Risk management applies to travel now

Business travel spending in the U.S. is predicted to grow 3.7 percent by the end of 2016, according to the Global Business Travel Association.

But while the volume of international business travel is expected to grow 5.4 percent, the association found that U.S. companies are becoming far more selective in authorizing business travel abroad as a result of global economic uncertainty and risk.

Travel risk is a concern for companies when employees travel both abroad and domestically. And these risks range from political unrest to tsunamis to infectious diseases.

Because of evolving threats, what used to be a paragraph about corporate travel in an employee handbook has turned into pages of risk management policy at most corporations.

Recently, Laurence Smith, chair of Chiesa, Shahinian & Giantomasi P.C.’s corporate and securities group and member of the firm’s corporate travel practice group, spoke to NJBIZ about the burgeoning cottage industry of corporate risk management.

NJBIZ: What role does an attorney play in corporate travel risk management?

Laurence Smith: We are one of the few firms nationally that has a practice group dedicated to the corporate travel business. If you look at large corporations that spend $100 million each year on air travel alone, in addition to what they spend on hotels, limos and car services, it’s a big business to manage. The larger companies hire in-house teams of professionals to overlook that service, and there is an overlay of law that governs the corporate travel law industry. Our practice group has been in existence since 1998 and, over the years, we’ve become familiar with all different facets of what corporate travel managers do.

NJBIZ: How is corporate travel risk today different than it was in 1998?

LS: Years ago, risk management in this regard would have been something as simple as a corporate travel policy that said the C-level executives can’t all travel on the same flight. The theory being that, if the plane went down, a company could not sustain the simultaneous loss of a CEO, CFO and COO. Those policies varied, but most risk management involved a couple of paragraphs in a corporate travel policy.

There was also an awareness of countries that had political instability or unrest that could present problems for travelers.

But after 9/11, what was a peripheral concern started to grow into a cottage industry. We saw that planes were used as weapons and the new warfare being waged by terrorists directly affected the corporate travel space.

One of the tools corporations use are pre-trip reporting tools. If there is a terrorist alert at Logan International Airport, a large corporation should be able to press a button and get a report to find out how many of its travelers are scheduled to fly in or out of Logan. Part of risk management is having corporation-wide visibility about employee travel schedules to divert potential disaster. And risk management continues to evolve.

NJBIZ: What travel risk management issues are becoming more prevalent today?

LS: I think one of the things we will see is a greater alignment of interest between the public and private sectors. For example, the TSA, the airlines and the corporations who have travelers out there every day will have a greater level of cooperation than we’ve seen in the past.

What typically happens in a regulated environment is that the government is the watchdog and the regulated companies, in this case the airlines, fight like the dickens because they don’t want government to be intrusive on their business. But because of the enormity of a security risk, you have a compete alignment of interest.

We already have immediacy, with regard to the ability to notify people by text messages about a delayed flight, a security issue at the airport or a problem with the destination country. This will continue.

It will be interesting to see the balance that is struck with regard to data privacy, especially with the European Union. In the U.S., we don’t have the same strict regulatory structure in place around personally identifiable information.

In 1995, the EU adopted a data protection directive that charged member states with implementing legislation to protect personally identifiable information. But what has happened is the terrorists have shown that Europe is fair game as well. So, it will be an interesting evolution — the balance that is re-struck with regard to protecting individuals’ personally identifiable information with arming the good guys with information they need to make sure people are safe.

NJBIZ: Can you draw the line to connect privacy issues in Europe and travel risk management in the U.S.?

LS: One of the reactions to 9/11 by the U.S. government was to get advanced passenger information from foreign countries before a flight took off with people bound for the U.S. But there is a stringent body of law in the EU about protecting personally identifiable information. So, the tension is the U.S. government would like to know as much as possible about passengers with enough notice as possible. But, there is legislation and culture in the EU that personally identifiable information is not to be divulged unless absolutely necessary.

Now, a few things have happened. One: The publicity about what the U.S. government could subpoena from Google and other large tech companies sent shockwaves through the European community. And the other was that terrorists have shown the European countries are fair game. And as you look forward it will be very interesting to see how the EU member states change, if at all, in the balance between privacy and security concerns.

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