Spies Plc.

In the years since the war against the Soviets in Afghanistan ended, terrorism has been brought home to a great many more people around the world. Especially in the United States and Western Europe, many had been barely aware of it, except as violence in faraway places, of which they know little. By the start of the new millennium, all that had changed.
Violence in nearby and familiar places have become almost a daily diet, served up by television, radio and the rest of the popular media in the West. During the decade 1990 to 2000, Americans had experienced, in 1993, the destructive attack on the World Trade Center and an armed assault, with fatal casualties, on the CIA headquarters in Langley, Virginia. There was the tragic bombing of the federal office building in Oklahoma City in 1995. In 1996, there followed assaults on American military men and women and their families in Saudi Arabia. The American embassies in Nairobi and Dar es Salaam were devastated by bombs in 1998. On 11 September 2001, America’s twin towers of the World Trade Center and the Pentagon were attacked with devastating effect of unimaginable magnitude.
Since then, a quiet intelligence revolution has been brewing inside many of America’s leading companies. According to the latest edition of Foreign Policy magazine, hotel chains, cruise lines, airlines, theme parks, banks, chemical companies, consumer products manufacturers, pharmaceutical companies, and even technology giants have been developing in-house intelligence units that look, and act, a lot like the CIA.
These organizations don’t steal competitor trade secrets or tap their phones. But many conduct surveillance of customers, visitors, and employees to collect information and spot potential threats. Some run red-team exercises that involve dressing in disguise and casing company locations to test the security. For all of them, the main job is analyzing hot-spot developments around the world, around the clock, from violence in Syria to environmental protesters in California, anything that could threaten a brand’s reputation, personnel, or business interests of their parent company.
Amy B. Zegart, a U.S business security analyst, explained that typically these in-house intelligence units have nondescript names like “Office of Global Safety and Security.” Most of these companies don’t like to talk openly about their intelligence activities for fear it will scare away customers or hurt their brand’s reputation. These offices are staffed with former CIA, FBI, and military professionals who have close ties to the U.S. government and conduct global threat reporting by working through normal channels and informal networks around the globe. Amy Zegart noted that this is the privatization of American intelligence that you haven’t heard about. And it’s part of the innovative, growing business of political risk management.
Actually, concern about political risks to business is as old as the hills, of course. In ancient Babylon, trade insurance covered looting and pillaging, the political risks of the day. Thomas Jefferson launched America’s first unconventional war in 1801 because thieving thrones in Tripoli, Tunis, and other states of North Africa were sacking U.S. merchant ships and holding them for ransom. In modern times, oil companies have been at the forefront of political risk management, seeing competitive advantages to understanding turmoil in oil-rich countries. Royal Dutch Shell has been doing scenario planning since the 1970s.
But political risk matters more now than ever because of the convergence of three things:
Supply chain improvements like “just in time” inventory management, which ships goods from factories to consumers as fast as possible, but leaves no stockpiles to keep business operating if anything goes awry;
Globalization, which has made it possible to make and sell products in more countries, to more consumers and, in the process, to generate more nodes of disruption;
The Information Revolution, which enables small groups to transmit messages to mass audiences in real time.
These three factors have given rise to a fundamental business paradox, which is businesses face greater global opportunities than ever before, along with greater vulnerabilities. Far-flung supply chains can dramatically lower costs, but they are hard to see and manage, leaving many managers unaware of just how exposed their business is to supplier delays, political events and natural disasters far, far away.
In the old days, the free world and the Soviet bloc were two different universes. Not anymore. Now everything is connected. A Kenyan fisherman may lack electricity, but they can check weather conditions and fish market prices on their cell phones. This entire connectedness means that political risks, be it civil strife, instability, insurgency, coups, weak legal standards or corruption have more spillover effects.
In a 2011 survey of the Fund for Peace’s Failed States Index, out of the one hundred largest high-tech companies, 81 percent of executives said they were worried about natural disasters, wars, conflicts, and terrorist attacks, a jump of 26 percent from the previous year. The Arab spring is the latest, and undoubtedly there will be others. Little changes also matter more now, too. Thanks to the information technology revolution, lone individuals and small groups can have a supersized impact if their messages go viral. Julian Assange used the Internet to turn his WikiLeaks operation into a phenomenon that roiled diplomats across the globe.
In 1998, the nongovernmental organization Global Witness, which started with three friends in a London apartment, exposed the role of conflict diamonds in Angola’s civil war. By 2003, its work had helped prompt United Nations sanctions against Sierra Leone, Angola and Liberia, and had cowed the diamond giant DeBeers into a certification scheme to clean up the industry.
Amy Zegart disclosed that a few years ago, before the Arab spring erupted, her colleague at Stanford College who met with Syrian President Bashar al-Assad told her that the Syrian strongman confessed he was much worried about Facebook than about a U.S. invasion. In the Internet age, small, local movements often don’t stay small and local for long. In business, as well as politics, power has gone asymmetric. Understanding the changing nature of political risk, and how to mitigate it, is a growing industry.
According to analysts, in large part, this is because the U.S. government has left an intelligence gap. In many countries, intelligence services regularly share information with businesses to give them a competitive advantage in the global arena. But U.S. intelligence agencies do not. Since 9/11, the private sector has been filling the gap. Amy Zegart explained that in-house intelligence units are the most pioneering examples, but they have plenty of company. There are now scores of open-source intelligence services, analysis shops, and consulting firms led by former U.S. high-level officials with names like Chertoff, Albright, Rice, Hadley, and Gates.
So when you think “convergence,” don’t just think about drones and spooks. There is a burgeoning convergence of intelligence and business. The CIA may not be getting into corporate espionage, but American companies are getting into intelligence. They’re just not talking about it much.