Keeping companies safe in an increasingly dangerous world

Introduction

Does it ever feel like the world is only getting more dangerous? In many ways, this is a confirmation bias we all engage in, with an element of nostalgia for what we ­remember as a safer past. But we can look to more concrete data as we survey many of the risks on the minds of Chief Security Officers (CSOs) to show that in this case we might be right.

The security company Allied Universal recently commissioned a study they have named “The World Security Report” of nearly two thousand CSOs in dozens of countries around the world and “almost half expect to increase their budgets significantly in the next year as they see economic and social unrest driving more cases of theft, fraud and the leaking of sensitive information.”

These concerns speak to some very specific trends plaguing society. Rampant retail theft in parts of the U.S.A has shaken security infrastructure and has led to increases in security budgets. Gun violence remains a major concern as companies continue to budget for workplace violence training in a society that is awash in firearms. And a ­degree of nervousness overhangs the world of CSOs as they watch warily as a deeply divided society enters into an uneasy election year.

The geopolitical landscape

Geopolitically, the landscape isn’t much calmer. It’s still too early to say how the latest unrest in the Middle East is going to impact global business, but the rising tension ­between the world’s two global hegemons – the U.S.A and China – has impacted the corporate security realm. ­Seemingly every day the U.S.A and its western allies have their ships and planes harassed by their Chinese counterparts as they navigate areas of the South China Sea that most of the world insists are international waters but which China claims as its own. These dangerous encounters could result in two planes colliding or an exchange of fire between two ships – wars have started over less. With western companies operating in China already focused on “de-risking” and moving elements of their supply chains out of China as tensions increase, the threat of war and its impact on global business must be gamed by international companies, pushing the need for business continuity and crisis management planning, and retaining security ­consultants to advise on evolving political risks.

The Russia/Ukraine war shows no signs of concluding, and has destabilized world markets and supply chains still trying to steady themselves after the impact of the ­Covid-19 pandemic, while reordering global alliances, and creating a dynamic of China and Russia rallying “The Global South” against more developed economies. Global businesses must invest in contingencies involving business continuity planning here as well, while safeguarding supply chains as they game possible disruptions.

Within this geopolitical landscape China presents its own specific, major risk factor as its post-pandemic business environment evolves in negative ways. Global businesses – with CSOs as key decision makers – must make difficult calculations about remaining in a market where the business environment is suffering greatly from a drastically increased security landscape, and executives visiting from abroad are detained and/or denied exit. China’s overbroad national security laws have criminalized standard business practices, such as market studies and reputational due diligence on business partners, making China, in the words of U.S. Commerce Secretary Gina Riamondo to her counterparts in China on a recent visit there, “uninves­table.” Finally, the level of cyber risk in China has never been higher and CSOs must make sure employees visiting China have separate phones and laptops, amongst other precautions, when visiting the country or risk losing trade secrets to aggressive Chinese corporate espionage.

Threat monitoring is a growth area

At the same time, despite a risky security landscape at home and abroad, certain companies are seeing their ­security budgets reduced or kept static. Eduardo Jany, the CSO of News Corp, points out that “stocks are lower for media companies and security divisions are a cost center and not a revenue generator. I wouldn’t say we’re suffering, but a lot of the budget decisions are about need to have, not nice to have. A lot of media companies are really tigh­tening the belt, even our high-risk deployments are not getting as much resourcing. We are having to be increa­singly frugal about how we support journalists and our team.”

New topics on the agenda

Much of the investment made by companies that are ­increasing budgets is going towards technology. The World Security Report notes that “asked about future spending, 42% of respondents said they intended to invest in artificial intelligence (AI) and AI-powered surveillance to spot threats more quickly”. Threat monitoring, leve­raging both the increasing power of AI along with experienced human operators, is a growth area in the corporate security industry. The World Security Report notes that concern has grown amongst CSOs about increasingly ­vocal protest movements focused on climate change and social issues, and so companies are depending on ­advanced threat monitoring to stay ahead of the threat of disruption to their operations and the safety of their employees. They also value these tools when identifying lone-wolf dangers developing on social media.
Matthew Horace, an experienced CSO who recently took on that role with the real estate investment firm Pretium, is seeing his budget increase as his employer seeks to ­manage risk in a shifting landscape. Matthew points to how an “increased awareness of mental health correlates with an increase in awareness of workplace violence – we’re offering more training, more resources” to address these issues.

Matthew points to how the pressures on police budgets over the last few years are impacting the work of CSOs. “With police budgets and resources shrinking, CSOs are looking for ways to address issues internally that we might have looked for outside help on. We have to be creative about how we structure our organizations and how we depend on government. Police response times aren’t what they were even four years ago; we have to prepare for how much those response times have gone up.” Matthew has a law enforcement background himself and he’s repeatedly heard that police aren’t as focused on property crimes – areas of major concern in his new role – and he will need to get creative when dealing with security challenges such as trespassing and vandalism.

Matthew also noted that because of the increase in violent crime they have deemphasized white collar crime, such as fraud. While several high-profile cases of fraud in business and politics – such as the FTX implosion and the George Santos scandal – have shined a spotlight on the need for robust reputational due diligence, these cases continue to arise with depressing regularity. Businesses that spend regularly on deal facilitators, such as lawyers and management consultants, are still slow to understand the need for deeper background investigations into potential partners and acquisition targets making more of these cases likely.
While the World Security Report points to many companies realizing a greater need to invest in security, a deeper look reveals not just that only some security budgets are growing. It also shows the shifting sands of the security landscape, and it hints at how those that are using those budgets smartly are engaged not only in the challenges of today, but are also trying to get a handle on those that might arise tomorrow.