The democratic response to terrorism

Santiago Íñiguez. Dean. Instituto de Empresa

25 April 2005

Terrorism threatens all people and is an affront to democracy and the institutions on which it is based. Companies, as institutions that generate value in democratic societies, are one of their main targets.

Last March was the first anniversary of the terrorist attacks of March 11 in Madrid. We all remembered the victims, their families and friends. Their sacrifice appeals to our conscience to deal out justice and build a firmer, safer democracy to enable the safekeeping of human rights - especially the most fundamental right: the right to life.

The blind cruelty of such attacks affects all business organizations, whether the risk is nearby or far away. At times, the threat is direct and permanent, as with extortion practised by the terrorist group ETA on companies operating in the Basque Country. On other occasions, companies become easy, high-impact targets as a result of the social and economic repercussions a raid on their activities will produce. This is the case of transport companies, communication infrastructures, the energy sector, chemical and foodstuffs firms. Terrorist networks use companies to develop their operations under protection of the law. This occurs with management of their resources through financial institutions – recently, blocking funds belonging to international terrorist organizations totalled $130 million – or use of the Internet as a communication and coordination means. The terrorist threat affects large multinationals accused of exporting the democratic ideal through the process of globalization, as well as small- and medium-sized firms whose owners’ families are targeted. Unfortunately, no company is safe from the threat.

Since Sept. 11, management schools have considered how to contribute, from the realms of education, to creation of a safer environment, and how to train executives to combat a phenomenon which affects them as citizens as well as professionals. The starting point is recognition of the threat as real, head-on and lasting. Experience shows that, given terrorists’ contempt for human life - their own or someone else’s – attacks are easy and not very costly. Consequently, eradication of terrorism looks to be a continued, complex process. Prosperous trade and terror are incompatible and business leaders need to understand that the responsibility for standing up to terrorism affects them directly. Interestingly, publication in 2002 of a study by the Council of Competitiveness – an association of CEOs, academics and trade unionists based in Washington, D.C. – pointed out that only 70 percent of top-level executives were concerned about the eventual impact of terrorism on their companies, and fewer than 50 percent had taken any preventive measure.

A new priority

Regardless of the government initiative, which is of decisive importance, executives must assume co-responsibility for the safety of their activity, workers, facilities and shareholders’ investments. In view of the current threat, this consideration takes on new light. It unveils consequences in company organization and in adoption of policies and measures, in parallel with other business practices. An initial conclusion is that security must form part of general management’s agenda, together with other traditional priorities, such as quality and corporate reputation.

The first area of action is adopting preventive policies. Prevention of terrorism has a cost, which must be adapted realistically to avoid unbalancing the company’s results. According to Fortune, North American business, especially large corporations, have invested $150 billion each year in the fight against terrorism since 2001. The largest spend is distributed across three areas: security in facilities, with increased surveillance using personnel, electronic and identification systems as well as access controls; improvement of information systems, to avoid intrusion and develop backup mechanisms (or parallel storage) to retrieve information in case of a disaster (such backups are common in companies, especially where information is a strategic asset); and investment in insurance. Of course, the cost of these items is high and companies may ask themselves to what point the risk is remote enough to increase their running costs, and whether they can add the cost to the end price of their products or services. For an excess of zeal in preventive spending to improve security could eventually kill the business activity.

Companies need help from specialized government bodies to know how and how much to invest in security. The aim must be to reduce vulnerability to a minimum. Accordingly, North American business is calling for direct initiative of the federal government, fundamentally aimed at the fight against terrorism abroad. They suggest creation of organizations to oversee and advise on in-house antiterror measures. Our country needs greater interaction between enterprise and government in this area.

There are other business practices with similar purposes, which could be applied to formulating more effective security policies. Benchmarking among companies in the same sector, to share information and experience, is one. Development of security audits by firms specialized in the area is a now-familiar phenomenon and will undergo significant growth in future. Security management in companies is a field where there can and must be innovation, and it is necessary to transfer the initiative to all levels of the organization.

The effort to combat the terrorist threat involves an objective which should encourage business owners and citizens in general: beating terrorism. In this fight, the civilizing strength of world commerce shown by companies; the diffusion of knowledge, education and technologies; the mobility of people, workers and capital will transform social and economic structures and contribute to creation of a world without fear.

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