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Operating in High-Risk Markets

Companies that seek profitable international opportunities often must go to higher risk countries, such as Pakistan, Nigeria, Iraq, and Sudan. Those wanting to operate in these frontier markets may have to deal with military conflicts, increased terrorism, dictators, lack of host government support, reduced infrastructure, and lower levels of health services.

The chief security officer (CSO) of any organization treading into such turbulent terrain must know how to address the unique risks of those situations. Ahead are key points to consider based on my own experiences in frontier markets. First, get good intelligence; second, establish good relations with the locals; and third, know how you will handle a crisis.

Organizations that want to operate in frontier markets need ways to properly assess the threat before going in as well as ways to stay apprised of the broader threat picture in the region and the country so that they will not be blindsided by changing circumstances. Gathering information in frontier environments can, however, be challenging.

Organizations often rely on a single in-country expatriate private security company to provide the analysis of state and intra-state security challenges. This method of information gathering has several advantages, such as the simplicity of information provision, access to intelligence analysis specific to the frontier nation, and a knowledgeable view of internal security challenges within the host nation. Also, there is the potential transfer of risk to the information provider.

The disadvantage of single-source information provision is that it may provide only one perspective, which could be inaccurate. To avoid that problem, the CSO should conduct in-depth question and answer sessions with the prime intelligence provider to reveal gaps and assess the integrity of the information.

In addition, the CSO should develop additional networks of information sources. For example, when I was with a multinational organization with offices in several frontier markets within the Middle East, I was the security liaison officer and special advisor to the senior management team. I worked with a prime security contractor that provided intelligence, but I also used other sources to gather additional intelligence to both corroborate and add to the intelligence provided.

This provided senior management with immediate access to security issues on the ground, and yielded additional, although sometimes conflicting, information sources. Through regular question and answer sessions, we were able to develop a clear picture of the events occurring within the environment that could have ramifications for the project or the organization.

Local Engagement

In a frontier market environment, a key risk is the potential of the local population to become hostile to the company’s presence there. Ultimately, different levels of local community opposition can lead to anything from local demonstrations to improvised explosive devices.

Some organizations try to mitigate this risk by walling themselves off from the local population but this can exacerbate the problem. For example, while working within the post-conflict environment of Iraq, I was informed that the local community saw our living arrangements and operations as possibly the work of a foreign intelligence organization. Such a view led to several attacks against the organization, originating from members of the local community.

This view had developed due to the organization’s strategy of limiting human engagement with the local community, as it was felt that too close a relationship could create internal security issues. Unfortunately, the inherent secrecy led to the community’s belief that the organization was involved in government intelligence collection. Following identification of the problem, a more open engagement with the local community was developed. This engagement led to significant assistance from the local community and resulted in the reduction of localized attacks.

There may be other ways in which engagement with the local community can aid in risk mitigation. Doing so may require the security practitioner to go outside the normal area of responsibility. For example, it may be that development of specific infrastructure, such as hospitals, power generation plants, and roads, could enhance the local quality of life and aid in the locals’ ability to earn money. The incoming organization may find it advantageous to fund such a project, to show support for the local community. Such engagement could reduce the likelihood of targeted attacks against the organization and make the populace more likely to share intelligence about terrorist threats. The CSO would generally be the one to educate senior executives as to the advantages of such projects that may fall outside the range of normal business operations.

This was done by one organization I worked with in the south of Iraq. As a result of its help with local infrastructure development, it suffered fewer attacks than other organizations traveling on the same roads. The local community, although not assisting disruptive elements against the security forces, were not hindering potential attacks either. But this company was regularly warned of possible attack locations by locally engaged staff, which allowed it to implement counter plans.

The CSO needs to make sure that all staff members understand the importance of maintaining a good rapport with the locals. The CSO may be required to develop strategies that adhere to local community practices, while still maintaining corporate integrity. For example, many NGO expatriates routinely gave food and water to children who lived in developing areas, with the good intention of helping children in need. Unfortunately, when the children took the food and water back to their homes, their parents felt they were being shown to be inadequate because they could not provide for their children.

That sometimes led to hostility to the NGO. To work within local cultural practices, I found that a better option was to locate the local community’s leader and provide that person with additional food and water. To ensure that the distribution of the food occurred fairly, arrangements were made to allow NGO staff to distribute the food under the local leader’s direction and auspices.

Crisis Management

CSOs are responsible for making sure that the organization is ready to respond in the event of a significant security incident. Most humanitarian and business organizations have structured plans and processes in place for such events. But in a frontier market this can be especially challenging in terms of crisis communications and resource movement.

Communications. The security manager must ensure both that proper communications can get out and that unwanted communications will not occur.

Many organizations working within frontier environments use varying forms of duress radio systems. In general these systems will identify that an incident is occurring but not make available the details of the incident. I have focused on ensuring that communications are made with those military or law enforcement groups that will be responding to a call for assistance. Following that priority, information can be supplied to in-country managers who can disseminate information updates within the organization as appropriate. Senior executives, who are accustomed to receiving detailed information prior to making decisions, have to understand that this is not always possible in the frontier environment.

With regard to unwanted communications, the best laid plans can be waylaid in today’s world of multiple informal communication venues. For instance, in one case where I was the in-country security manager during a long defensive action conducted in post-conflict Iraq, the aid organization for which I worked was under attack. Although senior in-country management was informed that an incident was occurring, details were not forthcoming as I was focused on handling the incident. One employee, however, was sending what he knew by e-mail to a colleague in the aid agency’s country of origin.

The recipient of the e-mail shared that unofficial communication with senior executives, who immediately contacted the CSO, who was not in-country, requesting more information about what was happening. The CSO, several senior executives, and a host of colleagues then e-mailed, telephoned, and Skyped in-country senior management, regional managers, and the specific location’s security management for an assessment of the ongoing events. Unfortunately, no accurate response could be given due to the all-consuming effort to defend against the incident.

This case illustrates the need for a clear and detailed crisis communications plan aimed both at keeping top management informed about the crisi and at keeping the rank and file from communicating about an event unofficially while it is unfolding. It is unrealistic to think that one can always keep a lid on side communications in such incidents, however, so the lesson is that the CSO will need to educate senior executives as to the reasons for initial conflicting and inaccurate reports of an incident.

Resource movement. Methods of movement for both physical and human resources within the country to an outside destination, or from outside the country to an incident site within the country, could be extremely hazardous. In extreme cases, the in-country security manager must move the incoming or outgoing resources to close proximity of border control points and then rely on external help for movement across the border. In those instances, liaison with organizations such as the Department of Defense (DoD), or the Department of State becomes invaluable. These agencies can assist in the coordination of life support and the movement of the injured or deceased.

For example, at one time, I was employed as a liaison manager working for a multinational corporation in Jordan. The company provided aid to displaced persons from Iraq. A situation developed where one Iraqi town lost its generator, which it needed for its hospital and water treatment plant, among other things. Without this particular piece of equipment, the community would not have been able to function, provide medical assistance, or clean drinking water for the townspeople, so the company I worked for wanted to provide a replacement generator. As the liaison manager, I advised senior executives as to what security arrangements would be required to transport the generator through areas of Iraq under U.S., British, and Australian military control. The senior executives were able, through the services of their home nation diplomatic services, to gain permission and assistance that allowed for the machinery to be transported through the various allied nations’ military controlled areas.

As for getting people out or sheltering in place in emergencies, it is imperative that the CSO develop an agreement with the frontier country authorities that will allow for the timely evacuation of injured personnel. I was injured in post-conflict Iraq while working for an aid organization. I received initial medical attention from a DoD hospital where I was stabilized. I was then relocated to a safe area to await transportation out of the country, which was by military aircraft. In this case, the aid organization had previously developed a memorandum of understanding with the DoD. This prior planning allowed for my timely transfer out of the country to a more stable and secure environment for recuperation.

Frontier markets offer potential profits and increased market share to organizations throughout the world. However, commencing operations within frontier market environments may initially mean working outside the organizational comfort zone. For the CSO, specifically, the commencement of organizational operations in a new environment would necessitate the development of initiatives and strategies not common to the general operation of the organization. As can be identified by the examples outlined above, a CSO’s success will be measured in the ability to educate senior executives to the strategic and operational specifics of frontier markets, and in the development of strategies that incorporate a frontier market’s realities with inherent organizational goals.

David Harding served formerly with Australia’s Special Air Service Regiment. He also worked on counterterrorist teams identifying terrorist threats to Australian installations in Australia and abroad. He has consulted with private industry on a range of security issues. He has been a member of ASIS International since 1992.