Risk-assessment firms flourishing since 9/11

From floods to terror, they give clients a heads-up


Sometime during the early hours of Aug. 10, just after British authorities had arrested a group of people suspected of plotting to blow up several commercial airliners over the Atlantic Ocean, cell phones and laptops around the globe got an urgent message:

"U.K. airports placed on critical alert Aug. 10 after discovery of alleged terror plot on U.S.-bound flights. No carry-on luggage allowed; flight delays likely."

It was from iJET, an Annapolis intelligence firm hired by multinational companies to keep them apprised of troubles that could affect their globe-trotting employees or far-flung property or suppliers.

It's one of many risk-management firms offering to help the companies to stay informed about and prepare for man-made and natural disasters.

The industry is made up of contractors such as iJet as well as those that steer companies and municipalities to develop and maintain their own emergency management plans.

The firms have expanded rapidly since the Sept. 11 terrorist attacks. And with each subsequent event, the industry gets more attention as insurance becomes more expensive and difficult to secure.

"It's not just terrorism," said Martin Pfinsgraff, chief operating officer of iJET, founded in early 2001. "Kidnappings in Asia are at a record level. We've had more hurricanes in the last decade than in the last 50, 60 years, and there are new diseases such as SARS and avian influenza. All of these issues, from a risk manager's perspective, have created a `perfect storm' decade."

Most days, the events are just big enough to muck up travel schedules or delay a shipment. But that kind of information can mean plenty to managers who are responsible for their salespeople around the globe or need to update clients about the status of a certain product that is en route.

Last Friday, iJET also warned clients about items that didn't make front-page headlines: an attack on newspaper offices by gunmen in Oaxaca, Mexico; a potential coup attempt in Burundi; oil workers abducted in Nigeria; and the arrest of an opposition leader in Senegal.

Not knowing about those events and preparing for them can cost companies time and money, said Kirk N. Walsh, who directs the risk management group of Risk International Services Inc., a company with offices in Cleveland and Charlotte, N.C. that handles such duties for companies and municipalities.

The firms big in their fields such as Risk International, formed in 1986, and iJET, have hundreds of mostly large multinational clients - many of them since the 2001 attacks.

They also have smaller domestic clients that discovered a need after events such as Hurricane Katrina.

Risk International provides internal services for companies that face disasters of all kinds, including assessing specific insurance needs, devising contingency plans and determining potential legal, environmental and product liability, among other things.

At iJET, the focus is on gathering information that can benefit the company. There are about 80 intelligence experts in-house and hundreds more on retainer or serving as sources overseas. The information is compiled, analyzed and sent electronically to clients daily no matter where they travel.

The company contracts with other firms that specialize in recovering kidnapped workers or evacuating those in danger. And still other companies, formed by insurers and travel agencies, offer other services such as employee tracking.

Before 2001 many companies didn't bother to have an in-house risk manager or outside adviser because insurance for catastrophic events was relatively cheap and readily available, Walsh said. Companies also didn't really fear terrorism so much as natural disasters, and they were all covered.

The 9/11 attacks changed that. Companies began putting together emergency plans and seeking advice. They also sought terrorism insurance. But with claims of almost $35 billion, the insurers stopped covering it.

Congress began forcing the insurers to write separate terrorism policies through 2007, and Montgomery County was one that took advantage. It has $250 million in coverage per terrorism-related incident for its $5 billion in real estate, said D. Terry Fleming, the county's director of risk management and a board member of the Risk and Insurance Management Society.

He and others are lobbying Congress to require that coverage be offered beyond next year. Without help, Fleming said, he surely would not be able to buy enough insurance - a linchpin of his post-Sept. 11 catastrophe planning.

"There will be more World Trade Centers and more New Orleans in our future," Fleming said.

Other experts said the most important preparation before a disaster is developing a business continuity plan. Most companies today can't adjust to a temporary shutdown forced by an act of terrorism, extreme weather or a disease pandemic because they have no excess production capacity or materials on hand.

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