Emerging markets growth sparks fresh security fears

Multinational companies are set to face new security risks as they look for growth opportunities in the developing world and become ever more reliant on virtual technologies to increase productivity. To rise to these challenges, security chiefs must adapt themselves to the new conditions and change the way they perform their duties.

This was the main message of the annual conference organised by Club des Directeurs de Sécurité des Entreprises [CDSE], an association of security chiefs of big companies in France.

The meeting, which discussed how security directors are supposed to deal with new risks created by globalisation and the wider use of virtual and IT tools by their companies, took place on November 25 at the OCDE headquarters in Paris.

“Your job is essential and is going to change,” the security chiefs that attended the event were warned by Clara Gaymard, CEO of General Electric Europe. “If we are going to carry on performing our duties in the traditional way, we are not going very far,” added Olivier Hassid, Managing Director of CDSE.

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Participants were told during the event that staying out of markets like Brazil, Russia, India and China in the current economic environment is not an option for a large company today.

DEEP CHANGE

“The BRIC countries are a reality, and your competitors are there already,” said Alexandra Trzeciak-Duval, Head of the Policy Coordination Division at the OCDE. She remarked that other, even less stable countries in Africa, Asia and Latin America are experiencing deep social and economic changes that cannot be ignored by companies either. “There are very important risks in such places, but also plenty of potential,” she said.

Deep involvement in unstable countries, however, implies a stronger focus on risk management and security affairs, the experts remarked. “Many emerging markets offer great opportunities, but we ask you to tread there with caution,” said Alain Bauer, a criminal expert who is Chairman of Conseil Supérior de la Formation et de la Recherche Stratégique, CSFRS, a security and strategy think tank.

Bernard Frahi, Security Director at Sanofi Aventis, stressed that even in very promising markets, risks can only be assumed if they make sense from an economic point of view.

He said that to keep security arrangements on competitive levels constitutes an important challenge for multinational companies in unstable countries and it is not an easy task.

Sanofi Aventis spends €500,000 a year just to provide security for employees who go on business trips. And that is no luxury, he said, because if an incident occurs, that leads to a court action in France, firms are required to show that all possible means were employed to guarantee the security of their employees.

Another head of security, Jérôme Ferrier, from oil giant Total, gave a practical example of how difficult such a balance is to obtain by noting that companies like Total fight for market share with rival firms that sometimes accept lower standards than those guaranteed to European workers.

“International oil companies compete with national oil companies which work in the same risky regions, but often don’t have the same security concerns,” he said. He also told the audience that in some countries risks are so acute that international companies that are fierce rivals in their fields often decide to adopt a cooperative approach and share security-related information.

The difficulties of working in risky markets were vividly exemplified by the young French ambassador in Baghdad, Boris Boillon, who said that a growing number of French companies have been setting up shop in Iraq in recent years.

“Iraqis have plenty of money to spend and want to make up for the time they have lost,” he said. “France has already helped to rebuild the country before, so we have a very good image in Iraq,” Mr Boillon added, noting that 30 French companies have begun work in Iraq since the toppling of Saddam Hussein in 2003.

But he made no attempt to disguise the risks that business people still incur by operating in the country. One of the most common security problems they are likely to meet are kidnappings by terrorist groups that have drifted towards common criminality and are carried out in a particularly brutal way, he said. Another is the risk of being in the proximity of a bomb blast. These still are daily occurrences in Baghdad, Mr Boillon conceded.

But the ambassador also noted that the Iraqi security forces have cleaned up their act and considerable help is often provided by national governments to their companies.

France, for example, has created a public private partnership in Baghdad which offers services like transportation, a safe centre of affairs and advice on private security for entrepreneurs interested in working in Iraq.

To enjoy such services, firms have to pay €2,000 a year, in an effort to also make them available to smaller firms. “Instability remains, but we can do business in Iraq,” Mr Boillon said.

RISKS IN THE CLOUD

Participants in the day-long event were also warned of day-to-day risks that they are likely to face in their daily jobs with increasing frequency.

One of these is the risk of cyber attacks, a crime that French laws are still only beginning to contemplate. The chief attorney of Paris, Jean-Claude Marin, said that some progress has been made on the criminal treatment of web-based frauds in recent years, and investigators have been employing new tools in their quest to bring cyber criminals to trial. “But it is not an easy thing to accomplish as new ways of perpetrating cyber frauds come about all the time, and often the legal system can only follow the criminals,” he said.

The exposure to web-based attacks can also be enhanced by the delegation of important tasks to third parties via virtual means, security heads were warned. Outsourcing can make much sense from a cost and operational point of view, but risks can be created in several stages of the process. “Cloud computing is a useful tool but the security of outsourcing processes is horribly managed by companies,” remarked Patrick Pailloux, Director of Agence Nationale de la Sécurité des Sistèmes d’Information [ANSII], an official body that deals with cyber threats to France’s national security.

Alain Bensoussan, an expert in IT law, stressed that security concerns must be registered and discussed at the start of contract negotiations with providers of cloud computing services.

Another emerging concern for security chiefs is the risk that their companies will find themselves involved in a breach of ethics, according to the experts.

Gérard Kuster, Head of the Ethics and Compliance Department at GDF Suez, the utility group, pointed out that this is an area where ‘extreme legislation’ has been developed in recent times.

The task of managing such risks is compounded by the power of technology and new communication channels such as online social networks, Mr Kuster said. “A real revolution in recent years has been the multiplication of interested parts,” agreed Dominque Lamoureux, Director of Ethics at aerospace group Thales.