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As countries and global businesses begin the climb out of recession, new challenges and threats are appearing on the horizon—along with new leaders and collaborators, say global security and business experts.
During a webcast sponsored by International SOS, a medical and security services firm, and Control Risks, a specialist risk consultancy with locations around the world, experts discussed global political and security risks that might pop up in 2010 for businesses to be aware of.
Analysts have seen a slow and unsteady financial recovery over the past two quarters, said Jonathan Wood, global issues analyst for Control Risks. “This is one of the most severe recessions of the post-war era,” he told webcast participants, worse than the oil crisis in the 1970s and the stock market crashes of the 1980s. However, the return to growth has been quicker and stronger than in previous downturns. Wood credited the revival to “unprecedented cooperation at the global level, particularly among the G20… [and] emerging economies coming into their political strength as key global players,” with agreements to support social safety nets, infrastructure, banking economies in the United States and Europe, and the preservation of free trade.
“Significant insecurities are coming, though,” Wood said. During the recession, governments made promises to their citizens that they now must keep, and they might find it difficult to do so. Unemployment is on the rise—as it normally will be for several quarters after a recession, Wood said. Countries could be tempted to turn away from their global partnerships to focus on domestic issues, he added.
Succession and regime change will shake up some countries in the Middle East and Africa, Wood said, particularly in Algeria and Libya. “There’s not always a clear sense of who’s waiting in the wings to take over. There may be family members [but] we’re not sure how contested the regime change will be,” he added.
Organizations doing business in countries with “street politics,” where violence might accompany a change in leadership, will have to factor these changes into their strategic and operational decisions. Key government ministers and officials might be out of office, and along with them partnerships or networks businesses had established. Potential violent conflicts should prompt organizations to make sure that their crisis management, evacuation and security plans are in good shape, Wood said.
Businesses should be particularly aware of three nations this year, Wood said: Iran, Iraq and China. Iran faces its fourth round of sanctions for its nuclear program, but it is unlikely that the United States or Europe will intervene militarily. Iraq’s government has stabilized and the country is no longer hostile to foreign businesses, Wood said. The country might undergo a change in leadership, and while analysts say there might be some violent protests, they won’t last. China has been a significant player in the financial crisis and recovery, making great strides outside its borders and increasing its role and weight in geopolitical affairs, Wood said. “We see greater integration of China into global institutions” and strategic issues like climate change, Iran, global finance and monetary issues, he added.
Organizations face greater danger at sea than they have previously. Piracy is on the rise in the waters around the Horn of Africa, Somalia, Southeast Asia, West Africa and the Gulf of Guinea, Wood said. Pirates are more professional, sophisticated and capable than before, and they are able to attack offshore oil and gas producers. In the South China Sea and Indonesia, particularly, firms dealing with the global recession have been unable to beef up security to deal with pirate attacks, Wood said.
Terrorist networks are changing their patterns of attacks, as plots to hit major cities and significant landmarks have been foiled, Wood said. Jake Stratton, general manager of global risk analysis at Control Risks, pointed out the Feb. 13, 2010, bombing at the German Bakery in Pune, India, which killed nine people and injured 53. The location was a favorite of tourists, even though the city is two to three hours away from Mumbai. “What it shows is the capacity of terrorists to surprise and not conform to form. Pune is a second-tier city … and not an obvious target. It was obviously aimed [to] hurt westerners. There is a growing expat community there.
“It tells us we can never be too careful. The terrorism threat is not confined to big cities. Terrorists will move to softer targets if prestige targets are out of reach.”
Protecting Human Capital
Organizations should protect their employees traveling to other countries, their expatriates and workers hired in other countries who then move to a third country as part of their jobs, said Alex Puig, regional security director, Americas, for Travel Security Services, a joint venture of International SOS and Control Risks.
“In this globalization epoch, more companies find themselves out of necessity moving into new markets. More of your corporate value—your human capital—is at risk,” Puig said. Look not only at international air travel but also railway, domestic flights and local roads. “These are things to understand about the countries you operate in.”
Don’t allow yourself to become overconfident, even if you’ve had operations in the country for several years, Puig warned.
“No matter how good you think you are, you will always have gaps. You must constantly review” risk management plans, he said.
Beth Mirza is senior editor for HR News. She can be reached at Beth.Mirza@shrm.org.
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