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Metrics for Success
Business Alliances and Security’s Due DiligenceThe Latest from SIW
Mace to launch dealer program, acquire central station Basics of establishing an employee ID badging system The security week that was: 1/02/09 The top 40 security stories of 2008 Homemade bombs force evacuations in Aspen, Colo. Toronto wraps up municipal surveillance pilot project
Mergers with or acquisitions of other companies, the outsourcing of key business processes to vendors, and other strategic alliances may align external organizations with the reputation and well being of your company. What would Security’s participation in the due diligence process bring to the risk management table?
Objective: To perform a pre-engagement review of the external relationship to identify potential areas of business risk that may be missed by a less comprehensive and knowledgeable examination.
Results Sought: Provide senior management with an additional set of potentially important inputs to the engagement decision.
Risk Management Strategy: Scratch the surface of any major business today and you will likely find not one homogeneous, wholly owned structure, but a set of interdependent alliances based on contracts, ownership shares or other ties to the mother ship. Long before the press conference or public notice of these alliances, auditors, M&A magicians, purchasing specialists and a gaggle of lawyers are at work (at huge expense) assuring your company’s executives that this arrangement equates to a 1 + 1 = 3 result. Is Corporate Security on the team?
This process isn’t about selecting an ad agency or real estate company. It is about business activities that are at the core of the business and shareholder confidence. These marriages or outsource relationships may provide external entities with virtually free access to proprietary business methods, trade secrets or sensitive customer information. They may be in high-risk locations with notoriously unreliable infrastructures. The list of risks is directly proportionate to the criticality of the product or service sought in the proposed relationship. The awareness of those risks is directly proportionate to the degree to which qualified sources are engaged to proactively identify them. Security needs to be an integrated member of the due diligence team.
The chart above examines the potential risks involved in an acquisition being considered by a fictional company. What Can We Learn from This Examination?
