Terror alerts and corporate board liability are focusing new attention on security issues for top company officers.
Terrorist attacks in the United States, bombings in the Middle East and kidnappings in Latin America have focused the spotlight on improving security for corporate executives when they’re at home or on the road. But threats to corporate leaders also might come from less headline-grabbing sources—animal rights activists targeting the home of a pharmaceutical firm’s CEO, or an angry former employee brandishing a handgun and trying to force his way into the COO’s office.
“After 9/11, numerous corporations and government agencies began to understand what terrorism is all about. It really jolted a lot of corporations to say, ‘We’d better take a look from the inside out,’ ” says Robert L. Oatman, an expert on executive protection who frequently provides training to other security professionals.
Executive protection experts are “part of the business continuity plan,” Oatman says. “We protect the No. 1 asset of the corporation.”
But that doesn’t mean every corporation needs to rush out and hire security specialists for their top executives. Much depends on such factors as the nature of the company’s business, where the executives travel, how high-profile they are and how wealthy they are, security experts say. Corporate leaders in high-tech industries, biotechnology firms, defense contractors and banks might be among those who warrant a closer look.
HR professionals in these and other firms may not be the only persons with a keen interest in executive security: Often, corporate boards determine that a risk assessment is in order, says Mark Cheviron, the vice president in charge of security at Archer Daniels Midland Co., one of the world’s largest agricultural processors, based in Decatur, Ill. Since the Enron scandal and the Sarbanes-Oxley Act, “boards are very, very concerned about internal audits, safety and security,” says Cheviron. “There’s a lot more liability.”
Regardless of who decides to have a risk assessment—HR or a corporate board—the first step is to hire an outside expert to perform the work.
Outside experts can provide a fresh perspective that can help organizations spot weaknesses or potential improvements.
They also can provide tax advantages. Say a company determines that an executive requires some protective measures, such as a security-trained driver. The Internal Revenue Service (IRS) might see that driver as a taxable benefit to the executive—unless an outside expert makes the recommendation.
To be eligible for a tax break, outside experts must be willing and able to defend their assessments if reviewed by the IRS, says Jerry Glazebrook, the head of protection operations for a multinational corporation that he declines to name.
Outside experts also can help bolster existing security resources. Even though most Fortune 100 companies hire former FBI deputy directors or experts with similar expertise to lead their security departments, the resources available to these departments often aren’t big enough to meet all of an organization’s needs. As a result, many firms contract with outside vendors for additional or specialized help.
What’s in an Assessment?
A safety assessment examines existing procedures in addition to factors such as how accessible the executive is to employees and visitors, where his or her office is located within the building, what mail screening measures are being used, and whether the executive has ever received threats. (Such threats, it should be noted, should be kept on file. Oatman, who heads R.L. Oatman & Associates Inc. in Towson, Md., asks for copies of threatening letters or e-mails, but often learns they’ve been thrown away.)
The assessment also needs to consider an executive’s vulnerabilities outside the office. “Executives tend to believe their home is their castle,” Oatman says. These corporate leaders, or their spouses and children, might be perplexed and at a loss as to how to respond if a disgruntled former employee or a rabid activist shows up at their front door.
“We want to look at the entire 24-hour clock,” Oatman says, including where executives spend their leisure time and where their children attend school.
Glazebrook, who once handled security for Henry Kissinger, says families often are neglected when it comes to executive protection. “The best and easiest target would be a family.” If kidnappers nab a family member, he says, the executive is likely to give them anything they want.
How Much Protection Do You Need?
A risk assessment might show that extra protection is warranted, but the type of protection required varies from case to case. Glazebrook, who has done more than 50 such assessments, says that in 20 percent to 25 percent of cases, no sophisticated security is necessary. Instead, measures such as a better home alarm system or tighter control on who has access to an executive’s schedule can do the trick.
In other cases, the degree of executive protection can vary widely. Safe rooms might be added to a home or office. Executives might be restricted to flying only on corporate jets, rather than on commercial flights. Or an expert might be brought in to coordinate and oversee out-of-town travel.
This is especially true for executives in multinational corporations who travel overseas. In such situations, it’s imperative to hire security experts who know their way around and know the language and culture.
Oatman says that before a trip, top-notch executive protection services conduct a threat assessment in every city and country that the executives will visit, doing such things as driving the routes the executives will travel and visiting each restaurant to scout out the exits. Everything from terrorism to crime risks are reviewed. When the executives arrive, security drivers are in place to take them to their hotels, and the executives have already been checked in so they don’t have to wait in line, where they might be vulnerable.
Those accompanying the executives should have emergency medical training, as well as knowledge of where the hospitals are located and who the English-speaking doctors are, Oatman says.
In many cases, the security personnel who accompany the executives shouldn’t stick out. “You need to move the executive carefully so it doesn’t look like they’re in a plastic bubble,” says Oatman.
Of course, in places like Iraq, gun-toting bodyguards may be a necessity. But often, the demand is for “polished, educated people who blend in with the executives,” Oatman says. Mike Ackerman, president and CEO of the Ackerman Group in Miami, cautions that trouble on overseas trips can come from the people you expect least: business partners. His Hong Kong office, for example, handles several cases each year in which American executives quarrel with a Chinese vendor or joint-venture partner, who then uses his contacts with the police to have the American put under house arrest on trumped-up charges.
“They [the Chinese businessmen] have a better shot of getting the problem resolved in their favor,” Ackerman says. His experts help extract executives from the situation more quickly.
For companies that have executives who travel overseas but don’t have an extensive security department, Cheviron recommends that HR managers tap into the resources of the State Department’s Overseas Security Advisory Council web site. The site offers free daily news briefings from around the world, including information on cyber crime and terrorism. There are also profiles of radical and terrorist groups, as well as reports on topics such as safety and security.
Corporations also can subscribe to for-profit services that collect intelligence information or chronicle terrorism, crime and political risks around the clock and disseminate it electronically or via cell phones.
What To Look For In a Vendor
Joe Keideth, who heads Keideth International in Beverly Hills, Calif., and has provided security for corporations, diplomats and entertainers such as Julia Roberts, says it’s key for a corporation to hire the right firm when looking to bring in extra executive protection. HR managers need to interview multiple companies, examining the background of the company’s principals and how long they’ve been in business.
Many executive protection companies also use subcontractors, so you’ll need to consider the experience of these organizations as well. “Because someone is an off-duty policeman doesn’t mean they’re trained for executive protection,” Keideth says.
He likens the situation to a person who has a brain tumor and goes to a general practitioner instead of a neurosurgeon. “Both would treat you,” he says, but the quality of care would be quite different. “You wouldn’t want somebody who doesn’t do this every day.”
Executive protection companies also should admit what their limitations are. Keideth says if he’s asked to provide maritime security on a yacht, he would bring in a former Navy SEAL. “Any company that says they specialize in all this stuff is lying,” he says. “They can’t have experts in all areas of security.”
The executive protection company also should be licensed and bonded, insured outside of the United States, and provide workers’ compensation if anything happens on the job.
Ask security vendors to give you clear cost estimates up front. A company may say that it charges $75 an hour, but after eight hours that might jump to time and a half; after 12 hours, it can be double time.
Keideth recounted the story of one corporation that came to him after having been charged $72,000 for six security personnel working 10 days. The corporation was reluctant to pay because the billing practices hadn’t been fully explained.
“So many people get sticker shock when the first bill comes in,” Keideth says. “Security isn’t cheap. Quality guys aren’t going to work for peanuts.”
Experts say a risk assessment can run from $15,000 to tens of thousands of dollars, depending on the number of executives assessed and the type of corporation. Rates for experienced executive protection providers often run from $750 to $1,200 per day. Keideth, for example, charges a flat daily rate, regardless of the number of hours he puts in.
Glazebrook says it’s tough to demonstrate the benefits of executive protection in black and white. “It’s not like loss prevention, where you can show numbers to show success. It’s very, very hard to benchmark.” But having that extra protection may deter an attack, or even an accident.
Corporate leaders need to ask themselves: For an “individual that is mission-critical to the operation—how would that damage my company if he was kidnapped, hurt or incapacitated?” Glazebrook says.
Susan Ladika has been a journalist for more than 20 years, working in both the United States and Europe. Now based in Tampa, Fla., her freelance work has appeared in such publications as The Wall Street Journal-Europe and The Economist.
Who Needs Protection?
Executive protection is typically associated with the highest-ranking members of a corporation, such as the chief executive officer, chief financial officer or chief operating officer, and perhaps their families. But it also may need to be extended to other members of a corporation.
For example, a regional manager in another country might be at risk. “He may not be considered a mission-critical asset, but he’s still an asset of the company that they have got responsibility for,” says Jerry Glazebrook, head of protection operations for a multinational corporation he declines to name.
That might mean hiring a security-trained driver or providing awareness training for the manager. If a company sends someone overseas and they are “not briefed properly on the true threat, there could be liability issues,” says Glazebrook.