Global Business/Sleuths In Suits
Mission: Intelligence
Since Sept. 11, executives are demanding better information about security risks--and about threats to their competitive edge
BY DANIEL FRANKLIN
Monday, Mar. 25, 2002
During his two decades in international corporate security, Bill Elder designed protection strategies in some of the most dangerous parts of the world, from Iraq to Colombia to Nigeria. Operating in countries where American intelligence was often weak, Elder had to rely on his own contacts. In the mid-1990s, while overseeing construction of an oil pipeline in northern Algeria, Elder learned from local sources of a series of killings committed by the rebel Groupe Islamique Armee. This intelligence scoop--the government didn't announce the killings for several days--allowed Elder to steer employees safely away from the danger zones and keep the project on schedule. Indeed, throughout his years as a corporate security manager for Bechtel and as a consultant to other companies, Elder, now retired, says he never once recommended canceling a project. "My role was to determine what the risk was and how to overcome that risk," he says. "As far as I was concerned, if they were willing to pay for the appropriate security, they could work in hell."
With each day's news reminding executives of how hellish the world can be, more and more of them are deciding that traditional "cops and locks" security will no longer suffice. A growing number of businesses are emulating the CIA and FBI in the inexact art of intelligence collection and analysis to try to predict terror attacks or political instability. Even for a business whose biggest worry is not rebels attacking its employees but, say, MICROSOFT attacking its market niche, corporate sleuthing has become more valuable than ever. "The most fundamental importance of intelligence is to warn--specifically, to warn against surprise attack," says consultant William DeGenaro, a veteran of government intelligence and a former director of business research and analysis at 3M. "Take the same process and substitute another threat--a blindsiding alliance, a technology shift. It's all the same."
How much a business needs to rely on intelligence analysis depends less on where it operates than how. The more capital intensive a business is, the more its executives need to know how the future is likely to take shape. Energy companies, which have to make multibillion-dollar infrastructure investments before they can draw a penny's worth of fossil fuel out of the ground, have set the standard for security and political intelligence overseas. High-tech firms, which need to determine where their competitors are headed before beginning costly research and development, have led the way in what is known as competitive intelligence.
These two sides of corporate sleuthing are largely distinct: they ask different kinds of questions and rely on different kinds of specialists. The ranks of business security intelligence departments are filled with former government agents, while competitive intelligence, with a few notable exceptions, is collected and analyzed by professional researchers who resemble librarians more than shadowy spooks.
Both occupations have boomed over the past several years. According to Brian Ruttenbur, senior vice president of MORGAN KEEGAN, an investment firm based in Memphis, spending on business intelligence and security has swelled to $7 billion annually, from $1.8 billion in 1980, and should double in the next seven years, spurred in part by the Sept. 11 attacks. While it is difficult to quantify spending on competitive intelligence because the industry is so diffuse, membership in the Society of Competitive Intelligence Professionals (SCIP) has risen to nearly 7,000, from 1,550 in 1990, and the overall market for business intelligence--excluding mundane stuff such as security guards, cameras and fences--has been reported to be $2 billion. And just as the attacks of Sept. 11 are forcing a transformation of government intelligence, so too could they make over corporate intelligence.
Security concerns aren't new, of course. Oil companies have pumped petroleum out of the Middle East for the better part of a century; they did not need to be told that the region could be dangerous. The same can be said of the insurance industry, which has been ratcheting up rates since the U.S. terror attacks, in the face of wildly higher demand for political-risk coverage. "No light bulb went off on Sept. 11," says Patricia Skold, who is head of CHUBB GROUP's political risk worldwide and has experience working for the U.S. intelligence community. "We've always been aware of the risk." But some of Chubb's new customers and those of its competitors suddenly had their awareness raised. Chubb, which has employed terrorism experts for at least seven years, has received 1,500 applications for political-risk coverage since Sept. 11--double the rate for the same period a year earlier.
Businesses with long-standing interests overseas often seem to know more about the sociopolitical texture of international hot spots than even the U.S. government. Robert Baer, author of See No Evil, which recounts his 20 years as a CIA agent, points to business's relative freedom from the legal and bureaucratic obstacles that circumscribe government intelligence as an important advantage. Since leaving the CIA, Baer has done occasional investigative work for private interests and says, "My access to information is better since I got out of the CIA."
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