Tecpetrol’s Fabio Lugo addresses our Latin American Natural Resources Conference in Buenos Aires last month
Latin America’s geography is rich in natural resources, currently producing 12% of the world oil and 7% of the world natural gas supply. But a young person dies every 15 minutes in Latin America and the region is home to 44 of the 50 world’s most homicidal countries. Violence is linked to drug traffickers, militias challenging state authority, terrorists and other groups, — all of which are imbedded within the region’s complex political milieu. So it’s no surprise that for the natural resources industry, production and profitability remains threatened by crime, which currently costs the region 3.5% of its GDP.
Fabio Lugo, personal and asset security manager for Tecpetrol, spoke to delegates at our Latin America Natural Resources Conference in Buenos Aires last month about the complex crime risks in the region. His key message to delegates was a stark warning: Natural resources companies’ responses to disasters are currently too reactive, rather than pre-emptive and preventative. The industry, he emphasized, must be proactive to anticipate threats and plan mitigation strategies accordingly to protect their people, assets and integrity of operations.
While the statistics make gloomy reading in their own right, crime exists in a number of complex forms, which must be understood to ensure that risk management strategies account for all types of threats, according to Lugo. Imminent threats include assault, robbery, kidnap, extortion, sabotage, social violence and fraud. The perpetrators vary in their level of sophistication, violence and political connectedness, from opportunist criminals, drug trafficking cartels to military and terrorist groups; however, in Lugo’s view, their common link is their economic motivation.
What then, are the three key imperatives that every Latin American natural resources company should embed into its risk management strategy?
1. Know the threats
Risk identification is the obvious starting point, although it may be necessary to review the sophistication of current processes. As I’ve outlined, the criminal threats are diverse, ranging in their frequency, severity and transparency. Furthermore, as past scandals have shown, crime in the form of corruption is likely to be well-concealed, just as random attacks cannot be anticipated.
The region is vast and varied, so risks should not be generalized or homogenized. Narco-trafficking corridors for will be at higher risk of violence, while certain areas will be more susceptible to military influence and illegal tax levies. Risk managers must ensure they know the specific threats in the region they’re operating in to exact an appropriate risk management strategy.
2. Act now
While implementing risk management strategies may seem obvious on the surface, Lugo believes that the tendency among risk managers in Latin America is to be too reactive to incidents, rather than preventing them. Human resources departments should foster a culture of awareness regarding:
- Preventative security
- Physical security in offices and operational areas
- Movement and travel security
- Outcomes of meetings with state security
Clearly, risks are interlinked with broader political and social trends, which the industry cannot avoid themselves; nevertheless, a proactive risk mitigation strategy is key to minimizing the detrimental impact of crime on operations and security. With the changing political and socioeconomic landscape in Latin America, risk managers must continuously monitor the situation to ensure the most appropriate security measures are in place.
3. Prepare for the worst
Crises cannot always be avoided, so contingency plans are an essential part of any good risk management strategy, Lugo emphasized. Business continuity, crisis management and evacuation plans are all important to limit harm to personnel as well as business interruption and subsequent loss of revenue, property or environmental damage.
Seven tips from the frontline
Drawing his presentation to a close, Lugo shared seven good practices for corporate security:
- Deploy a thorough and effective risk matrix
- Prevent, don’t react
- Spread the word: Ensure all employees and contractors know safety protocols
- Always be in contact with relevant security departments and forces
- Imbed practical protocols for preventative safety into operations
- Collaborate with military forces and national police for security support
- Secure local support for optimum disaster response and crisis management
Lugo’s final comments reflected the importance of communicating the strategy across the organization. If natural resources companies in Latin America want to minimize the potential impact of crime, development of a logical and thorough protocol shared across the organization should be a top priority. Risk matrixes must be regularly reviewed as new risks emerge and existing ones develop to help shape protocols to maximize operational efficiency and security.
Thanks to Ella Passingham, Willis Towers Watson, London, for her help composing this article.