Danger abroad - Global - anti-Americanism threatens overseas operations - related article: Best Practices for Crisis Management

Chief Executive, The, Jan-Feb, 2003 by Rebecca Fannin

Growing anti-American sentiment is threatening the safety of U.S. companies overseas. Find out what some CEOs are doing to protect against harm.

The scene: outside the United States Embassy in Jakarta, Indonesia, on July 29, 2002, four years after the fall of the dictator Suharto, which left the Muslim country in an uneasy state on the road to democracy. "Reebok are killers! Reebok are exploiters!" chanted 1,000 Indonesians who worked in the city of Bandung making shoes for Reebok, the world's second largest athletic shoe maker. The protesters gathered to oppose a cut in orders that left some 5,400 workers without jobs. During the course of the demonstration--their fifth of the year at the embassy--they set fire to a giant cardboard model of a training shoe.

It was a vulnerable moment for the giant corporation, and Reebok executives had to move quickly to protect their corporate image. They opted to offer the workers full severance payments, which they felt was a step toward securing goodwill, says Doug Cahn, vice president of Reebok's human rights program, which doles out grants for health and safety training and strives to improve working conditions. Reebok was also seeking to improve the safety of thousands of employees at production facilities scattered throughout Asia, including Indonesia, where a nightclub in Bali became the target of a terrorist bombing just a few months later, killing nearly 200 people.

The Reebok experience, and the heightened awareness of the possibility of terrorist attacks against American corporations at home and abroad in the wake of September 11, has put CEOs on notice that they have to take personal responsibility for creating a plan to manage potential security crises.

"A CEO of a major publicly traded company must be personally involved with corporate security issues," says C. Michael Armstrong, former chairman of AT&T.

"CEOs are accountable for protection, defense and recovery in light of a disaster, natural or man-made." Armstrong should know. He rushed technicians and communication equipment to restore phone service for Manhattan business customers after the collapse of the Twin Towers.

"Until recently, most general managers did not care about corporate security," says Bruce Blythe, CEO of Atlanta-based Crisis Management International, whose teams of former FBI agents and counselors have advised more than 200 companies on security risks, most of them since September 11. Today, he notes, more and more managers realize that they need to provide at the very least "emotional first aid" during crises.

"This issue has definitely registered on the radar screens of CEOs," says Gary Lynch, vice president at Booz Allen Hamilton in New York. "It's gone beyond the enlightenment to 'How do I prioritize the operational risks?"'

Two months after 9/11, Booz Allen surveyed 72 chief executives of companies with at least $1 billion in revenues and found that fewer than half were evaluating alternative plans in case normal business operations were interrupted. If the study were repeated today, Lynch says, "there would be a tremendous pickup" in the percentage of executives saying they are now adequately prepared. Lynch heads a newly formed group of 50 consultants who have worked with 75 to 80 corporate managers on security since the World Trade Center and Pentagon attacks. His consulting company has also logged hours overseas, where it has staged security drills and assessed risks.

In Indonesia, Booz Allen's security consultants advised a prospective client to lower its profile by removing signs, information on Web sites and the names and locations of staff members. In another instance, they advised an automotive manufacturer overseas and a U.S. consumer products company (Lynch would not disclose specific names or locations) to invest in X-ray machines to scan containers shipped to certain ports. Seaports are particularly vulnerable to terrorist attacks, Lynch says, because they are exposed. He adds that corporations should also make sure their shippers run background checks on dock workers and limit access to cargo-loading sites.

Mock drills inevitably turn up surprises. During one drill, an asset management company in the northeastern United States discovered it could not transfer funds electronically to another bank because the code used to authenticate and execute the transfers (codes are changed daily) was left on a slip of paper in a drawer in a building that had been evacuated in the drill.

"In some areas of the world, such as Southeast Asia, you need to have someone assigned to corporate security," Lynch advises. In areas where a corporation cannot afford a full-time security person, it should still appoint a key official to coordinate with local law enforcement or with a security consulting firm. This especially applies to Africa, Southeast Asia, the Middle East and other high-risk regions that are far from U.S. corporate headquarters. He also recommends that top executives arrange to have personal protection from a private concern like Kroll, a security consultantcy whose cases include investigations of reports that Philippines President Ferdinand E. Marcos and his wife, Imelda, secretly amassed millions of dollars while in office. The firm also advised the Port Authority of New York and New Jersey on security measures and evacuation procedures at the World Trade Center after the 1993 terrorist bombing, measures that Kroll says enabled thousands to evacuate the towers in 45 minutes on Septemb er 11.