Thinking about your local operating environment – A Mexican context

Published on October 17, 2016 by Philippa Williams

It’s 9am on a Sunday morning in London, and you are looking forward to a relaxing, lazy day ahead. Your work phone starts to ring, rudely interrupting your early morning tranquility. Noting the number, your heart sinks. It’s your Mexican security monitoring service´s emergency number, and a quick calculation reminds you it is the middle of the night somewhere on the other side of the world where you transport mass consumer goods across the Americas. Such a call normally means one thing, another cargo theft incident – likely a hijack. This will be the third in the last few months. You sigh, you know the drill…

Mexico has a complex operating environment with significant security, environmental, social and political challenges for those either transporting goods through the country, or with export focused operations there. BSI´s intelligence platform SCREEN marks Mexico as severe for cargo theft, noting the involvement of large scale, well-armed, organized crime groups who run sophisticated networks. Their operations tend to be well-executed and can outsmart the latest technical gadgets designed to keep your cargo safe, and if needs be out-gun any physical security you might have employed. If they are targeting specific products, which they know (from a tip off) to be in transit at a certain point, they have been known to erect road blocks and target the goods of their choice.

These networks often include local – and sometimes federal – authorities, who are either lured in by extra pay, or are threatened until they agree to actively participate or turn a blind eye when necessary. Whether defined as co-option or corruption, this is a significant challenge for our Clients who are moving their goods across the country, and a significant obstacle when trying to find out what has happened after an incident. 

Understanding the context

  • Official involvement makes “reporting” said crimes often seem virtually redundant, and many don’t for fear of reprisal or because of a complete lack of faith in the official routes of investigation. An environment of chronic impunity has also encouraged smaller-scale copy-cat, local gangs to enter into the market, normally using violence to ensure they get “their piece of the cake”.

  • The less sophisticated the operation, the more likely that violence is used as a means to intimidate or threaten drivers into handing over their cargo. While Mexico´s notorious, well-armed, transnational cartels are an intrinsic factor of the challenging security environment, so too are the hundreds of small-scale gangs that exist throughout the country. Such groups have flourished as the federal forces have focused on hunting down organized crime “king-pins”, leaving widespread security vacuums. This environment has seen a rise in incidents of kidnap, extortion, and other forms of violent crime such as hijackings.

  • The potential involvement of state institutions, third party security providers, transport operators, even employees in cargo theft, means distrust among all parties is high. Impunity and a weak rule of law mean few incidents are ever formally investigated and it is highly unlikely that any such investigations would result in convictions. Asset recovery is rare.

An inevitable cost to doing business?

When I discuss cargo theft concerns with Clients, I often hear that it is a challenging, but potentially inevitable part of doing business in Mexico. In other words, it is a serious, but not insurmountable, security risk – and subsequent cost – to operating in the country.

As a company´s operations in Mexico increase, so too does its security budget. New and increasingly sophisticated GPS and other tracking devices are used to follow cargo, armed guards and security personnel are hired for certain states, routes are monitored and safe spots for drivers firmly marked. Yet, early morning emergency phone calls to Executives on the other side of the world continue, often from the same locations.

In my conversations with security managers, private security contractors, public security authorities, government agencies, civil society and multinational businesses, I am constantly reminded of how fluid any given security environment is and how important it is to understand your local operational environment. Only by doing this can you address what factors might be contributing to an uptick – or downturn – in security incidents, and develop relevant security protocols to understand your risk threat.

In the context of cargo theft, thinking about your local operating environment is critical to increasing visibility in your supply chain. Such visibility may highlight key factors to address within your risk management plans that were previously overlooked. 

Dissecting your local operational environment

Some factors within your local operational environment will be revealed in regular audits, but there are a number of other influencers that might be affecting your risk profile at a localized level.

  • Internal operating environments: employees; transport providers; security providers; third party contractors; hiring and human resources practices; security protocols and procedures; social and environmental labor practices; unions.

  • External operational environment: Geographic and physical locations; social environment (high levels of local unemployment, poverty, low-level gang activity, sophisticated national criminal activity); political environment (known corrupt officials, unstable political environment); social or environmental activism (particularly against your company, or those you third party with), external union organizations.

Post-Incident Investigations – a no-go?

Investigations are often not carried out post security incidents in Mexico. Firstly, those who would naturally be charged with such a task – public security officials – are unlikely to be effective (for all the reasons highlighted above). Secondly, in a country with violent organized criminal activity that can tread the precarious line between the licit and illicit world, it is often thought that investigations are too dangerous for a company and their employees. It could jeopardize your ability to operate in a given location. Thirdly, most security providers who are monitoring Client’s cargo would only go so far as to handing over an incident report, not following up with an investigation into the who/what/why?

However, by not carrying out any form of a post-incident investigation you could be missing serious factors within the local operational environment that could be contributing to increased risk in your supply chain. Understanding this environment and addressing the local operational and external environment risk factors could uncover vulnerabilities in your supply chain, which might not be the “high-risk” security factors that are being budgeted for.

How often do you carry out post-incident investigations in challenging security environments?