December 17, 2013

How to Help HNW Clients Evade Kidnapping, Ransom and Extortion

It is hard to imagine a greater financial or personal peril for individuals and their families than kidnap, ransom and extortion crimes. Merely imagining its occurrence is enough to induce spine-tingling shivers and gut-wrenching queasiness.

Fortunately, many affluent families are well advised of these exposures by their financial advisors and insurance brokers, the latter a vital conduit to the many important services provided by specialized insurance companies bearing the kidnap, ransom and extortion risk.

For the most part, affluent families are well aware of the kidnapping “hot spots” around the world, such as Mexico, Venezuela, the Philippines and the Sahel region of Africa, among others. Many take adequate precautions when visiting such places for business or vacation. But just like hackers are always one step ahead of the latest cyber crime prevention tactic, kidnappers are always devising ingenious new ways to abduct wealthy individuals and their children for large ransoms.

Brad Hedberg, president of the Portico Group, a Chicago-based insurance brokerage specializing in the risk management and insurance needs of affluent families, financial institutions and not-for-profit organizations, recently described to me an incident last year involving the daughter of a billionaire that could have ended badly. “She’s a young teenager, and like all people that age has feelings of invincibility, which can lead to imprudent behavior,” he explained. “She had tweeted some details about her family, such as the time and place of her graduation dinner. She also tweeted a photo of herself and her brother on the family jet as they traveled to a specific location for a family vacation. Inadvertently, she had exposed herself and the rest of the family to a kidnap risk.”

Had the family’s security team not detected the tweets and shut down the girl’s account, the children could have been abducted and held captive for untold millions of dollars in ransom. Even worse, they could have been physically harmed.

Money Matters

As this story indicates, technology has become the newest weapon in the arsenal of organized crime, the primary perpetrators of kidnap, ransom and extortion schemes. If a criminal realizes that an affluent person will be at a particular location at a certain time, this information can be the means to a disastrous end.

Few people are aware that social media sites like YouTube, Facebook and Twitter use so-called “geotagging” technology, which incorporates geographical location data like longitude and latitude into the user’s texts, posts and photos. It’s right there, often without the user knowing it.

Another way to determine a technology user’s location is through triangulation, an important navigation principle in ancient times. If a traveler knows the distance to three specific locations, then there is only one place he or she can be. In a modern world context, a smartphone can discern and disclose a person’s whereabouts by knowing the location of the nearest mobile phone towers and Wi-Fi hotspots.

Even the cards that serve as hotel room keys create identity risks. “Those cards contain your profile, which includes all sorts of personal data like your name and address,” Brad said. “Always take them with you and dispose of them when you get home. Otherwise, a criminal can find it, swipe it and realize exactly who you are and just how wealthy you may be.”

Other ways of unintentionally alerting criminals to your presence and prosperity include wearing expensive clothing and jewelry and toting high-end luggage. Advertising one’s wealth is a sure way to attract kidnappers. Appearing anonymous by wearing casual clothes like an average tourist helps throw off the scent of money.

It’s also prudent not to appear “too American,” as kidnappers consider virtually all U.S. business travelers and vacationers to be of significant financial means. Ditch the New York Jets sweatshirt and Los Angeles Dodgers baseball cap, and learn how to be inconspicuous and otherwise blend in with the local culture.

The criminals in today’s hot spots are seasoned veterans. Mexico is the kidnap capital of the world, a particular risk to the many Americans who travel there on business or for leisure. “Resorts that used to be safe like Acapulco are now insanely dangerous,” according to my colleague Greg Bangs, Chubb’s worldwide product manager for crime and kidnap, ransom and extortion risks. “In a single 24-hour period recently, 27 murders were committed in and around the tourist area.”

Some formerly high-risk regions of the world like Colombia are safer, while others like the Philippines and Venezuela are deteriorating rapidly. Travel to Indonesia also is particularly risky, and the Sahel region of Africa, which comprises multiple mining and oil exploration plays by U.S. companies, is extremely dangerous.

As Greg points out, “Kidnappings in the Sahel area are perpetrated by Al Qaeda and offshoots like Boko Haram and Ansaru. In November, the U.S. Department of State designated both organizations as terrorist groups. Unlike Mexico, where kidnappers routinely take a hostage and safely return them in 72 hours for ransoms in the $2oo,000 to $500,000 range, these terrorist groups will abduct and hold people for years, until extraordinary sums of money are paid—in the tens to hundreds of millions of dollars.”

How Your Clients Can Defend Themselves

The best defense against kidnap, ransom and extortion threats is to stay away from the hot spots. When this isn’t feasible, smart tactics include varying one’s transportation routines, as kidnappers undertake surveillance as part of their planning. Dine at the hotel’s restaurant and not local venues, walk away from commotion and not towards it, and keep family pictures out of local newspapers.

Never flag down a taxi in dangerous regions—in Mexico, up to 60% of gypsy cab drivers are criminals, Greg notes. Always have a hotel or restaurant contact an official, licensed taxi. When one’s presence cannot be hidden from local media, heavy security is required, from armored vehicles to the hiring of armed security trained in escape and evasion tactics.

The best advice is to seek counsel from experienced security professionals like Risk Control Strategies, which has served Chubb’s policyholders for years. These consultants know the local risks and language, have handled thousands of cases, and can respond 24/7 wherever a person may be.

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