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Firms coping with unrest

Companies activate crisis plans in Mideast

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Firms coping with unrest

MANAMA, Bahrain—As unrest spreads across northern Africa and the Middle East, risk managers with operations in the region have been taking steps to protect their employees and property and, where possible, to prevent significant disruptions to their business should things turn ugly.

Demonstrations—violent at times—flared last week in countries across the region, inspired by Egyptian President Hosni Mubarak's departure from power this month. Anti-government protesters took to the streets in Bahrain, Iran, Libya and Yemen to demand political changes.

The demonstrations in Egypt left hundreds dead and injured by some accounts, with significant property damage to retail and hospitality businesses. Large industrial risks experienced business interruption losses but relatively little property damage, sources said.

Deaths, injuries and property damage were also reported in other countries in the region where demonstrations were held.

Some companies with operations in the area have lost sight of the potential political risks they face in emerging economies, said Adrian Lewers, head of the political risks and contingency team at Dublin-based Beazley P.L.C. “But you cannot disconnect the two—economic and political risk are fundamentally intertwined,” he said.

The events unfolding in the Middle East and north Africa are an example of what can happen quickly, he said, and this has brought the focus back on political risks in even the most “successful” emerging markets.

“The most important thing you can do in countries like this is have a business contingency plan in place,” said Jorge Luzzi, director of corporate risk management at tire maker Pirelli & C. S.p.A. in Milan.

The main focus of the plan should be on how to remove employees from an area that is experiencing political violence or, if conditions permit, how to keep them working, Mr. Luzzi said.

That approach paid off for Pirelli at its Alexandria, Egypt, plant when demonstrations escalated there, he said. Pirelli moved expatriate families to Europe and moved some managers to neighboring locales such as the United Arab Emirates, Mr. Luzzi said. Enough staff remained at the Alexandria plant to keep it operating at 30% of its normal capacity, he said.

A contingency plan should include how employees could finish work in time to comply with curfews or complete some tasks at home, Mr. Luzzi said.

Jones Lang LaSalle Inc. acted in the early days of the Cairo demonstrations by moving expatriate employees to Europe and closing offices so local workers did not have to go into Cairo, said Janice Ochenkowski, managing director of global risk management at the Chicago-based real estate firm.

“With everyone being concerned with safety and the future of the country, there was very little business going on anyway,” she said.

Jones Lang LaSalle does business throughout the Middle East, Ms. Ochenkowski said, and operates offices in Abu Dhabi and Dubai, United Arab Emirates. Procedures are in place to stay in touch with employees and clients in the region should protests threaten operations, but as of late last week, tensions had not risen to the point at which the company felt it needed to take steps to move employees or close offices, she said.

Julia Graham, chief risk officer of DLA Piper U.K. L.L.P. in London, emphasized that reliable intelligence information on the region where trouble could arise is critical to making sure employees are kept safe.

She uses several information services and depends heavily on updates from Stirling Assynt (Europe) Ltd., a London-based firm that specializes in Middle East political risk. The information includes projections of where demonstrations might erupt and how businesses should react, she said.

“That knowledge, for me, is really very helpful,” Ms. Graham said.

Control Risks, a London-based risk services firm, is in the position of ensuring the safety of its employees who were sent into a chaotic situation in Bahrain to advise companies there on how to keep their staffs safe.

Rebecca Scorzato, senior manager at Control Risks' Washington office, said the company is in daily contact by telephone with its consultants there “to ensure that the appropriate resources are in place to protect them. We did the same thing in Cairo and it proved very successful.”

Oil giant BP P.L.C. moved 350 people out of Egypt during the protests there, a spokesman for the London-based oil company said, but has yet to take steps in other countries, some of which also have seen disturbances.

BP has operations in Abu Dhabi, Algeria, Jordan, Libya and Oman.

“We've been monitoring everything closely,” the BP spokesman said, but no evacuations had been ordered as of late last week.

Kevin C. Wilkes, practice leader, security risk consulting with Willis North America in Pittsburgh, a unit of London-based broker Willis Group Holdings P.L.C., urged companies not to overlook the importance of an emergency travel plan for expatriates and employees traveling in the region.

“It really is a big exposure for many of our clients,” Mr. Wilkes said. “Unfortunately, many companies we come across may have a crisis team in place, but they haven't considered the dangers or risks that employees may come across” outside their immediate work area. “They are neglecting the global workplace.”

If disruptions such as those in Egypt occur in regions where businesses operate, a company would be well-advised to set up a temporary travel emergency command center to help employees deal with the crisis, Mr. Wilkes said. The center should provide critical information to employees and operate until the crisis is resolved, he said (see box).

Ms. Ochenkowski said Jones Lang LaSalle relies heavily on its local management to coordinate the emergency movement of employees.

“We're in frequent communication with our regional management,” she said, where decisions are made on whether employees should stay put or be moved out of a threatening situation.

DLA Piper also leaves a lot of risk management to local managers, who are experts on conditions where they live and work, Ms. Graham said.

“I do not run anything without the local team,” she said. “This is very much a locally engaged and managed event.”

Sarah Veysey contributed to this report.