witnessed countless examples of
the good, the bad and the ugly.
The risk of KRE
• In many countries, militant, politically-motivated groups and
organised criminal gangs actively target foreigners for kidnapping
and companies for extortion
• Motivations vary between groups and region
• Kidnapping is big business - ransoms provide a revenue source
and help fund other activity
• In recent years Australians have been the subject of kidnaps or
attempted kidnaps in Bolivia, Brazil, Cambodia, Colombia, Iraq,
Mexico, Morocco, Nigeria, PNG, Peru, the Philippines, Somalia, Sri
Lanka and Yemen.
The risk of KRE (cont.)
• Important to determine if a kidnap risk
is real or is it feigned: for example, is it
a “protection racket” or a criminal scam?
• There have been conspiracies to extort
large sums of money from Australian
companies in China, Fiji, India, Indonesia, Mali, Papua New
Guinea, the Philippines, Thailand, Vietnam... and elsewhere
– Examples of extortion can also include “Protection money”,
“environmental levies”, “licence fees” and “facilitation payments”.
Global Market Share of Kidnappings
• Nearly half of the world’s reported kidnappings occur in
Latin America, with Mexico as the leader, followed by Venezuela
and Brazil.
• Other kidnap hotspots include Afghanistan, Algeria, India,
Indonesia, Iraq, Nigeria, Pakistan, the Philippines, Mali, Russia
and Yemen.
Case Study – Al Qa’ida in the Islamic Maghreb
• AQIM evolved from affiliation of extremist groups
– Continued to expand in north and west Africa.
• Security and governance vacuums assisting growth
– Linkages with many local extremist groups – kidnap on-sales
• Highly active and highly volatile
– In September 2010, AQIM claimed responsibility for an attack on a
uranium mine in central Niger, where seven foreign executives were
taken hostage. Four still remain in captivity.
– Trouble with recovery – low tolerance levels
Are your personnel at risk?
• The risk of kidnapping to individuals living and working in
developing and undeveloped countries is often is significant
• These personnel often operate in remote locations and local
security (government and private) is not always able or willing to
provide the required level of protection
• Kidnappers are becoming highly motivated, well organised, and
are increasingly willing to take greater risks
Are your personnel at risk? (cont.)
• Foreign employees of multinational companies (particularly in
the mining, oil and construction sectors), non-government
organisation (NGO) staff and tourists at most risk
• Kidnappings primarily occur when victims are at their place of
residence, in transit, public locations and in the workplace
• Kidnappers are moving further afield to carry out their
operations, striking in new locations
KRE trends
• Kidnappings are driven by multiple motivations
• Kidnap and ransom events are becoming longer-term
– Kidnappers are prepared to take a long-term approach to
negotiations – it is difficult for authorities to track, capture and
rescue in kidnapping regions
(i.e. north and west Africa, the Philippines)
• Kidnappers are also becoming more brazen and willing to take
higher risks to undertake their operations
KRE trends (cont.)
• In recent years, there has been an increase in targeting of
expatriate workers, particularly those in the mining/hydrocarbon
industries and NGOs.
• Opportunistic and ‘Tiger’ kidnapping becoming a popular tactic
– Short-term, lower-risk
– Complacency will continue to be exploited
• Kidnappers use Facebook too! The exploitation of social media
Case Study - Peru
• Rising commercial opportunities
in South America and Peru for
Australian Business
• Popular with Australian travelers
• KRE not in the same league as
Mexico, Columbia or Brazil –
but complacency is a key risk
• Some examples: Tiger Kidnapping
and Virtual Kidnapping
When a kidnapping occurs
• Employers have a “duty of care” for the welfare and safety of
their personnel: expatriate and local nationals
• While most companies have detailed risk mitigation strategies in
place, kidnappings are not always avoidable
• Employers must be fully prepared
to respond when an event occurs
• Even those with an obvious political
agenda can be open to negotiation
to allow victims to be freed
Australian Government response to kidnapping
• Australian authorities have a limited capability in most countries
to assist in response to a kidnapping (but might create a SITF to
coordinate the responses)
• In any event, many western governments, including Australia, will
not meet ransom demands.
• There is often a requirement to rely upon security consultancy
companies with KRE response capabilities and experience.
Case Study – Papua New Guinea
IR has responded to kidnappings in Cook Islands, Honduras, Nigeria,
Northern Ireland, Papua New Guinea, Philippines and Timor.
Several have been in PNG – mainly involving employees of banks and
financial institutions (and mainly local national employees)
On one occasion the entire ATM refill team was kidnapped
Another occasion a retail bank branch manager was kidnapped and his
family held hostage while he was taken to the bank to access the vault
We are aware a raskol gang is currently planning to kidnap a senior
expatriate executive in Port Moresby.
Other types of crisis
• A crisis can hit in many different forms – and can strike anywhere
• Natural disasters, political issues, bomb threats and hoaxes,
personnel threats, medical emergencies, missing persons,
contaminated and malicious damaging of products, etc.
Political and disaster
• Ongoing global uncertainty
• Instability also continues amongst our regional neighbours:
Political instability in the Pacific
Natural disasters across South-East Asia
Landowner disputes
Geo-political tensions across the region
• From floods in Thailand, threats of physical harm to senior
company executives in Shanghai, to incommunicado missionaries
in PNG to missing backpackers in the Philippines
Case Study – 2006 Fiji coup d'état
• IR responded to help expatriate a number of Australian workers
during the last Fiji coup
• Company had contract with international
EM responder for evacuation – lack of
local knowledge
• IR placed a responder on the ground and had employees safely
on a departing charter in 48 hours
• Local knowledge, experience and ingenuity critical for
crisis management success
Closer to home
• Australia largely free from politically-motivated groups and
criminal kidnappings are rare events
• Social, environmental and financial issues continue to provide a
potential catalyst for acts of civil disorder, sabotage and extortion
• Activists, lone offenders and the trusted insider
• Without the right tools and training, a small incident can easily
become a major crisis
Corporate Tools for Crisis Management
• Crisis Management Insurance
– Kidnap, Ransom and Extortion (KRE) insurance provides employers
with a kidnap prevention and response capabilities to facilitate
successful outcomes.
• Understand the security risks in your operating environment
– Sovereign Risk Assessments on foreign projects: political stability,
currency, legal (incl. taxation), landowner, environmental, security
and safety, industrial relations, corruption issues, etc.
Corporate Tools for Crisis Management (cont.)
• KRE Planning
– Documentation and policy specifically for KRE: Kidnap and Ransom
Prevention Plan; Group Executive Protection Policy
• Crisis Management Planning - Develop a Crisis Management Plan
– A framework and tools to respond to all the major hazards the
business might face.
• Interoperability with Corporate Security Plan, IT Disaster
Recovery Plan and BCM
Corporate Tools to Mitigate KRE Risks
• Select your Crisis Management Team (CMT)
– A team of executives and specialists to respond to complex issues
• KRE & CM Exercises – practice makes perfect
• Appropriate Support Services
– Medical; Environmental; Media/Public Relations; Security;
Insurances; OH&S; Accommodation; Disaster Recovery Site
Duty of Care and Liabilities
• Employers, governments, insurance companies and private
security firms engaged to facilitate a kidnap release, may face
legal action following a kidnapping due to allegations of
neglecting duty of care obligations.
• Some examples of Duty of Care issues:
– NGO worker in Sudan
– UK oil worker in Nigeria
And in relation to protecting staff from violence overseas it is worth noting
Pacific Communications v Davies NSWCoA (2001) – quantum damages plus
Role of Consultant – Crisis Responder
• Establishes and advises crisis committee
• Advices on external contacts - police, government, media
• Advises on initial contact, demand and proof-of-life (KRE)
• Advises on ransom negotiation, delivery, victim recovery
• Post-incident debriefing of victim and security measures
• Save client return is the number one priority
What a Crisis Responder can do for you
• Facilitate the process to achieve an effective outcome
• Act as intermediaries with outside contacts
• Provide clients with guidance, regular reports and post-incident
briefings and analysis
• Understand dynamics of working with corporations and families
• Understand the extortion process and how to deal with a variety
of demands
What a Crisis Responder can do for you (cont.)
• Evaluate circumstances, identify options and recommend a
solution that is best for the client
• Experience dealing with common criminals or sophisticated
political groups
• Provide independent and unattached advice
Contact Details
Paul Fitton
Tel: 02 9439 2922
[email protected]

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