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Published: February 12, 2002

 
 

Security Concerns Prominent on CEO Agenda

Another management priority is a proactive employee-safety measure that will also reduce costs: using videoconferencing to replace air travel. Interestingly, only a few CEOs (7 percent) appear concerned about lowering their public profile.

Nearly half of the surveyed CEOs (49 percent) are reviewing alternatives to their existing supply chains in case of disruptions; 42 percent are reviewing their suppliers’ abilities to ensure production is safe from sabotage. U.S. businesses lost hundreds of millions of dollars because of supply chain disruptions when U.S. borders and airports were closed in the wake of the attacks.

“Nearly half of CEOs are reviewing alternatives in case of supply chain disruptions; 42 percent are reviewing their suppliers’ abilities to ensure production is safe from sabotage.”
Post-9/11 Customer Service
Despite the CEOs’ increased sensitivity to their companies’ operational vulnerabilities, participants in this survey appear confident in their ability to maintain quality of service for their U.S. customers. Most of the respondents agree that corporate security is unlikely to make customers uneasy. Nearly three-fourths of CEOs (72 percent) believe that the quality of corporate security is no more important now for customers than it was prior to September 11, and that customers’ willingness to purchase from their companies will not be affected. However, chief executives of nonfinancial firms are more concerned — more than a third believe that the quality of their corporate security is a more important factor in customers’ willingness to purchase their products and services.

Globalization strategies have been largely unaffected by events of the past year, including the terrorist attacks and protests in Seattle and Genoa, according to these CEOs. Half the interview group believe that any new barriers to previously open borders, both in the U.S. and abroad, will have either an insignificant or no impact on their companies. Whereas this is especially true for large firms, CEOs of the smaller Fortune 1000 firms believe that the after-effects of September 11 will hinder their competitiveness. A third of the surveyed executives believe that any new barriers will have a moderate or very significant effect on their companies.

Business as Usual?
CEOs are evenly split on the question of when or whether “business as usual” (defined as the state of business on Monday, September 10, 2001) will return: A third felt that business as usual would have returned within three months, a third think that it will return sometime between six months and 5 or more years, and a third believe that business will never be the same. Chief executives of global firms are less positive: Over half of these executives believe that business will never be the same.

“CEOs will find that a stronger partnership between industry and government is needed to solve critical security problems and ensure business continuity.”
Three-fourths of CEOs (74 percent) believe that recent events will not change their companies’ relationships with federal and state authorities. Of those who do believe these relationships will change, most expect changes to involve coordinating protection of physical locations within the U.S.

Any additional costs for new corporate security should be shared by government, shareholders, and customers, according to two-thirds of those CEOs who believe such additional security costs are possible. A third of CEOs believe that new security costs will not be substantial.

Looking ahead, we believe CEOs will find that a stronger partnership between industry and government is needed to solve critical security problems and ensure business continuity. A cooperative effort is essential to achieve a level of business resilience that positions the business community for future growth.


Authors
Mark Gerencser, gerencser_mark@bah.com
Mark Gerencser is a vice president with Booz Allen Hamilton in Annapolis Junction, Md. He has 20 years of engineering and consulting experience resolving communication-systems, information-security, and technology-insertion challenges. He is coleader of the firm’s strategic security initiative.

DeAnne Aguirre, aguirre_deanne@bah.com
DeAnne Aguirre is a vice president in Booz Allen Hamilton’s San Francisco office. She has 18 years of organizational and technology strategy experience serving multinational clients. She is coleader of the firm’s strategic security initiative.
 
 
 
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Resources

  1. “Security and Strategy in the Age of Discontinuity: A Management Framework for the Post-9/11 World,” by Ralph W. Shrader and Mike McConnell, s+b, Q1 2002; Click here. 
  2. “From New Economy to Siege Economy: Globalization, Foreign Policy, and the CEO Agenda,” by Jeffrey E. Garten, s+b, Q1 2002; Click here.