In the current era of globalization, U.S. companies are rapidly expanding their reach — and their risks. In many of the world’s leading danger zones — Iraq, Pakistan, Mexico, Venezuela, Brazil and the Philippines — the kidnapping of North American executives is a growth industry. In Colombia, where more than 4 thousand kidnappings occurred and $250 million in ransom payments were collected over the past few years, the kidnapping of Americans and other foreigners, along with well-to-do locals, has become a way of life for rebel armies and gangs of criminals.
Although North American executives and their families are popular kidnapping targets, U.S. business has been slow to manage kidnap and ransom risks effectively. What’s the best way for employers to prepare for and mitigate losses associated with kidnappings? International risk management expert Thomas W. Harvey recommends any employer sending employees into high-risk countries purchase kidnap and ransom (K&R) insurance coverage.
“Americans with K&R insurance are four times more likely to survive a kidnapping than non-insured travelers,” says Harvey, president and CEO of Assurex International, the world’s largest privately held commercial insurance brokerage group. “Nonetheless, 60 percent of Fortune 500 companies and even fewer small businesses carry kidnap and ransom insurance coverage for their expatriate employees,” Harvey says.
In spite of the business community’s slow response to what has become a global hostage crisis, the international risk management professionals at Assurex are committed to educating employers about kidnap risks and extortion demands, and training employees to successfully manage their risks once they land on foreign soil.
“Money is the name of the kidnapping game,” says Harvey. In 67% of cases, ransom is paid, and the average payment is about $2 million. K&R insurance typically covers ransom and extortion payments, hiring professional security consultants and negotiators, theft of ransom money, death of victims during rescue, transportation costs, and payments to informants.
“Companies that balk at K&R premiums should bear in mind that K&R insurance is far less expensive than a ransom payment or a murdered executive,” said Harvey. A two-month stay in Colombia, for example, would run about $4,000 for $1 million of coverage.
The kidnapping crisis is not restricted to foreign shores. Many Americans would be surprised to learn how often executive kidnappings occur in the United States. Bank branch managers and their families are at particular risk. Each year, the FBI investigates 350 to 400 domestic kidnappings, with ransom involved in one- third of the cases. Fortunately, executives kidnapped in the United States can count on the FBI and local police working on their behalf. This is not so if you are kidnapped abroad. In some foreign countries, the local and state police may be your kidnappers.
To keep the dream of foreign travel from becoming a nightmare, Assurex recommends employers put expatriate employees through a rigorous training program designed to help them assess the local cultural and political situation. In addition, employees should be taught what to do — and not to do — in the event they are kidnapped. Let employees know what type of action the company will take to secure their release. Inform employees it could take months to free them. Stress that victims should always leave negotiations to the security consultants and insurance professionals hired to handle the situation.
* Don’t think you’re immune because you’re not rich. The most frequent kidnapping targets are middle-class executives and their families. Remember, wealth is relative. A middle-class income in the United States may well place you on the top end of the income scale in some of the world’s most dangerous nations.
* When traveling abroad, maintain a low profile and don’t advertise your wealth. Leave your flashy clothes, glittery jewels and luxury car at home.
* Vary your routine. Don’t travel the same road, jog the same path or eat at the same restaurant every day. This is particularly true for expatriates stationed abroad for an extended period of time. Don’t let your familiarity with a country and its people blind you to hidden dangers.
* Only use official taxi stands. Step in a cab abroad, and you risk driving away in your kidnapper’s car.
* Steer clear of isolated or rural areas. Don’t make the kidnappers’ job any easier than necessary.
“Whether expanding operations globally, or operating banks and other high-risk businesses domestically, executives owe it to their employees, shareholders and customers to reduce their risks and protect their employees and other corporate assets,” says Harvey. “K&R insurance and employee security training should be part of every at-risk organization’s risk-management arsenal.”
Assurex is the world’s largest grouping of privately held risk management and commercial insurance brokerages. Visit them at assurex.com.
Courtesy of ARA Content, www.ARAcontent.com.