Safe Travels

The early-April abduction of a nun from Asbestos, Quebec, who was working as a missionary in Cameroon, serves as a reminder that Canadians are by no means immune to the danger of kidnapping.

Boko Haram, the Al Qaeda-inspired terrorist group that claimed responsibility, has engaged in a series of kidnappings against Westerners in recent years, and although originally based solely in Nigeria, is now carrying out its terrorist operations in neighbouring countries, such as Cameroon and Mali.

The increasing trend of abductions of foreigners may signify that kidnap for ransom is viewed as an acceptable revenue generator by militant groups active in the region. By essentially working for profit, the distinction between profit and political gain has become blurred.

Actual abduction figures are difficult to obtain because the vast majority of kidnappings go unreported. That said, one of the leading crisis response companies has reported an almost 100% increase in kidnappings of foreign nationals between 2011 and 2012, a figure undoubtedly influenced by such events as mass kidnapping of ship crews by Somali pirates. And although

piracy has since declined 40%, new methods, such as “express kidnappings” are on the rise.

These developments have important implications for Canada given the number of Canadian businesses based in Nigeria, Southern Mali and other countries across the region. The aforementioned deterioration signals a downturn in the security prospects for companies working in these areas and emphasizes the need to re-evaluate and manage risk exposures.

Troubling news, indeed, since Canada’s economic growth in the next few years will be supported, for the most part, by increased external trade spurred on by a weaker Canadian dollar and the federal government’s vigorous promotion of international trade.

It is important to note the significance of international trade to the Canadian economy, including that international trade represents more than 60% of Canada’s gross domestic product (GDP) and there would be 3.3 million fewer jobs without international trade, note figures from the federal government’s Global Markets Action Plan.

RISKS IN SOME COUNTRIES OF INTEREST

While the exact number of Canadians abroad is difficult to validate, Statistics Canada suggests that the number is somewhere in the neighbourhood of 2.8 million.

For example, country-specific information from the federal government notes that more than 2,500 Canadian companies currently operate in Mexico (some 50,000 Canadians are thought to reside in Mexico either full- or part-time); about 500 Canadian companies are active in Brazil (more than 50 of these in the mining sector alone); and more than 25,000 Canadians are currently living in South Korea.

In addition, the Asia Pacific Foundation of Canada reports that approximately 300,000 Canadians reside in Hong Kong, 20,000 in Beijing and more than 6,000 in Shanghai.

Under the Global Markets Action Plan, which the federal government launched in October 2013, the government is concentrating its efforts on the markets that hold the greatest promise for Canadian business. Mexico, China, Brazil, South Korea, India, Russia and Turkey, among others, were identified as “emerging markets with broad Canadian interests.”

The challenge, of course, in working in emerging markets is the inherent risk associated with political instability, lack of infrastructure, cultural differences and lack of security. The broadening political and security threat is reflected in the rising risk of kidnapping in these markets. And many of the trade agreements were negotiated with countries that sit on the list of top kidnapping countries in the world, while many of the targets are local or expatriate employees of multinational companies and non-governmental organizations.

Among its findings, the National Intelligence Council report, Global Trends 2030: Alternative Worlds, notes safety and security is becoming the number one concern of expatriates and business travelers.

Kidnap-for-ransom can take various forms:

• “Traditional” kidnapping involves a person being physically abducted and a ransom demand communicated in exchange for the individual’s safe release. However, criminals, particularly in Latin America, have become creative and devised alternative methods of achieving their objectives.

• Express kidnapping, also referred to as “Lightning” or “McKidnapping,” involves a person being held for a short period of time in exchange for the payment of a relatively small amount of money.

• Virtual kidnap involves criminals monitoring the “victim’s” routines and using the information to extort money from the family or employer. This is done by claiming to have abducted the person, when really the so-called victim is simply unreachable for a short time period.

EVOLUTION OF INSURANCE

Kidnap, ransom and extortion insurance, however, has evolved to respond to these newer, innovative methods of criminal finance, and can play an important role in the travel risk management plan for any-sized organization.

The increased exposure to risk of kidnapping places a “Duty of Care” responsibility on all Canadian businesses involved in international trade, but can be a nightmare for small and mid-sized companies that typically lack the risk management infrastructure employed by larger companies. Duty of Care is a legal obligation to adhere to a standard of reasonable care in acts or omissions that could foreseeably harm others.

Depending on the jurisdiction, the obligation can be based in legislation, case law, employment/contract law and torts law. It is also a standard of corporate responsibility and best practice.

For employers, the duty has evolved over recent years. In the past, employers were responsible to protect the health and safety of their employees in the workplace, but changes to Bill C-45 (employer criminal negligence) and Ontario’s Bill 168 (workplace violence) have extended those obligations beyond the workplace to protect employees, their dependents, contract workers and guests on expat assignment or business travel wherever they may be assigned.

The recent increase in kidnapping in emerging markets signals a downturn in the security prospects for multinational companies working in these regions and indicates a need for Canadian companies to re-evaluate and manage their risk exposures. Travel risk management standards have emerged recently that set the benchmark for mitigating the risk to a mobile workforce.

What should a responsible employer do to prepare and protect employees while working abroad? At a high level, the process involves risk assessment, identifying threats, preparing employees, monitoring threats and providing adequate response in the event of an incident.

Kidnap and ransom insurance coverage can help address many of the elements of travel risk management by offering pre-trip planning and security intelligence briefings, a communication plan with clear instructions of what to do in the case of a threat or incident, and 24/7/365 emergency assistance, crisis response and evacuation.

These services, delivered by experienced crisis response companies, are typically included in the premium for the kidnap, ransom and extortion policy.

The policy limits can range upward of $25 million. In addition to the insured benefit for reimbursement of the ransom, policies will also often cover other forms of extortion, wrongful detention and hijack. Extensions to these policies include coverage for lost earnings, personal accident (injury and death), computer virus, legal costs, counselling and cosmetic surgery, to name but a few.

The extensions may be subject to lower sublimits.

Consider that a corporate policy providing $2 million of coverage for directors, officers and employees with travel that includes Colombia, Peru and Burkina Faso can cost as little as $1,500 per year.

The Emergency Political Repatriation and Relocation Extension has become increasingly important in recent years in light of the rising political unrest around the globe. It covers the costs incurred to transport insureds to the nearest place of safety or to their resident country should officials of the resident country expel or recommend the insured person leave the country, or if the insured’s property, plant or equipment is confiscated or expropriated.

Coverage includes accommodation costs, airfares and even the insured person’s net salary for a period of as long as three months following the relocation.

High-risk Security Markets

• Nigeria: The Movement for the Emancipation of the Niger Delta (MEND) continues to represent a major threat to the oil industry. Despite some success in trying to employ militants following an amnesty in 2009, MEND’s political agenda is re-emerging with violent attacks on oil infrastructure and kidnapping of oil workers in the Delta states.

• Mali: The military coup in March 2012 and ensuing unrest led several Canadian mining companies to reduce operations, cancel exploration or pull out foreign workers. After Ghana and South Africa, Mali is Africa’s third-largest gold miner and there are more than 15 Canadian mining and exploration firms working in the country, Natural Resources Canada reports.

• Mexico: Mexico is Canada’s fifth-largest export market and third largest trade partner. There are an estimated 2,500 Canadian affiliates based out of Mexico, the largest comprising a cross-section of mining, manufacturing and financial services companies. Mexico also holds the distinction of being the world’s number one country for kidnapping in both 2012 and 2013. Records suggest that there were 2,000 reported kidnappings in Mexico in 2011, but most go unreported, and some say the true figure in 2011 was closer to 18,000 incidents.