For Exxon International President Sidney J. Reso, the last days of life must have been agonizing. Abducted by a husband-wife kidnapping team, Mr. Reso lay in a tiny storage warehouse, tied, gagged and with a bullet wound to his arm. He died after four days of captivity. Two months later, the Federal Bureau of Investigation (FBI) caught the kidnappers, who had demanded a ransom of $18.5 million. The wife plea-bargained for lesser charges, cooperated with authorities and led them to southern New Jersey, where Mr. Reso was buried in a makeshift grave. The husband, a disgruntled former Exxon employee, was charged and later convicted of kidnapping and murder.
Although the tragic story of Mr. Reso's kidnapping and death shocked the nation, the case brought home the fact that executives are vulnerable to kidnapping and abduction not only in high-risk countries in the Middle East, but also right at home in the United States. In fact, no matter where they take place, corporate kidnappings occur much more frequently than most people realize. Control Risks Group, a McLean, Virginia-based security consulting firm, reports that between 1990 and 1992, there were 2,625 kidnappings worldwide, up sharply from the 1,171 that occurred between 1987 and 1990. Besides corporations, hospitals also face a growing threat from infant abductions. The Hospital Council for Southern California reports that infant abductions take place in about four out of every 200,000 births.
Whether the motivations of the kidnappers are due to ideological, economic or personal reasons, kidnappings have similar effects on the victim and his or her family and company. For the victim, the experience is harrowing. Often confined in deplorable conditions, the detainee may be exposed to health hazards, or subject to threats or beatings that can lead to injury and even death. Throughout the detainment, the victim's family is crippled by fear and uncertainty about the welfare of their loved one, who the kidnappers are, why they abducted their loved one and if the matter can, or will, be safely resolved. Finally, for the kidnap victim's employer, the abduction will result in the loss of the victim's contributions to the company, the psychological effect the event has on other employees, the financial costs of the kidnapper's demands and the public relations impact on the firm's reputation.
Because kidnapping poses a threat to executives, risk managers must develop a response to this crisis. Although companies can implement certain security measures--and others may be able to fund the abductor's ransom demands--few firms have the resources and expertise required to deal with all phases of a kidnapping event. For that reason, risk managers should investigate the use of a kidnap insurance policy for both the financial coverage it offers and the consultant expertise that it provides.
WHAT'S THE RISK?
Risk managers who use a risk assessment to determine if their firm is vulnerable to kidnappings may find that the risk is small. Nevertheless, it is important to realize that even a small threat may still pose a danger to their firm. The situation is further compounded by the fact that changes in recent world events indicate that corporate kidnappings in overseas locales may become more prevalent in the future.
The reason for this was revealed to the authors in a recent meeting with an experienced anti-terrorist agent. The agent remarked that many of the countries that subsidized terrorist activities in the past, such as the former Soviet Union and Cuba, have either dissolved or are financially strapped. As a result, these governments have cut off or reduced funding for international terrorist groups. Since many of these terrorist groups conduct their activities solely as a way to earn a living, the agent reported that they are now searching for alternate sources of funding--which means many of the groups are turning to corporate …