The Maoist Threat: The Role Of Risk Management Firms

The current debate of ‘people or profits’, with regards to the Maoist uprising, prevents big conglomerates from investing in the mineral rich states of India. The Maoists are now in 200 districts across 12 Indian states, stretching from Nepal to the northern district of Tamil Nadu. It is a challenge to India’s internal security and their growing political influence in the region will certainly have an impact on the economy. More than four decade of the left wing extremism in India has claimed approximately 20,000 lives and its reach is expanding drastically. The Maoists seek to overthrow the democratically institutionalized government through armed resurrection. They are expanding their sphere of influence by running a parallel administration with an organized military command structure in nearly 44 districts in Orissa, Jharkhand and Chhattisgarh and few districts in Andhra Pradesh.

Maoist presence in the mineral-resources rich regions scuttles India’s plan to capitalize on the resources. The world biggest steel maker, Posco, yet to start their US$32 billion project in Orissa, delayed it due to agitation and protests over land. Government sources projected that recently sprung out left-wing extremism in regions rich in iron ore, coal and bauxite has stalled an upcoming project worth US$80 billion, which would have doubled the national steel input. This is despite the government assurance of additional forces, intelligence and other adequate support for the state governments. ArcelorMittal and NMDC Ltd. are reluctant to expand their projects in the resource belt due to the ongoing strife between Maoist and the Central Security Forces. Business and Investment experts believe that “the high level of risk associated with doing business in Naxal-infested regions will deter investment.” If the situation continues, it will hamper India’s growth rate in the future.

Even as investors are concerned, the major challenge is emerging from the public attitude mooted by eminent scholars on the ‘people or profit’ debate. Opposition to the TATA plant in Singur, the allegation on Posco for forceful land acquisitions and many other issues against corporate establishment in Maoist influenced areas, created enough negative agitation against the corporate establishment. Even in the Maoist-Free Zones, corporations and investors are reluctant to expand their projects due to a backlash from the local population. Arousing public sentiment can be wishfully converted into a struggle against the establishment in the poor rural regions, say leading risk advisors. Adequate safety and security to physical infrastructure merely deters the agitation group. In order to avert the risks to gain profits, big conglomerates are working on a multi-level strategy to pre-empt anti-development threats, emerging particularly from poor rural India.

Corporate Social Responsibility (CSR) plays a vital role in winning the hearts and minds of the people. Laying roads, building schools, hospitals and women empowerment are activities frequently organized by the corporations to fulfill their social responsibility role. On the political ground, corporations lack the will to fight political issues lest it hurt the good will of the company. Therefore, corporations outsource the job of analyzing socio-politico and cultural activity of a region to ‘corporate security and risk consulting firms’. Leading risk consultants in India, Hill and Association (Delhi), Mitkat Risk Advisory Services (Mumbai), Mahindra Special Services Group (Mumbai) and Orkash service (Delhi) Ltd etc. are some examples.

These firms are specifically tasked to assist corporations and investors in calculating risks and creating risk awareness in organizations by training the senior management in risk assessment programs. However, risk consulting firms’ primary focus rests on crucial projects encompassing information security management to high-end physical security in vulnerable areas and instituting a security setup wherever necessary. The risk consultant helps the client in grass-root-investigation on matters ranging from money laundering investigation, asset tracing, tracking and locating individuals/absconding employees, fraud risk assessment and information forensic etc.

The recent terrorist attack on the Mumbai Taj Hotels and the uprising of people’s resistance in the resource rich belt, backed by CPI-(Maoist), traumatized the corporate world with a sense of insecurity. Risk advisors primarily working on risk consultation, now shoulder more responsibility in dealing with insurgency and terrorism to caution the respective client to avoid running into a troublesome region. Corporations and investors believe that risk advisors services can mitigate possible Singur type agitations, which plunge the region into human disaster and hamper long-term investment, like it happened in West Bengal.

In conclusion, risk management firms play a vital role for investors and corporations in an emerging security threats environment. The risk advisor by conducting early investigation in an area foresees possible risks and threats to the investor in the region. This creates a conducive environment for the corporation/investor to expand the project without disturbing the state apparatus. At the same time, the role of private actors investigating Maoist and people resistance activities is sometimes exposed to vulnerable situations, like abduction, harassment and a threat to life etc. Although, so far no such incident has been reported, risk advisory firms should be cautious while operating in such a dangerous environment. Nevertheless, corporate security and risk management firms are committed to playing a crucial role in the emerging security environment.

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