Pandemic Exposes Organizations To Kidnap For Ransom Risk

The number of confirmed cases of the novel coronavirus (COVID-19) has now topped one million worldwide with more than 72,000 deaths, according to the World Health Organization (WHO). As businesses face losses from interruptions prompted by lockdowns, there’s another risk on the horizon that’s tied to the outbreak, which is kidnap for ransom.

“Kidnap for ransom can, and does, occur everywhere. That said, for kidnapping to flourish into a pervasive security threat, there are certain prescriptive conditions that are present in most countries where the crime is rife,” said Brittany Damora (pictured), kidnap for ransom specialist at Schillings. “These include impunity, instability, lack of rule of law, pervasive corruption, and absent civil authority. When these elements are combined with the inevitable repercussions of a global pandemic – such as the draining of critical resources, economic downturn and widespread unemployment – rates of kidnapping can turbocharge.”

Read more: K&R insurance specialist Clements Worldwide sees rise in ‘express kidnappings’

Previous health emergencies indicate how kidnap for ransom and other criminal activity can spike during this type of outbreak. Damora pointed to Ebola-afflicted areas, such as Liberia and Sierra Leone, where many companies put a hold on their operations and in turn, there was an average of a 50% increase in unemployment rates as well as a marked increase in criminal activity.

“In general, health crises put a strain on political stability and often result in a prolonged economic recession, which are both key factors driving the threat from kidnap for ransom,” she continued, adding that regions around the world that will be hit the hardest by kidnap for ransom are those that already lie at the cross-section of an unstable security environment, high levels of criminality, and systemic corruption. These include South America and sub-Saharan Africa, though Damora also expects to see an increase of kidnap for ransom in areas where militant groups will use the pandemic as a smokescreen for their political agenda, such as Yemen, Syria, and in the wider Sahel. It’s notable too that while experts have warned that these incidents frequently occur outside of North America, they can also occur in Canada and the United States.

With many governments implementing total societal shutdowns and strict international travel restrictions right now, abductions might not initially appear in the headlines. However, the victims of 90% of all global kidnap for ransom activity are local nationals and this percentage will certainly increase over the short term, explained Damora.

Some insurers offer kidnap and ransom insurance, which is a specialty crime coverage that protects against financial losses that arise when an insured is threatened with kidnap, extortion or illegal detention domestically or abroad. According to insurance brokerage HUB International, when a business’s executives and employees travel internationally or within their home country’s borders, they may be at risk of this criminal activity. If a kidnapping event does occur, the costs to an organization could be significant, even if no ransom is paid.

Read more: What is kidnap and ransom insurance?

There are other challenges that an organization could face if one of their employees becomes a victim of kidnap for ransom, such as the speed at which these events unfold, media attention, restriction of the management team’s freedom of activity, and the involvement of authorities, police, government, clients and other stakeholders, as well as dealing with potentially irrational agents.

“All these factors can hinder an organization’s operations and potentially damage their reputation if not handled well, which can seriously impact the bottom line,” said Damora.

According to the Schillings expert, an effective crisis response plan and well-constructed crisis management team (CMT) is critical in limiting an organization’s exposure to kidnap for ransom.

“A CMT can even improve your business’s reputation during this uncertain time through clear, concise actions that show your organization not as a victim, but as an advocate for its clients and employees,” Damora said.

Moreover, relying on the advice of experts in this field is an important step that organizations should take if they’re exposed to this threat.

“As the coronavirus outbreak continues, remember that you are never alone in the run up to and during a crisis,” Damora told Insurance Business. “An experienced crisis response expert can provide training and can be utilized almost immediately in the event of an incident to guide your CMT and limit potential reputational fallout. The crisis responder can steer the team, maintain momentum in negotiations, reduce extortionists’ expectations, prioritize the firm’s interests, and implement a disciplined financial and communication strategy.”