FOR Marketing Perspective: Security Management

FOR Marketing Perspective: Security Management

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Security-risk-protection

A sea change for risk management in Indonesia

Craig Foster,
Country Manager
PT Hill Konsultan Indonesia.

If the events of Sept. 11 had not already done so, the Bali
bombing provided the catalyst for multinational companies
operating in Indonesia to place a greater emphasis on asset
protection -- both people and facilities.

Issues surrounding terrorism are likely to be core features of
many corporate risk management strategies in Indonesia for some
time to come. Facilities, plans and procedures developed in
Indonesia at key installations in the past have not been designed
with the latest threats in mind. There is a pressing need to
design effective security risk management strategies that address
these new threats both in the immediate and foreseeable future.

Certain provincial areas of Indonesia have traditionally been
assessed as "lower risk" in comparison to the Central Java
environment. The focus of risk management and security planning
has, up until recently, been primarily on Jakarta. The terrorist
attacks in Bali have forced a radical revision of this practice
with potential threats now switching to perceived "soft targets"
nationwide to include provincial operational centers, popular
western gathering places and most recently the Jakarta
international schools.

The traditional "relationship-based" security models with
heavy reliance on the Police/Military often employed in Indonesia
by the mineral extraction industries in remote areas are being
hastily upgraded to a more self-reliant and internationally
benchmarked design. In today's Indonesia, "official" resources
are increasingly deployed in restive provinces or stretched by
rising levels of urban crime. Those responsible for security
management should seek to maintain key relationships where
appropriate but provide a comprehensive set of integrated
contingency plans and operating procedures catering for the new
challenges presented by terrorism, rising crime, labor unrest and
a need for better community relations. In short, self-help and
sustainability are key factors.

The world's markets are becoming increasingly interrelated and
interdependent. Strategic investment and operating considerations
often extend beyond national borders. Critical decisions for
domestic and international corporations are affected by the
larger issues of national economies and political trends, as well
as global financial and capital markets. Accordingly, the threats
faced by multinational corporations at home and internationally
derive from a combination of internal and external sources. The
country executive is often challenged by an overseas head office
at times ill informed or whose views on the local security
situation can be heavily influenced by the domestic media. This
"perception-versus-reality" struggle is an almost daily survival
battle for many Jakarta based executives.

Terrorist incidents are believed to have increased more than
tenfold over the last decade, and 67 percent of those is focused
on attacks on business. Fraud, in its various forms, is
estimated to amount to losses totaling US$400 billion. 82 percent
of major fraud cases are found to involve the company's own
employees. The American Society for Industrial Security
estimates that intellectual property theft costs the U.S. economy
$250 billion per annum.

Historically, the security industry has enjoyed an overall
annual growth of between 7 percent and 9 percent, with certain
sub-sectors, such as investigation and IT security, experiencing
higher growth rates.

This growth has been fueled by the impact of globalization,
and the trend of outsourcing in manufacturing and services. At
the same time the proliferation of modern technology (e-commerce
networking and data sharing) is continuing to increase the
exposure of corporations to threats against their facilities,
people and assets.

Indonesia has certainly seen its own spikes in demand for
security services, which have largely been reactive and event
driven. However, medium to long term prospects for the industry
will ironically depend upon issues such as lasting improvement in
the security situation, better law and order and the integrity of
the judicial system to attract new investments likely to require
risk management and security support.

The recent international incidents such as the Sept. 11
attacks and the Bali bombings have forced governments,
corporations and individuals to revise substantially their
approach to security.

These corporate and personal behavioral changes are still
unfolding amongst Jakarta's expatriate community, many of whom
are accustomed to the more familiar risks of political
instability and social unrest but did not sign up for the risks
of terrorism.

Worldwide, and lately Indonesia included, executive and
facilities protection has been scaled up and programs to screen
employees, vendors and sources of goods implemented. A survey
carried out by the International Security Management Association
on trends and challenges after Sept. 11 showed that the number of
respondents with plans addressing biological, chemical and
nuclear contamination more than doubled to 70 percent of
respondents. Additionally, more than 67 percent of the
respondents predicted additional funding for the corporate
security department in 2002-2003.

Unlike in the past, short term or cosmetic security
improvements are not likely to be sustainable in addressing the
prevailing risks in Indonesia. A paradigm shift in operating
ethos and everyday security awareness is required to reflect the
reality of the current operating environment.