Dealing with the Challenges of Political Violence and Crime in Latin America

No stranger to political violence

Latin America as a region is no stranger to political violence, and headlines of anti-government protests in Venezuela, Chile, Bolivia, Nicaragua and Peru are all too familiar. Layered on top of recent political discontent, we see increasing social unrest in the region resulting from the coronavirus pandemic and accompanying lockdowns and economic desperation in 2020.

The violence of the 20th century related to military coups, dictatorships, human rights violations and disappearances has given way to drug cartels, organised crime, political protests, kidnappings and homicides in the 21st century, in a region where democracy has only recently emerged as the prevailing political system. It has been more than 30 years since military leader Augusto Pinochet was ousted from power in Chile via a referendum, and 20 years since Vicente Fox was elected as the first Mexican president not from the dominant political party, the Institutional Revolutionary Party. In this time, the region has sought to establish and strengthen democratic institutions, including free and fair elections, separation of powers and the rule of law.

In many ways, the countries of the region have been successful in these efforts, with more people empowered to vote, run for office and feel that they have a say in their local and national governments than before. Looking simply at the number of elections and referendums in the region in the past 20 to 30 years, Latin America could be considered one of the most democratic regions in the world, despite outlier states like Cuba and Venezuela today. Recall that, in Quebec City at the Summit of the Americas in 2001, leaders of the region collectively ‘affirmed their shared commitment to democracy’ and vowed to sign and enforce the Inter-American Democratic Charter through the Organization of American States (OAS).[2] This was an ambitious and landmark consensus for a region where most countries had only recently been ruled by military dictatorships.

However, despite the democratic advances in Latin America, the level of political violence has not decreased and there has not been a natural correlation between security and democracy. Democracy has not meant a decline in poverty or more economic opportunity for all. Unfortunately, the coronavirus pandemic has exacerbated this situation. Rapid urbanisation and persistent inequality throughout the region have contributed to a decline in security, and governments have been unable (or unwilling, in some countries) to fulfil basic social services, like public healthcare, or protections for its citizens, let alone the overarching promise of democracy, peace and prosperity for all people. Democratic institutions remain weak in many countries. Democratically elected governments have not always governed democratically. Instead, political violence erupting in the streets, gang-related organised crime, drug-cartel turf wars, an increasing rate of homicides and kidnappings, and, in some cases, a return to authoritarian tendencies have been the result in Latin America.

Human rights groups report that there is a murder in Latin America every 15 minutes.[3] According to these groups, such as the Open Society Foundations, Latin America accounts for approximately one-third of all homicides in the world even though the region is home to just 8 per cent of the world’s population.[4] According to data compiled by the Igarapé Institute, Brazil, Colombia, Mexico and Venezuela account for one-quarter of all murders globally. The UN Office of Drugs and Crime reports that the majority of violent crimes and homicides in Latin America occur in highly concentrated urban areas – in some cities, on just 2 per cent of the streets – with homicides linked to both criminal activity and political violence.[5] Statistics from the Igarapé Institute and UN Office on Drugs and Crime indicate that one-third of all Latin Americans reported being victims of violent crime and 85 per cent of the victims are male.[6]

The economic cost of insecurity in Latin America is both direct and indirect. A 2017 study conducted by the Inter-American Development Bank (IDB) estimated that the direct annual cost of crime and violence in the region is US$261 billion, which is approximately 3.5 per cent of GDP.[7] The study looks at the costs associated with crime, including people changing behaviour to avoid crime, businesses and households spending money for protection, firms reducing their investment, productivity losses as a result of political unrest and government spending on public security, police services, the judiciary and the administration of prisons. Several studies demonstrate the staggering opportunity cost of violence in the region, where political violence, kidnappings, homicides and crime drain public and private resources that could be used for more productive economic purposes.[8]

At the same time, the cost of doing business in parts of Latin America is higher, given that businesses accrue more risk operating in countries or cities where the levels of insecurity are highest. Companies must invest more to protect their operations and personnel, increasing spending on everything from security cameras, guards and gates to background checks, government and law enforcement liaisons, safety protocols and emergency management plans to address unforeseen challenges like the spread of covid-19. In worst-case scenarios, CEOs have been targeted, workers kidnapped or killed, factories infiltrated, supply chains choked off, small businesses ransacked and whole operations forced to close, costing companies millions of dollars in losses as a result of political violence and crime in Latin America. Political violence has damaged the business environment in Latin America. However, successful businesses seek to manage the risks, even amid the increasing levels of violence and crime, and take proactive steps to safeguard their investments and assets in the region.

Now, businesses will need to manage the additional risks brought on by the global coronavirus pandemic and resulting economic downturn. Latin America’s economy as a whole is set to decrease by approximately 9.4 per cent in 2020, according to the International Monetary Fund (IMF). This is down by 4 per cent from its April 2020 projection since the largest economies of the region – Brazil and Mexico – have suffered from the worst outbreaks of covid-19. According to Goldman Sachs analysts, Mexico, Argentina and Peru are likely to see double-digit declines in growth this year, making it the worst economic downturn in the region since World War II. Still, the IMF projects that the region will see a recovery of 3.7 per cent growth in 2021.

Latin America was considered the global epicentre of the pandemic during June and July, accounting for more than 40 per cent of the world’s new covid-19 deaths. Latin American governments, central banks and international financial institutions took steps to mitigate the impacts of covid-19, but the pandemic continues to rage through many parts of the region. Brazil, Mexico, Peru and Chile have been hit hardest according to confirmed numbers of cases, but numbers out of Bolivia, Ecuador and Venezuela are less clear. There is a widely held belief that covid-19 cases are undercounted due to a lack of testing capacity as well as political will on the part of some governments, including in Venezuela, Mexico and Brazil. At the time of writing, Brazil’s confirmed death toll to covid-19 currently stands at approximately 166,000, and Mexico’s at approximately 99,000.

Latin America is suffering from multiple related economic factors from the pandemic, including the negative impacts of lockdowns and travel restrictions inside the region; the reduction of trade within and outside the region; the reduction of foreign investment; and lower remittances from the United States and Europe. Many countries are also suffering from a decline in global demand for commodities, a significant drop in tourism and low oil prices.

Coming out of the pandemic, the region will likely have to deal with growing crime, insecurity, and social and political unrest – and the possibility of increased migration to the United States from Mexico and Central America. Political stability will be necessary for the economic recovery in the region, but it is far from certain as many people in Latin America have begun to feel disillusioned with democracy.[9] As noted, economic prosperity has not been a natural correlation to democracy, and neither has security. Rapid urbanisation, poor social services (like healthcare and education), weak democratic institutions and persistent inequality, which were already chronic in the region, have been exacerbated by the pandemic and the economic downturn.

Political protests and violence, which were seen in 2019 in places like Bolivia and Chile, could return as the region shifts gears to elections. Bolivia and Chile both held elections in October 2020 – after both had been postponed earlier in the year due to the pandemic. Fortunately, both Bolivia’s presidential election and Chile’s national vote on the need for a new constitution were held peacefully. In the case of Bolivia, the leftist candidate Luis Arce, aligned with former President Evo Morales, emerged victorious, and in Chile, the people voted overwhelmingly to draft a new constitution. So far, both countries have avoided mass protests and political violence seen in 2019. Peru, however, experienced a wave of political protests in November 2020 when the popular Peruvian President Martín Vizcarra was impeached and replaced by Congressional leader Manuel Merino, who resigned within a week amid the protests. Presidential elections in Peru are not scheduled until April 2021 and political protests are likely continue until then. Brazil is scheduled to have municipal elections in November. Venezuela will have legislative elections in December, but the opposition parties have decided to boycott saying that the election will be rigged. Chile, Nicaragua and Ecuador are scheduled to have general elections in 2021, and Mexico will hold midterm elections in June 2021.

In this chapter, we explore these security threats, seen in Chile, Nicaragua, Mexico, Brazil and Venezuela, and give recommendations for companies operating in Latin America.

Military police and protests in Chile

Street demonstrations left 18 dead and hundreds injured in Chile in October 2019. The Chilean government under centre-right President Sebastián Piñera issued a state of emergency and instituted a military curfew as anti-government political protests – initially prompted by a metro fare increase – escalated over issues of social justice and reform. Chileans said that the fare increase was the catalyst for the larger outpouring of mass frustration with the government over low wages, inadequate pensions and the high cost of utilities, education and healthcare. Social and economic inequities in Chilean society continued to be a rallying cry for protesters into 2020 as the country’s poor faced a lack of food. During the May 2020 protests, a large banner reading ‘hunger’ went up on the side of a building in Santiago.

While fare-dodging students initiated the protests at metro stations, as unrest spread, many lower to upper-middle class Chileans joined in to protest against the government’s austerity measures and disproportionate benefits to the wealthy political economic establishment. Just days before the protests began, Piñera had publicly described Chile as an ‘oasis’ amid the turmoil elsewhere in Latin America, striking a dissonant chord with large swathes of the Chilean population who see the wealthy Piñera as out of touch and oblivious to their daily struggles. The protests led to violence, the looting of businesses, vandalism and arson, clashes between protesters and the militarised police, alleged human rights abuses and cacerolazos (pots and pan-beating protests).

After two weeks, President Piñera lifted the state of emergency and curfew. He also proposed reforms, including a higher tax rate for the wealthy, and reshuffled his cabinet. Piñera’s proposed reforms include raising the basic pension and minimum wage, rebalancing disparities in the municipal budgets to provide more support for poorer neighbourhoods, a new tax bracket of 40 per cent for those earning more than US$11,000 a month and a decrease in salaries for lawmakers. The government’s tone changed after the largest protest in recent history on 25 October when 1 million people, 5 per cent of the total Chilean population, marched in the capital of Santiago. The protests are considered the most violent unrest that Chile has witnessed since the end of the Augusto Pinochet dictatorship in 1990. Chilean observers noted that some of the demonstrations, particularly the cacerolazos, were reminiscent of the empty-pots protests during the Allende years of the 1970s, while some of the countermeasure responses by security forces were reminiscent of the Pinochet era that followed.

Distrust in government continued into 2020 and lockdowns in Chile were severe for several months as the government sought to control the spread of covid-19. The resulting postponement of the constitutional convention election to 25 October created additional unrest, with many protesters angered that the Chilean government used the pandemic to silence their voices for change.

Abuse of power and unrest in Nicaragua

In Nicaragua, more than 300 were killed and thousands fled and set up refugee camps on the border with Costa Rica after political violence erupted in Nicaragua in April 2018. The crackdown by the Nicaraguan government of President Daniel Ortega began after anti-government protestors took to the streets to denounce the handling of wildfires in a protected area of tropical rainforest in the country. The political violence only worsened following the government’s decision to change the country’s social security system, which many in the country believed put an additional economic burden on the people.[10] More than a year later, in September 2019, the Nicaraguan police were still repressing opposition protests against President Ortega, who banned anti-government demonstrations following the April 2018 uprising.

International observers have denounced the political unrest and human rights abuses in Nicaragua, as the government’s national police, armed paramilitary groups and thugs supportive of Ortega’s government have sought to silence the protestors. The UN High Commissioner for Human Rights, Michelle Bachelet, reported in September 2019 that the crisis in Nicaragua continues amid human rights abuses against the Nicaraguan opposition and the ongoing imprisonment of more than 100 activists.[11] A year earlier, the UN Security Council held a meeting in Nicaragua in early September 2018 at the behest of Human Rights Watch that called on Nicaragua to end the crackdown and dismantle the armed gangs.[12] Meanwhile, the OAS called Nicaragua a ‘time bomb’.

The situation in Nicaragua is reminiscent of the violence in Central America of the 1980s, when the Sandinistas brought Ortega to power the first time in Nicaragua after the 1979 coup and then fought against US-supported Contras for nearly a decade. As in the 1980s, the violence today has brought back old speculation of Ortega’s corruption, abuse of power and ties to drug trafficking. In addition to the bloodshed and displacement of Nicaraguans, the political violence has had a significant negative impact on the Nicaraguan economy, with an especially grim outlook for the tourism sector, which had been fuelling growth and development in the country in recent years.[13] Multinational corporations and small business owners alike have suffered as a result of the political violence in Nicaragua. Protesters have looted corner markets and the major north-south highway has been blocked off intermittently, bringing commerce to a standstill.

The effects of covid-19 on Nicaragua are not as documented as in other countries of the region; however, it is clear the economic consequences of the pandemic and 2020 lockdowns will hurt the Nicaraguan people as Ortega uses the excuse of the conronovirus to justify a consolidation of power.

Corruption and cartels in Mexico

Mexico’s murder rate hit a record high in 2019, surpassing the previous record high of 29,111 murders in 2018, according to data released by Mexico’s national public security office. This was sobering news following already grim statistics from the previous two years.[14] For example, the 2018 Mexico Peace Index had reported that, in 2017, Mexico saw its highest homicide rate on record, estimating that the total economic impact of violence reached US$249 billion, equivalent to 21 per cent of GDP. Further, political violence in Mexico increased sharply ahead of the 1 July 2018 election, which saw left-wing populist Andrés Manuel López Obrador win the presidency with an overwhelming 53 per cent of the vote.[15] Indeed, López Obrador’s win could be attributed to the growing insecurity and violence in the nation, and a population growing weary of tolerating it. Mexicans clearly voted for change, tired of the same old way of dealing with corruption and cartels. However, López Obrador has been unable to reverse the violent trends and make a difference to the security situation in Mexico, which has been made worse by the pandemic.

The crackdown on the drug cartels and organised crime that began during the administration of former President Felipe Calderón left tens of thousands dead, and the inadequate efforts of his successor, President Enrique Peña Nieto, were not enough to diminish the threat of violence. The disappearance of 43 students in Guerrero in 2014, and the incomplete investigation that failed to bring the perpetrators to justice, became a symbol for the many Mexicans lost during the drug war.[16] International rights groups have called on López Obrador’s government to properly investigate the disappearances, possible involvement by the federal police and the military, and complicity of government officials. In August 2018, Amnesty International called on López Obrador ‘to prioritize the human rights agenda in government decisions’ to protect the rights of the people, including human rights defenders and journalists seeking to cover the violence in Mexico.[17] But so far, López Obrador’s security strategy has been severely lacking.

Until Mexico addresses the issues of inadequate policing, impunity and an overwhelmed justice system, they will have a difficult time pursuing the gangs, organised criminal groups and drug cartels. These are the extrajudicial groups behind the violence, political killings (more than 100 politicians were murdered during the last election cycle in Mexico), and kidnappings (according to rights groups in Mexico, a person is abducted every two hours in Mexico).[18] Though López Obrador is more than two years into his term, he still lacks an ambitious security reform agenda to address the rising levels of violence. To be successful, his administration needs a comprehensive national plan that goes after the criminal actors but also deals with chronic issues of inequality, corruption in governance and impunity.

López Obrador will also need to address the compounding negative impacts of the coronavirus, which he has consistently downplayed even as numbers of infections in Mexico soared in mid-2020. He was slow to implement shutdown orders given that many Mexicans, including many of his supporters, live and work in the informal economy, so shutting down the country and asking people to work from home was just not a possibility in his view. However, Mexico will suffer the consequences as its economy is set to decrease by 10 per cent in 2020 and the underlying issues of corruption, organised crime and violence increase as a result of joblessness and economic decline.

Gangs and murder in Brazil

Mexico is not alone with a high murder rate or in its struggle to address the threats and consequences of the coronavirus - Brazil has also struggled with high levels of violence in the past few years and the highest number of covid-19 cases in all of Latin America in 2020. Fortunately, however, 2019 data indicated that the murder rate fell 19 per cent from the prior year and had the least number of homicides since 2007.[19] The declining murder rate is good news for Brazil, considering that the Brazilian Forum of Public Security showed a murder rate of 30.8 per 100,000 people in 2017, higher than Mexico’s 26 per 100,000,[20] and a cost to the nation of approximately US$75 billion each year.[21] As in Mexico, the direct and indirect costs of crime cut into the growth and development of the country, even as poor economic conditions have given rise to increased criminal activity and its associated violence. As in Mexico and elsewhere in Latin America, it is the organised criminal groups, gangs and drug trade that fuel the violent crime in Brazil, particularly in urban areas, where the majority of victims are poor black men.

Growing violent crime in Brazil has had an impact on Brazil’s politics, which faced a pivotal presidential election of its own in October 2018. Increasing levels of violence and insecurity hit home with voters when the then right-wing candidate and current President Jair Bolsonaro was violently attacked and suffered multiple stab wounds while campaigning for the presidency in September 2018.[22] Bolsonaro, who won the presidency with 55 per cent of the vote in the second round, ran his campaign on an authoritarian agenda against crime and corruption, and claims responsibility for the declining murder rate since taking office. Political observers believe his more authoritarian style of governance comes in response to Brazilians who were fed up with the violence, corruption, scandals and economic malaise seen during the administrations of Dilma Rousseff and Michel Temer.[23]

According to Brazilian national Fernanda Luchine Ishihara, who is an expert in corporate social responsibility, ‘systemic corruption at all levels of the Brazilian government, law enforcement and the private sector are the root of the political violence in Brazil’. She believes that it is a ‘vicious cycle’ in Brazil that leads to the political violence as well as the generalised violence and criminality in Brazil, ‘as ordinary Brazilians feel trapped in this unfair system’.[24] The government in Brazil will have to address the systemic corruption that feeds the criminality and go after those who have been operating in the country with impunity, including many elected officials, law enforcement and, in some cases, corporations like Odebrecht. At the same time, they will need to crack down on the criminal organisations, gangs and drug cartels that have exploited the vulnerabilities in the system if they want to see the levels of violent crime continue to decrease.

The reality is that Bolsonaro’s inadequate response to the pandemic will make these underlying conditions more complicated to address. An August poll by Datafolha found that 37 per cent of people gave Bolsonaro a positive approval rating, which is up from 32 per cent in June and the highest his ratings have been since he took office. Popular outreach will buoy Bolsonaro’s approval ratings and blunt the economic impacts in the short term, but he will need to address systemic issues of corruption and crime to have a real impact in the long term.

Chaos and collapse in Venezuela

A combination of poor economic policies, corruption and a wholesale degradation of democratic institutions has led to a political, economic, security and humanitarian crisis in Venezuela. Venezuela has been in a death spiral of violent political protests and economic collapse in the past few years as ordinary Venezuelans have taken to the streets against the government of President Nicolás Maduro and fled for the borders to Colombia and Brazil, seeking a way out of the devastated country. More than 5 million Venezuelans have now fled the country - a staggering 1 million left in just seven months between November 2018 and June 2019.[25] With the pandemic, many Venezuelans have been forced back to their country out of a lack of opportunity in neighbouring countries - making the humanitarian crisis in Venezuela all the more severe. As in other countries of Latin America, the poor have accused the government of using the coronavirus as an excuse to institute draconian policies and go after political opponents. A recent UN report issued on 16 September noted its findings of alleged ‘crimes against humanity’ by the Maduro regime during this time.

While the Venezuelan government has been unable and unwilling to rescue the country from a tanking economy, hyperinflation and defaults on payments to institutional lenders such as the IDB, ordinary Venezuelans suffer from soaring crime rates, rampant corruption, and endless lines to procure basic goods and services, which are in short supply.[26] Recent accounts out of Venezuela indicate that hospitals handling covid-19 patients lack a consistent water supply, to speak nothing of a lack of ventilators or medicine to treat the disease. Statistics are meaningless as well, given the government’s inability and unwillingness to collect basic data on the country’s decline. Meanwhile, political protests are met with a brutal response from law enforcement, which uses tear gas and rubber bullets against protestors. The last major protests in April 2019 were quickly quelled by Venezuelan military and security forces that remain loyal to Maduro, despite efforts by opposition leader Juan Guaidó to gain their support and push Maduro from power. Many consider Maduro’s government and ruling Socialist United Party to be corrupt, operating more like an organised crime group than a political party, but so far the efforts to bring about change in Venezuela (including US sanctions) have not proven successful.

According to Ambassador Charles Shapiro, who served as US Ambassador to Venezuela from 2002 to 2004, ‘Venezuela is a failed state. The economy is in free fall, and government lacks legitimacy. Venezuela exists very precariously at the intersection of bad ideology, incompetence, venality, nepotism, drug trafficking and corruption.’[27] Indeed, the high crime rates, kidnappings and homicides in Venezuela are related to the economic free fall as well as the government’s corruption. Human Rights Watch and other groups have called for a regional response to help the Venezuelan people, but the country is not likely to emerge from the violent chaos and turmoil until there is a change in government. As Shapiro said, ‘Whenever you think things can’t get worse in Venezuela, they do. As a result, violence – common criminality and political violence – is likely to increase in the coming year.’

Safeguarding your business in Latin America

High levels of insecurity negatively impact business interests in Latin America – yet, business continues in the region despite the high cost that political violence, homicides and kidnappings inflict on the private sector. Now, the economy of Latin America is facing additional challenges as a result of the pandemic. Every major economic indicator for growth and development would increase in Latin America if the security situation improved, but even so, there are still willing investors, large multinationals, mega conglomerates, small to medium-sized businesses, and individual entrepreneurs who invest and operate in the region. Despite the high levels of violence and crime in Mexico and Brazil, the two largest economies in Latin America, the major engines of the economy have been largely undeterred over the past 25 years owing, in part, to a diversification of the economies, free market and stable macroeconomic policies of successive governments, as well as global integration through trade and investment. This includes the oil and gas sector, telecommunications, retail, mining, construction, real estate, the auto sector and tourism. As these countries emerge from the pandemic, they will rely on this diversification to create new jobs and drive growth and development in the region.

Business cannot wait for the political and policy changes that are needed in many parts of Latin America to improve the security situation. Nor can it wait for a vaccine to solve the challenges of the coronavirus pandemic. However, businesses can and do manage the risks that come with the operating environment. Corporate entities operating and investing in Latin America require ongoing risk management to deal with the uncertainty of the security situation. Successful companies in the region invest in appropriate systems and protocols so they can mitigate the risks and seize the opportunities. They also turn to specialised firms that can help them navigate the security concerns and prepare for possible downside impacts as a result of the security situation – including anything from violent political protests disrupting supply chains to CEO and top management being targeted for kidnapping and extortion to criminal organisations penetrating the organisation for illegal gain. As the pandemic has made clear, companies operating in Latin America and around the world also need emergency management plans and protocols so they are not caught flat-footed by unforeseen challenges. All of these examples have happened to companies doing business in Latin America, and firms like our own, The Arkin Group, have been called upon to help handle such security breaches and to reduce the possibility of them happening again.

Anyone doing business in Latin America should consider the following steps to safeguard their investments and assets in the region.

Know your partners

Reliable information about business partners is critical to sound business decisions in Latin America. This requires due diligence designed to assess the risks associated with partnerships, mergers and investment opportunities. Companies need targeted due diligence and background research that combines thorough public data and traditional investigative research with well-sourced, on-the-ground information. Individuals and companies operating in Latin America need to know their partners and any potential ‘red flags’, and they need advance information and analysis of the individuals and entities critical to a transaction or investment. In a post-pandemic world, Latin America is likely to see an increase in mergers and acquisitions, and a consolidation in some sectors where distressed assets may become available now when they were not before. This makes it all the more important for companies entering the market to know their partners in order to feel confident about taking advantage of these opportunities.

For example, in the early 2000s, a large multinational financial institution was preparing to buy a smaller-sized bank in Central America and came to us for a thorough review of the bank’s senior management in the region before concluding the deal. The due diligence methodology included inquiries with corporate, regulatory and industry sources to determine the good faith of the senior managers. Through this process, the bank learned that a member of the senior management team had business ties to a known criminal in the region and that the same individual had been investigated for alleged involvement in criminal activities. The due diligence process was critical for the firm’s visibility and allowed the financial institution to take appropriate steps before concluding the deal. Had information about this individual come to light after the deal, it could have had a significant negative impact on the entity’s regulatory and reputational standing.

Build internal intelligence systems and capabilities

Because information is so important to mitigate risk, many companies operating and investing in Latin America have come to rely on sophisticated information-gathering programmes. They have developed internal processes to collect external information that could have an impact on their bottom line and to assess critical developments in their industry and operating environments. This could be information like spikes in violence or kidnappings on a certain transhipment point used by the company or it could be developments with criminal organisations extorting other companies in the area. Companies often work with outside providers to help build the internal intelligence systems and capabilities to then use external business intelligence – all of which is designed to improve their decision-making.

For example, we worked with a multinational corporation with worldwide operations, including in Mexico and Colombia, to develop internal intelligence mechanisms to manage incoming competitive and security-related information that impacted their most important operations. The company developed the internal systems and protocols necessary to then analyse information coming from external networks. These external networks were able to provide real-time intelligence about ongoing and emerging security threats to the company’s operations. In one of their markets, the company was able to monitor the security risks emanating from violent street protests, create and implement a risk mitigation strategy, and protect their valuable investment there.

Monitor political, economic and security risks

Operating in a volatile environment, where political violence and common criminality are major factors, companies need not just internal systems and protocols for receiving information, but also ongoing intelligence collection and political economic risk monitoring. Understanding the political, economic and security environments in which a business unit, factory, retail store, headquarters, partners or acquisition targets operate is essential to a company’s risk mitigation strategy. The most successful companies develop an intelligence-based approach to political economic risk assessments and ongoing monitoring that provides timely information from external networks of on-the-ground sources. Reading The Economist is not enough – these companies need proprietary information relevant to their specific corporate business objectives.

For example, we worked with a non-profit service organisation seeking to expand to several different countries around the world, including in Chile, Cuba and Mexico. The organisation required a series of reports analysing each country’s political, economic and security situations, as well as the reception the non-profit would likely receive in each country. Part of what made the reporting successful was that the initial reports developed a list of key contacts for the organisation, a road map of governmental bureaucracy and real-time intelligence about the security environment to help make important expansion decisions. Ongoing intelligence monitoring has helped the organisation to mitigate the significant risks to its mission and personnel posed by political violence and organised crime in these countries.

Develop security protocols and emergency response systems

It is equally important that corporate entities develop security and crisis-management protocols when operating in unstable environments. Companies need to develop effective and sustainable security and safety programmes, emergency-response systems and disaster-recovery plans. These plans could be related to threats to a facility, employees and information, or unforeseen crises and location-specific concerns. For example, companies in the region that had existing emergency management plans in place were much better equipped to handle the sudden lockdowns in 2020 as a result of the public health emergency. They were able to draw upon existing safety protocols and plans for operating remotely, thus mitigating the negative health impacts to their employees and financial impacts to their bottom line. Protocols for dealing with kidnappings for ransom, express kidnappings, bribery and extortion are especially critical when operating in parts of Latin America where such violence and security breaches happen frequently. Physical security assessments and ongoing security protection for corporate facilities and management – including everything from armoured cars to a vetted security detail, surveillance cameras and safe rooms – can help safeguard against such threats.

For example, we worked with a multinational conglomerate seeking to revamp the security protocols for its Latin American subsidiary. Using on-the-ground intelligence, we developed and executed a strategy for continued production in the unstable area in which they were operating – an area subject to paramilitary and insurgent activity. It was important to identify and remediate weaknesses in their security posture, and create a pro­active and ongoing risk assessment capability for the company. In another case, we worked with a mining corporation operating in Mexico in areas of the country largely controlled by the drug cartels. The corporation suspected facilities and some personnel had been penetrated by the organised crime groups and required a thorough review of its physical security posture, security protocols and emergency-response procedures in Mexico to safeguard the company and its workers from the threat. Most recently, we worked with a firm to help shore up their emergency management plan during the coronavirus pandemic. Fortunately, we had already established protocols with the client during the H1N1 outbreak in 2009, so they were ahead of their competitors in their immediate response to covid-19. This was invaluable to the company and its employees from a health, financial and public relations perspective.

Facing the challenges

The security challenges facing corporate entities operating in Latin America are significant, particularly during the pandemic and as the region emerges in 2021 in a post-pandemic world. Still, the countries highlighted above – Chile, Nicaragua, Mexico, Brazil and Venezuela – are likely to see sustained high levels of political violence and criminality during this time. Political solutions and policy changes will not happen overnight, so businesses need to manage the risks while also taking advantage of the economic opportunities that Latin America presents. Intelligence-based systems for collecting information and monitoring the political, economic and security situation in a market are key, as are security protocols and emergency-response systems. Corporate entities should consider such measures to safeguard against the threats of political violence and criminality as the cost of doing business in Latin America for the foreseeable future.


[1] Jack Devine is president and founding partner and Amanda Mattingly is a managing director at The Arkin Group LLC. The information in this chapter was accurate as at November 2020.

[24] Luchine Ishihara, Fernanda. Personal interview with co-author Amanda Mattingly (11 September 2018).

[27] Shapiro, Charles. Personal interview with co-author Amanda Mattingly (11 September 2018).

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