Celina Realuyo — Safegaurding Supply Chains from Geopolitical Risks

Bio (From the SARMA Conference Agenda)

Celina educates top US and foreign military and civilian leaders on national security and counterterrorism strategies at the National Defense University, teaching the “Global War on Terrorism” and “Terrorism and Crime” courses. She was also the Director of Counterterrorism Finance Programs at the State Department’s Office of the Coordinator for Counterterrorism in Washington DC.

Abstract (SARMA Agenda)

Globalization has revolutionized and accelerated the way goods and services are sourced, produced, and delivered around the world. Increased integration and interconnectivity have greatly improved the quality of life for global citizens. However, along with all the benefits from globalization have come increased and magnified risks that threaten not just the global economy but international securities as well. Supply Chains at every stage of their process – from acquiring raw materials for, manufacturing, and transporting finished products – are particularly vulnerable to geopolitical risks such as terrorism and crime.

Globalization

Recently, we have seen an unprecedented growth in globalization that has lead to new levels of corss-border trade and investing. This also raises the competition in the markets fro resources. This has created a tremendous information and technology transfer so that there is better access for communications and travel. Empowering the global citizen with choices has come hand in hand with these new economic powers that have grown due to globalization. Now, lets look at the core global risks. These include geopolitical: Terrorism, war, Economic: oil shock, US dollar, Societal: pandemics, infectious diseases, Environmental: natural disasters, and Technology: Critical Infrastructure. Currently, a manifestation of these global risks is occurring. Food security, natural disasters, energy security, and the credit crunch are all examples of this statement.

Mrs. Realuyo believes that a Supply Chain is the background to global business and that globalization has accelerated production times, outsourcing, and subcontracting. Economic optimization has a concentrated geographic risk, which has made supply chains become more vulnerable.  Something that is scary is that Mrs. Realuyo stated that in a poll she conducted, only 21% of businesses have continuity plans.  This number needs to be well above 80% in my mind.

Supply Chains are Attractive Targets

Supply Chains are appealing targets for terrorist and criminal groups because they have large responsibilities in the energy, food and water, manufacturing, chemicals, pharmaceutical, transportation and shipping, financial systems, and information technology fields.  Terrorist groups seek to orchestrate attacks with spectacular and multiple effects on society, the civilian population, economy, and media.

Nexus Between Terrorism and Crime

To first look at this topic, we will compare both Terrorism and Crime.

As you can see, both have similar actions, but go about them in very different ways.  Now that we have a general knowledge of the comparison we can look at a weird pattern that was presented.  In the last few years, criminals have been working with terrorists so that both can work at optimal levels.  It is a very scary organization move.  Lets take in this example.  A gang steals a Westerner in the Middle East and then sells him to al Qaeda.  al Qaeda then publisizes that they have a prisoner and uses him for leverage or kills him.  al Qaeda does not specialize in kidnappings, but a gang may.  It is a way that these groups are going that spell real danger for all of us on the other side of this thought process.

Her presentation now shifts to her findings that Terror Groups are becomming increasingly reliant on  Crime.  Lets think about some recent attacks such as the Madrid Train Bombing, random kidnapping in Iraq, Columbia FARC and drug trade, Sri Lankan Tamil Tigers maritime privacy, and the Hezbollah in South America.  She links this shift to the economic crippling attacks terror groups have been performing.  9/11 cost the US about $100Billion overall and it only cost them less than $500k to produce.  When Terror Groups use criminals to optimize costs, the result is a problem facing the modernized world.

This makes us think about how these will effect securing our supply chains.  Well, we will face higher operating costs, more spending on security, higher insurance premiums, longer wait times, and more inventories.  This means the consumer needs to beware because sometimes, companies cannot afford these prices and become lackadaisical.  Lets look at the killer counterfeit couch syrup case in Panama in 2007.  365 deaths were attributed to tainted cough syrup bought at pharmacies to help with sickness that had struck the nation.  This cough syrup was traced to China and had no regulating test performed on it.  A certificate disguised the manufacturer, but the Chinese Government eventually figured out who it was.  He produced a bottle that looked like legitimate cough syrup when it was killer chemicals and sold it.  So, how much can we trust outsourcing?  The answer to this question is not easy to find and varies from company to company and leads us into the next subject.

Safeguarding the Supply Chain

There are some simple, however vital, steps to be taken while safeguarding a Supply Chain.  you must protect the product and packaging, safeguard movement, secure business transactions, ensure regulatory oversight, increase penalties, heighten vigilance and awareness, and promote international cooperation.  There have been promising progress in Supple Chain measures and international efforts to safeguard supply chains from Terrorism and Crime have been on the rise.  The future looks bright for the safety of our supply chains, which is good considering we try to take out terrorist supply chains because we believe it will greatly hinder them, which leads me to believe that the same would be true for the US.

Geopolitical Risks Impact on Organization

What can an organization do to help the effort?  Mrs. Realuyo finished her discussion with highlighting a few steps to answer that question.  Recognize global risks, ID, evaluate, prioritize, consider strategic operational and financial impacts, allocation of resources, preparation and planning, and a focus on resilience are the topics she listed.

Relevance

I was glad I sat in on this session because it gave me a great overview on a world I had little previous knowledge on, Supply Chains.  Now I understand their importance, risks posed to them, and what the future holds in protecting them.  I come out of this thinking that the protection of our Supply Chains and the destruction of our enemy’s is a great way to gain the upper hand.  I will be looking more into terrorist supply chains in the future and as always, I will keep you posted.