Disaster Due Diligence Aug. 20, 2010 

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Business security

HEADLINE: Mexico Under Siege

SUMMARY: Monterrey, Mexico's business capital and richest city, has become embroiled in the country’s escalating drug war, prompting an outcry from business leaders for more soldiers to stem the violence. Recent incidents include the murder of a suburban mayor, armed gangs blocking city streets and attacks against small businesses on the city's outskirts. "The security environment in Monterrey has turned, in just a few months, from seeming benevolence to extreme violence," U.S. Ambassador Carlos Pascual said. U.S. businesses with a major presence in Monterrey include Whirlpool and GE.

STORY LINK: http://online.wsj.com/article/SB10001424052748704557704575437762646209270.html?mod=WSJ_hpp_LEFTTopStories

ANALYSIS: The residents of Monterrey are reaping the results of being in denial. The rapid change from being isolated from all the violence in northern Mexico and considered a safe haven has changed 180 degrees in weeks. The deterioration of the city caught “everyone by surprise,’’ but should not have. Recently Forbes Magazine named Monterrey “the best city in Latin America to do business in.” I wonder how they feel about that statement today.

If you think for a moment that you or your community or company is somehow immune or above a disaster striking you, then you are in a full-blown state of denial. But this situation is much, much bigger and is being played out in other key areas in the world that can have an impact on American companies.  Many global political hot spots are also key areas for the U.S. economy. Maybe not the shining stars, but they are integral parts of our supply chain and can impact GDP. CEOs and CFOs with genuine interest should be watching these events and should already have a plan in place for their remote operations.

Brian Rutter, a security analyst for my office, reports, “The Mexican drug cartels’ recent shift in tactics has unmistakably shown them to be not satisfied alone with achieving insular objectives in their trafficking of narcotics. As if the threat posed by the Mexican cartels was not dire enough, there is speculation now that the Iran-backed terrorist group Hezbollah is operating in Latin America and possibly influencing the Mexican cartels.” 

Let’s for a moment take a look at the flooding in Pakistan.  The Taliban and al Qaeda will take advantage of the situation as will other lesser known indigenous terrorist groups. While the government lacks the resources or structure to provide aid to the 20 million displaced residents, these groups are winning a huge public relations battle to exploit the current situation. This is a stepping stone for the bigger prize, India.

India and Pakistan have lengthy history of friction and frequent disputes. India’s close relationships with the UK and U.S. just adds to fuel to the fire.  The al Qaeda or Taliban influence and infiltration in Pakistani government is very disturbing. The U.S. has provided the Pakistani government with billions of dollars of advanced weaponry to help the government fight the terrorists. If these weapons fall into the hands of cartels/terrorists, destruction will be on a much larger scale.

The conditions in India are ripe to have a repeat situation as we see in Monterrey. One day you are viewed as an industry jewel for cheap labor and resources and in the blink of an eye, your resources and your company become wartime casualties and while your employees and executives become hostages in their own homes.

Any U.S. company with business operations in Mexico or India needs to have business continuity plan and a workplace violence plan immediately. We should learn from Monterrey and start preparing because the warning signs are all over the place.

If you had to respond today, are you ready?

--Scott Watkowski, Firestorm Franchise principal

Health matters

HEADLINE: Number of illnesses linked to eggs likely will grow

SUMMARY: An outbreak of salmonella illnesses has prompted a nationwide recall of 13 popular egg brands produced by an Iowa company and triggered a multi-state investigation that is expected to grow, federal health officials said. The CDC is looking into a four-fold spike in reported cases of salmonella Enteritidis with a particular genetic fingerprint in late June and early July and many states have reported increases in the specific pattern since May.

STORY LINK: http://www.msnbc.msn.com/id/38741401/ns/health-infectious_diseases/

ANALYSIS: The recall of millions of eggs from the nation’s supermarket shelves illustrates that, despite advances in agricultural science and food safety, no process is perfect.  Nature inexorably both adapts and circumvents human precautions.  While the number of those made ill by tainted eggs is small in relationship to the overall population, this is little consolation if you are the one sickened. 

There are several precautions that can lessen the likelihood of foodborne illness.  Proper preparation – using clean utensils, avoiding cross contamination, and thorough cooking – reduces this risk.  Additional safety is afforded through awareness.  Research has shown the vast majority of product recalls go unheard or unheeded.  In a “connected” society, the flow of information can be overwhelming.  Yet, some issues are weightier than others and should be monitored periodically.

These pages often include references to a “Culture of Preparedness.”  Situational awareness regarding things in your pantry or refrigerator that can make you sick certainly falls within that culture.  It would be an overreaction to be alarmed about the recall of eggs; similarly it would be dreadfully negligent to be unaware of this lurking danger.

HEADLINE: Drug recalls surge

SUMMARY: Recalls of prescription and over-the-counter drugs are surging, the Food and Drug Administration reported. More than 1,742 recalls were issued last year, skyrocketing from 426 in 2008, according to the Gold Sheet, a trade publication on drug quality that analyzes FDA data. One company, the since-closed drug repackager Advantage Dose, accounted for more than 1,000 of those recalls. High-profile recalls of Tylenol and other products by McNeil Consumer Healthcare, a unit of Johnson & Johnson have raised concerns about manufacturing standards.

STORY LINK: http://money.cnn.com/2010/08/16/news/companies/drug_recall_surge/index.htm?hpt=T2

ANALYSIS: Almost as a natural follow-on to the story of a massive recall of eggs, the report of a sharp increase in recalls by the pharmaceutical industry solidifies the realities of random variation and product deficiencies.  Individuals can limit exposure to risk my monitoring product recall sites such as www.fda.gov/Safety/Recalls/default.htm, following reports in the media, and taking drugs only as necessary. 

There is a lesson, however, from the manufacturing side of this story, one not limited to the pharmaceutical industry.  If you are a business owner, ask yourself if you have full confidence in your processes.  Most would immediately say “yes.”  Yet, Johnson & Johnson -- a company renowned for quality and corporate responsibility – has been plagued with production problems and forced to close two of its plants.

In bad economic times, the natural path is to cut costs and seek efficiencies ranging from staff reductions to shifting to less costly suppliers to process changes.  In considering these and other potential changes, leadership must examine critical nodes and paths, identifying potential sources of failure.  If Supplier “A” went out of business, could you survive?  The likelihood of an unanticipated failure – and the ultimate failure of your enterprise – increases in hard times and multiplies exponentially in times of crisis.

Do you know where the weak links are in your staffing, supply, distribution, and financial chains?  Might your own lack of awareness be such a link?

HEADLINE: First case of Broward dengue fever confirmed

SUMMARY: The first case of the tropical virus dengue fever has been discovered in Broward County, Fla., health officials said. An adult who had not left Broward for weeks came down with the mosquito-borne disease this month, meaning Broward is now the second place in the continental United States -- following Key West -- where dengue fever exists.

STORY LINK: http://www.palmbeachpost.com/news/first-case-of-broward-dengue-fever-confirmed-857048.html

ANALYSIS: As has been addressed previously in this forum, the identification of dengue in Florida is but the most recent example of novel disease emerging somewhere in the world, a phenomenon of unprecedented frequency over the past 20 years according to the World Health Organization (WHO).  Eliminating mosquito-supporting standing water, applying other vector control methods, using organic or chemical repellants, and wearing appropriate, covering clothing minimize risk of contracting dengue fever and other insert-borne diseases.  Immunization provides additional protection, for yourself and those around you.  When traveling, seek a travel medicine update and follow recommended precautions.  As humans can now travel around the globe in a matter of hours, so too can disease.  The first step in staying healthy is understanding what can make you otherwise.

--Dr. Don Donahue, Director, Firestorm Healthcare Response Team

Natural disasters

HEADLINE: Scientists: Summer fires, floods augur global warming

SUMMARY: This summer of weather-related catastrophes ranging from the massive wildfires choking Russia, the devastating monsoon-fueled flooding in Pakistan and flash flooding in many U.S. cities isn’t just a portent of things to come, scientists say, but a troubling sign climate change is already under way. These events fit specific patterns predicted by climate scientists, the Geneva-based World Meteorological Organization says, including "more frequent and more intense extreme weather events due to global warming."

STORY LINK: http://www.msnbc.msn.com/id/38676877/ns/weather/

ANALYSIS: Natural disasters and severe weather run in cycles. There are many interrelationships and interactions. Hurricane frequency follows patterns that repeat over decades.

Clearly, globally we are seeing flooding, volcanoes, earthquakes, hurricanes, wildfires, intense heat, droughts, and more. The links to global warming have been challenged by many. What cannot be challenged are the impacts of these events -- economic and human.   

Every crisis is a human crisis. These disasters give rise to human disasters that are beyond description. These human tragedies take on a life of their own, building to new crises of communicable disease, violence, public unrest, societal upheaval and death.  

Global supply chains have made us all closer and interdependent. These events impact all of us in multiple ways.

Global warming? … Climate change? ... Whatever you call it, these events signal change. This is change you must believe in.

Predict. Plan. Perform. ™ Are you ready?

--Jim Satterfield, Firestorm President/COO

Data security

HEADLINE: Study Finds Financial Services Target of 33% of Data Breaches

SUMMARY: Financial services continues to be the industry most affected by security breaches, according to a report by Verizon and the U.S. Secret Service. A third of data breach cases and 94% of all compromised records were in financial services. "The targeting of financial organizations is hardly shocking; stealing digital money from information systems rather than vaults is basically just a less primitive form of bank robbery," the report notes.

STORY LINK: http://www.banktech.com/news/showArticle.jhtml?articleID=226600226&cid=RSSfeed_BankTech_News

ANALYSIS: As I have said in the past, the fact that financial services are the most affected by security breaches should come as no surprise – after all, that is where the money is.  But there is one very important lesson for you, the business owner, which is not mentioned in this article.

If your identity is stolen and your credit card is used by a thief, your liability will be $50, or less.  If your debit card is stolen and used by a thief, you could lose more, but it if you recognize a problem with your account (note to all of you – check your account balances regularly!) and tell the bank, they can stop the losses at the balance in the account.

If your business accounts are compromised, and this is happening with increasing frequency, you could be out many thousands of dollars if, as is often the case, you keep larger balances.  There are no limits on the amount you could lose.  Sophisticated scams will have several wire transfers of $8k to $9k (so as not to trigger the $10k government reporting requirements) sent from compromised business accounts to mules – people in the U.S. with domestic accounts.  They will in turn take some percentage and forward the money overseas, where it will disappear.

While litigation is underway in several jurisdictions, banks say they have no obligation to refund money to a customer whose loss was not the bank’s fault.  If a customer’s computer was compromised by some malware that is not the bank’s problem. 

You can take this to the bank (pun intended): Predict – losses of money and information through data breaches and information insecurity will continue and likely increase.  Plan – get the best countermeasures you can find for your data networks, storage, and devices, especially anti-virus software.  Be sure you and your staff understand your responsibilities and talk to your financial institution’s representatives. Perform - Carefully and regularly check on your finances and balances.  Control and confine access where practical and check and double check.  Do not allow banking transactions to occur away from your offices.  If you find suspicious activity, notify your financial institution immediately.

--Ted Hansen, Director, Firestorm Expert Council

Preparedness groups

Join Firestorm’s LinkedIn groups and help build a Culture of Preparedness for your family and organization:

DISASTER READY PEOPLE: http://www.linkedin.com/groups?gid=1914314&trk=myg_ugrp_ovr

WORKPLACE VIOLENCE: http://www.linkedin.com/groups?gid=1898572&trk=myg_ugrp_ovr

COMMUNICABLE ILLNESS: http://www.linkedin.com/groups?gid=1899278&trk=myg_ugrp_ovr

SWINE FLU: http://www.linkedin.com/groups?gid=1921222&trk=myg_ugrp_ovr