Honor Roll

Prime Target

Keep your company from being a victim of extortion.

It's the stuff movies are made of: bomb threats, product tampering, sabotage and kidnapping. You might think these things could never happen to you--after all, you're a small, relatively obscure company. But that could actually be what makes you an attractive target to an extortionist.

"Being a victim of extortion or threats is not a factor of size, and it's not always connected to a perception of wealth. You can fall victim for many reasons," says Andy Duffin, managing director of crisis management services for Pinkerton Consulting and Investigations in Hallan- dale, Florida. "A small company might be an easier target than a large multinational one, which may often be perceived as having a significant security force in place. And while a large company might be able to weather the costs stemming from a kidnapping, a product recall or a negative press campaign, for a smaller company, the damage could be irreparable."

To protect your company from corporate terrorism, the first step is to understand that it can, indeed, happen to you. Duffin says the source will likely be one of six types of perpetrators: disgruntled employees (current or former); someone else with a grudge against you or the company; criminals who are looking primarily for financial gain; psychotic or mentally ill individuals; terrorists; or "hoaksters." Possible scenarios include an unhappy employee who threatens to release company secrets or plant a virus in your computer, threats from a perpetrator to injure people or damage property if a ransom isn't paid, product tampering, and threats to generate negative publicity if the company fails to take specific actions.

The next step is to develop a crisis management plan. Although you certainly can't plan for all contingencies, think in advance about what steps you'll take so you can react calmly and purposefully to resolve a situation. Decide who will be in charge of what, and plan for communicating with law enforcement officials, the media, your customers and your employees. You might also want to meet with a crisis management consultant before anything happens; establishing such a relationship in advance may cost a small amount of time and money, but it will be invaluable if the need arises.

Determine, too, how you will handle the costs associated with an incident. Some of the expenses may be covered under your regular business insurance, or you may want to investigate special policies. For example, CIGNA Property & Casualty recently introduced kidnap and extortion, and product tampering insurance to its product line. In conjunction with the insurance, CIGNA offers risk management services through Pinkerton, which consults with clients both before an incident, to reduce the likelihood of one occurring, and afterward, to assist with managing the situation.

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This article was originally published in the April 1998 print edition of Entrepreneur with the headline: Honor Roll.

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