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02.10.2016

Response Strategies for Kidnap & Ransom Resolution

Marc McLean - Head of Personal Accident Division

Kidnap for ransom and extortion are on the rise as a prevalent reality in today’s global criminal society. Corporate executives traveling or located in turbulent, uncertain areas of the world can be exposed to myriad risk factors as criminals seek financial gains. Response strategies must be vigilant, encompassing targeted risk management solutions. Professional response consulting services are critical. Companies should be aware of the potential risk factors that executives face and insurance coverage options for successful resolution of an unexpected, horrific event.

High profile exposure confronts any company with overseas businesses operating in volatile, politically-charged locations. More than 30,000 ransom occurrences are reported each year worldwide. Professional response consultants estimate that there is more than 10 times that number of unreported events. For criminals, the acts are a low investment, high reward endeavor. Individual ransom demands average $2,000; yet an event that triggers an unusually large ransom sum cannot be eliminated or self-funded by the individual or entity. Risk transfer through commercial insurance protection to minimize financial impact is essential. Corporate insureds should know what to look for in a K&R policy and how professional risk services can be engaged to counter effectively.

“Crisis response consultants are experienced in managing complex K&R risk scenarios taking place in the current socio-political environment. The paramount consideration for the insured is to be confident in the scope and quality of the crisis response services available to them in the time of need,” stated Bruce Kaplan, Managing Director of Hazelwood Street, Ironshore’s exclusive risk response consultancy firm. Professional crisis response firms deploy new and proven methods upon detection of a convincing threat or for immediate response to an active occurrence. The ultimate goal of crisis response strategies is to reduce individual anguish and avoid ransom payment for conflict resolution.

K&R insurance coverage has evolved over the past 35 years, originating from the Lloyd’s market. Specialty insurers recognize the necessity of accessing the expertise of response consultants to initiate preventive training and institutionalize security protocols for at-risk executives. K&R episodes can involve illegal hostage taking, extortion threats to the policyholder organization or corporate executive, detention in holding an individual under duress for any reason, executive disappearance, or express kidnap played out in a 24-hour time period, which has become increasingly pervasive in Mexico and South America.

Response consulting teams with global reach should be comprised of diverse professionals, including experienced government officials, security experts and highly trained military personnel. Consultants work closely with the insurance company to establish processes based on circumstances likely to impact specific scenarios for the corporate insured. K&R insurance offers cover for the associated consultant fees incurred when serving in an advisory capacity or implementing aggressive tactics to bring closure to the event. Mr. Kaplan noted that insurance policies also should reimburse the policyholder for any ransom payment as insurance companies cannot meet ransom demands directly to the victimizers. Corporate risk management should be informed about what to look for in a policy. What steps can be taken to avoid potential risk. How threats or occurrences will be handled for crisis resolution.

Comprehensive insurance programs leveraging professional expertise and technological savvy inherent within risk response consultancy services are integral to successful threat mitigation and satisfactory resolution.

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