Homeland Security’s Tom Ridge

The first secretary of Homeland Security tells CFO what companies should fear most.

As the first secretary of Homeland Security, Tom Ridge instituted tough new border controls and airport-security measures, and executed the famous color-coded alert system. Now the former governor of Pennsylvania has formed his own consulting firm, Ridge Global LLC, specializing in security and economic-development issues. And he is working closely with one client — Discover America Partnership — to seek a better balance between current security measures and the need to connect efficiently to the outside world. Lack of balance, he says, has hurt both the country’s image abroad and Corporate America’s ability to operate globally. Still, the 62-year-old Ridge insists that dusting off “our welcome mat” doesn’t entail lowering our guard on terrorism — not at all.

What should companies fear most these days?

The business world’s exposure grows as the global market grows and companies become more interdependent. The more you spread out your franchise, the greater the vulnerability. Terrorism is just one [potential threat]. There are also criminal acts, accidents, weather events, geopolitical situations, work stoppages, energy availability — you name it. Increased vulnerability means that priorities need to be set, such as whether to go to a redundant IT system or look at your supply chain more carefully.

In our most recent global confidence survey, CFOs rated their concern over terrorism a 16 on a scale of 1 to 100. Does that surprise you?

No. The randomness of terrorism should be of grave concern to everybody, but most people still think it will happen somewhere else. So the fact that the corporate world minimizes the risk of terrorist attack is understandable. What won’t be understandable — to shareholders, employees, or the market — is if companies fail to do some basic things to manage that risk.

Why should companies invest in security when shareholders want business reinvestment?

When you’re dealing specifically with an investment to reduce the risk of a potential terrorist attack, most CFOs view it as an expense rather than an investment, and I understand that. But the business case for at least an honest assessment of security needs, particularly throughout the supply chain, cannot be overstated. The business community understands better than the political community that it is a risk-managed world. But they can’t be so cavalier as to say we are not exposed to any risk or minimal risk and we’re just going to ignore it until it happens.

How much should corporations spend on security measures, versus the government?

I’m not going to quantify it. Frankly, I have a view that corporationsÂ…at the end of the day, have assets that are primarily theirs to protect.

How has security impeded global business?

I’m waiting for CFO or someone else to poll its readers about how difficult it is, in a post-9/11 world, to get people into this country to do business. I have talked to corporations that no longer bring people into the United States to train; these people now train overseasÂ…. I can only guess that there have been businesses lost, networks diminished, and opportunities not realized because it is difficult to get into America to do business.

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