Tough Guys Step Out From the Shadows: The Once-Murky World of Private Detectives and Bodyguards has Gained Visibility and Respectability Since September 11
Published by: the Financial Times
Peter Thal Larsen
April 11, 2002
Highlights of the Article:
(...) Beyond the immediate steps to improve physical security, there is a broader recognition that companies must make a better assessment of the risks they face. "The days of guards and gates are gone," says Harry "Skip" Brandon, a former head of counter-terrorism at the FBI who now runs Smith Brandon International. "While protecting a warehouse may have some significance, it may not be the most important thing." (...)
For the full article see below.
If it is possible for an industry to come of age, the corporate security business formally reached maturity on September 11 2001.
In the aftermath of the terrorist attacks on the US, the once-secretive world of private detectives and bodyguards shrugged off the last vestiges of shambling amateurism and emerged as a professional - and highly relevant - branch of the service industry.
In the new environment, much of the immediate focus has been on physical security as companies - especially those in the US - rushed to reassure their workforces. In airports, government buildings and large offices, security procedures have been noticeably tightened.
Yet the war on terrorism has also reached further into the intelligence and investigations end of the corporate security business.
The search for terrorist funds, and the attempts to crack down on companies which - even unwittingly - do business with organisations linked to terrorism, have once again highlighted the pressing need for up-to-date business intelligence.
The change has been swift. In 2001, a survey of the largest companies in the US conducted by Pinkerton found workplace violence to be the main security threat, followed by internet security and employee screening. Terrorism ranked a lowly 17th. In the same survey this year, terrorism has become the third most pressing concern for the largest US corporations, although workplace violence remains the leading worry.
"There was an immediate response in requests for security assessments," says Naz Paciotti, president of Pinkerton's consulting and investigations division. "Companies wanted to know their vulnerabilities."
The shift in attitudes has prompted industry players to beef up their traditional security consulting arms. Mike Cherkasky, chief executive of Kroll, the leading consulting group, says the company has hired an extra 96 people to conduct security assessments since September 11, doubling its staff in that area.
Even for companies that are used to worrying about threats to their overseas operations, there is a sudden focus on offices not previously seen as vulnerable. Ira Lipman, chairman and president of Guardsmark, the privately-owned security firm, says companies can no longer afford to make distinctions between offices in different locations. "If you allow yourself to be an easy target, you will be hit."
Beyond the immediate steps to improve physical security, there is a broader recognition that companies must make a better assessment of the risks they face. "The days of guards and gates are gone," says Harry "Skip" Brandon, a former head of counter-terrorism at the FBI who now runs Smith Brandon International. "While protecting a warehouse may have some significance, it may not be the most important thing."
Another effect of the attacks is that senior executives are taking direct responsibility for security issues. "There was a trend to have the security director report to the human resources department," says Bart Schwartz, chief executive of Decision Strategies. "That responsibility is now coming back to the company's general counsel."
The war on terrorism has also provided plenty of work for financial investigators. In the US, the USA Patriot Act has forced companies to examine their business partners more closely.
Meanwhile, the broader fallout from the stock market downturn, the collapse of Enron and the scandal engulfing Andersen has also played into the hands of investigators. "Clients are saying: normally we would go to our auditing firm, but we need somebody independent," says Jules Kroll, executive chairman of Kroll.
The flurry of activity has also led to further consolidation. At the physical security end of the business, Group 4 Falck has made its move into the US by buying Wackenhut, and other deals are expected to follow.
In the consulting business, the past six months has been marked by the entry of media and marketing firms into the business. Omnicom is backing Safir Rosetti, a new company set up by the former New York police commissioner and a former Kroll executive.
Meanwhile, a breakaway group from Kroll has set up a corporate intelligence and investigations arm for Incepta, the public relations company. Both are actively hunting for acquisitions.
Perhaps the most prestigious new arrival to the business is former New York mayor Rudolph Giuliani, who has set up a consultancy with help from Ernst & Young. However, rivals remain unclear about the services Mr Giuliani, who declined to be interviewed, plans to offer.
Industry observers remain sceptical about the inroads likely to be made by marketing companies, pointing to a similar attempt by the Big Five accountancy firms to move into the business during the 1990s. With a few notable exceptions, that effort has largely failed.
"I foresee problems in terms of the pure size of these businesses and the conflicts that may engender," says Patrick Grayson, former head of Kroll in London, and now a consultant on security and investigations. "The pure investigation firms are at least in control of their own destiny."
What's more, past experience shows that large companies have a patchy record in retaining their most talented staff. This was illustrated most recently when Amy Lashinsky and Ambrose Carey, the founders of Asmara - now part of Armor Holdings - left to set up a new business.
"This industry is unique in terms of personalities and skills," says Terry Lenzner, the veteran Washington-based investigator. "It's a bit like rounding up cats."
Another aspect of increased respectability and visibility is that corporate security firms are more likely to be regulated. In the UK, the newly-created Security Industry Agency - while mainly aimed at nightclub bouncers and companies that put wheel clamps on parked cars - may also have implications for the investigations business.
Yet these concerns are minor compared to the sense of opportunity that corporate security executives have felt in the past six months. The overwhelming feeling is that this is a business whose time has suddenly come, and the players in the industry now have a chance to show their worth.
As Richard Burt, the former US ambassador to Germany and chairman of Diligence, says: "September 11 has not stopped globalisation. It will continue but in a much more uncertain world."
(...) Beyond the immediate steps to improve physical security, there is a broader recognition that companies must make a better assessment of the risks they face. "The days of guards and gates are gone," says Harry "Skip" Brandon, a former head of counter-terrorism at the FBI who now runs Smith Brandon International. "While protecting a warehouse may have some significance, it may not be the most important thing." (...)
For the full article see below.
If it is possible for an industry to come of age, the corporate security business formally reached maturity on September 11 2001.
In the aftermath of the terrorist attacks on the US, the once-secretive world of private detectives and bodyguards shrugged off the last vestiges of shambling amateurism and emerged as a professional - and highly relevant - branch of the service industry.
In the new environment, much of the immediate focus has been on physical security as companies - especially those in the US - rushed to reassure their workforces. In airports, government buildings and large offices, security procedures have been noticeably tightened.
Yet the war on terrorism has also reached further into the intelligence and investigations end of the corporate security business.
The search for terrorist funds, and the attempts to crack down on companies which - even unwittingly - do business with organisations linked to terrorism, have once again highlighted the pressing need for up-to-date business intelligence.
The change has been swift. In 2001, a survey of the largest companies in the US conducted by Pinkerton found workplace violence to be the main security threat, followed by internet security and employee screening. Terrorism ranked a lowly 17th. In the same survey this year, terrorism has become the third most pressing concern for the largest US corporations, although workplace violence remains the leading worry.
"There was an immediate response in requests for security assessments," says Naz Paciotti, president of Pinkerton's consulting and investigations division. "Companies wanted to know their vulnerabilities."
The shift in attitudes has prompted industry players to beef up their traditional security consulting arms. Mike Cherkasky, chief executive of Kroll, the leading consulting group, says the company has hired an extra 96 people to conduct security assessments since September 11, doubling its staff in that area.
Even for companies that are used to worrying about threats to their overseas operations, there is a sudden focus on offices not previously seen as vulnerable. Ira Lipman, chairman and president of Guardsmark, the privately-owned security firm, says companies can no longer afford to make distinctions between offices in different locations. "If you allow yourself to be an easy target, you will be hit."
Beyond the immediate steps to improve physical security, there is a broader recognition that companies must make a better assessment of the risks they face. "The days of guards and gates are gone," says Harry "Skip" Brandon, a former head of counter-terrorism at the FBI who now runs Smith Brandon International. "While protecting a warehouse may have some significance, it may not be the most important thing."
Another effect of the attacks is that senior executives are taking direct responsibility for security issues. "There was a trend to have the security director report to the human resources department," says Bart Schwartz, chief executive of Decision Strategies. "That responsibility is now coming back to the company's general counsel."
The war on terrorism has also provided plenty of work for financial investigators. In the US, the USA Patriot Act has forced companies to examine their business partners more closely.
Meanwhile, the broader fallout from the stock market downturn, the collapse of Enron and the scandal engulfing Andersen has also played into the hands of investigators. "Clients are saying: normally we would go to our auditing firm, but we need somebody independent," says Jules Kroll, executive chairman of Kroll.
The flurry of activity has also led to further consolidation. At the physical security end of the business, Group 4 Falck has made its move into the US by buying Wackenhut, and other deals are expected to follow.
In the consulting business, the past six months has been marked by the entry of media and marketing firms into the business. Omnicom is backing Safir Rosetti, a new company set up by the former New York police commissioner and a former Kroll executive.
Meanwhile, a breakaway group from Kroll has set up a corporate intelligence and investigations arm for Incepta, the public relations company. Both are actively hunting for acquisitions.
Perhaps the most prestigious new arrival to the business is former New York mayor Rudolph Giuliani, who has set up a consultancy with help from Ernst & Young. However, rivals remain unclear about the services Mr Giuliani, who declined to be interviewed, plans to offer.
Industry observers remain sceptical about the inroads likely to be made by marketing companies, pointing to a similar attempt by the Big Five accountancy firms to move into the business during the 1990s. With a few notable exceptions, that effort has largely failed.
"I foresee problems in terms of the pure size of these businesses and the conflicts that may engender," says Patrick Grayson, former head of Kroll in London, and now a consultant on security and investigations. "The pure investigation firms are at least in control of their own destiny."
What's more, past experience shows that large companies have a patchy record in retaining their most talented staff. This was illustrated most recently when Amy Lashinsky and Ambrose Carey, the founders of Asmara - now part of Armor Holdings - left to set up a new business.
"This industry is unique in terms of personalities and skills," says Terry Lenzner, the veteran Washington-based investigator. "It's a bit like rounding up cats."
Another aspect of increased respectability and visibility is that corporate security firms are more likely to be regulated. In the UK, the newly-created Security Industry Agency - while mainly aimed at nightclub bouncers and companies that put wheel clamps on parked cars - may also have implications for the investigations business.
Yet these concerns are minor compared to the sense of opportunity that corporate security executives have felt in the past six months. The overwhelming feeling is that this is a business whose time has suddenly come, and the players in the industry now have a chance to show their worth.
As Richard Burt, the former US ambassador to Germany and chairman of Diligence, says: "September 11 has not stopped globalisation. It will continue but in a much more uncertain world."