Firms are failing to address increasing corporate travel risks

Although digital communications have enabled businesses to connect and grow irrespective of distance, corporate expansion invariably requires personnel to travel further and more frequently.

In an era of globalisation and economic pressure, this has led multinationals increasingly into underdeveloped and emerging economies. As a result, corporate personnel often travels to high-risk countries where organisations have an obligation to prepare and care for travelling staff.

However, businesses regularly fail to take necessary precautions and do not have an appropriate management team in the event of a crisis. Furthermore, most organisations would struggle to identify which of their employees are abroad and their location at any given time, according to Ian Nunn, head of Aon World-Aware Solutions. 

Despite overall figures for terrorist activity increasing, Nunn – who was awarded the Queen’s Gallantry Medal in 1987 for bomb disposal duties in Northern Ireland – says corporates are falling into a false sense of security when it comes to their own travel risks, now that terrorist activity in North America and Europe has subdued.

“Terrorism this year is more prevalent than any other year before. The problem is that it is not as prevalent in North America or Europe, which means there is a perception that terrorism has gone away,” he says.

“Statistically, there were more attacks in 2013 than any prior year. Moreover, five of the eight biggest emerging markets are in the worst parts of the world in terms of kidnap, street crime and assault.”

Pressure from stakeholders and shareholders to see growth has encouraged corporates to take strategic risks by operating in emerging markets, but the risks to employees are all too often neglected.

“Almost all of the companies I have spoken with do not have a capable crisis management team to manage the complex medical and security events that can occur,” says Nunn.

“The first thing I ask a risk manager is: ‘Do you know where all of your travelling employees are right now?’ and of course, the eyes go sideways because they don’t know.”

Aon WorldAware Solutions, which provides clients with around-the-clock access to global terrorism and crime risk-level information, was partly a product of the insurance broker’s experience following the Domodedovo International Airport bombing in Moscow. The suicide attack organised by a faction from the Caucasus in January 2011 was aimed at foreigners and killed 37 people.

“It took us all day to determine whether we had anybody there, and we were still not sure at the end of the day, because only one PA needs to be missing who had booked travel for somebody,” Nunn says.

A key part of the problem is the low-profile nature of many of the crimes and attacks, something that has contributed to the general lack of awareness by corporates.

“What you never see in statistics is the true size of this problem, because most of it is done under the radar. Most places don’t want to publicise kidnap and firms don’t want to admit ransoms have been paid,” adds Nunn. 

“In countries where tourism is important, such as the Philippines, they do not want to publicise the fact that many people are being kidnapped. There’s a lot more to this than meets the eye.”

The issue is not restricted to corporates either, according to Nunn, who points out a growing interest in WorldAware from higher education institutes, as their students increasingly take up placements and courses around the world. 

The killings in August of two British medical students during a six-week work placement at a hospital in Malaysian Borneo have further raised the profile of travel risk management.

Compensation

Nunn says that, in general, there are three phases when someone has been killed. 

“The first phase is when the body is flown back and the ceremony takes place, followed by a lull and then a legal challenge. 

“Relatives of the victim feel you sent their loved one without being properly prepared and want compensation. That’s the world we live in now.”

Organisations are often not explained their legal responsibilities in terms of duty, care and corporate governance, says Nunn, which can result in the company paying large financial settlements if an employee is killed. 

“Something companies don’t seem to understand is that somebody needs to approve every trip – people shouldn’t just go [without this]. 

“When things go wrong, the lawyer will want to know who approved the trip. Implementing a thorough risk assessment process allows the risk manager to sign off on that trip with a full understanding of what the risk is, having agreed various mitigation measures for the individual.”

Corporate travel is arguably likely to expand as businesses become more global. As a consequence, it seems that handling the associated legal, operational and medical risks faced by travellers will increasingly become a requisite task for diligent risk managers. Asa Gibson