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 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 public.

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 this Key persons not present in the initial stages of a crisis Companies having to close their door when an incident is not well managed

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

Agenda 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 countries 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 negotiations – 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 Treatments PLANNING, PRE-RISK and CM EXERCISES

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 PLANNING 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.) IMPLEMENTATION 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 OPERATION 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 (IT/Comms).

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 costs.

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 QUESTIONS? INTELLIGENT RISKS (IR) Paul Fitton Tel: