The Costs of Executive Protection

A good business take steps to protect its capital. It’s a no brainer to secure inventory from theft, to protect plants and factories from sabotage, and to safeguard networks from cyber threats. However, one area that companies are only beginning to realize is just important to protect is human capital. The value of many companies lies in the hearts and minds of their founders and top executives, therefore it’s just as important to protect those assets as it is to keep anything else related to the business safe.

One can see this trend in the financial reports of many cutting edge companies. Tech companies, perhaps the sector where human capital is most valuable, have begun to fork over serious amounts of resources in order to make sure their top brass is safe from harm.

For instance, the multinational tech corporation Oracle reported spending $1.8 million on security for co-founder and CEO Larry Ellison. Of course, this is surely only a fraction of what security of Ellison costs in actuality. The Chief certainly spends his own money on securing his multiple California states, and assuredly Oracle doesn’t disclose some of its spending out of concern for security.

And of course, Oracle isn’t the only company that spends highly on security, nor are they the only company that doesn’t fully disclose the amount they spend. Google reported spending only slightly over $530,000 to protect CEO Eric Schmidt, and just over $30,000 for co-founder Larry Page. The disparate cost likely has more to do with official reporting methods rather than a difference in threat level. It is very possible that Google isn’t revealing their high level costs for securing their top executives.

What exactly contributes to these costs? Man-hours are probably the biggest factor. Executive security involves well-trained personnel that is needed for sometimes around-the-clock protection. Some executives also chose such protection not only for themselves, but also for their family.

Chief executives also tend to travel a lot, which increases security concerns and cost of services. Companies that often do business in emerging markets can find their highest valued employees in an unstable country, or at least one that is far more dangerous than the United States. Executives can attract the attention of kidnappers, extortionists, thieves and even terrorists. For this reason, security can be heightened during foreign travel, but it isn’t cheap. Travelling expenses and around-the-clock protection comes with a hefty price tag, but companies find it to be a worthwhile investment.

Executive protection details travel everywhere with the client. They also scout all locations in advance, and carefully plan travel routes to minimize threats before they even happen. They also always plan for the worst– they know exactly how to get their client out of the building, city, or even country if things go really wrong.

Aside from personal protection during travel, home security also plays a factor in the cost of protecting high valued assets. Companies can either go with automatic systems or hired guards– sometimes both. Large estates can be especially difficult to secure, and the most advanced home security systems can cost upwards of hundreds of thousands of dollars. Features of these systems include high-resolution cameras, reinforced windows, motion sensors and sometimes even facial recognition scanning software.

The interior of many houses are secured with safe rooms. These ultra-secure rooms have similar features to a fallout shelter, now with separate phone lines, closed circuit video cameras, air filtration systems and livable amenities, including bathrooms. In the case of a home invasion, the family can easily retreat to such a panic room and call for and await help.

While perhaps safe rooms are only purchased by the ultra wealthy, more average Americans also spend a lot on home security. according to Security Sales and Integration magazine, Americans spent a total of $25.9 billion on professionally installed electronic security products and related services last year.

Lastly, for the executives, secure transportation is also key. Private cars and jets for executives can run close to $1 million a year– Bank of New York spent nearly that on chauffeur services for top executives. This figure likely doesn’t even include the material cost for planes or cars, however, so in reality the expenditures are much higher. Of course also included in transportation is the security aspect. Routes must be carefully planned, evaluated and vetted before proceeding, especially with high profile diplomats or government officials. Additionally, the mode of transportation needs to be carefully guarded at all times, and the personnel responsible for operating every aspect of it need to have background checks and the like. All of these factor heavily into the cost of secure transportation for high-level executives.

While some high level executives probably prefer a quiet lifestyle without the intrusion of heavy security, the reality is that they are far too important to a successful company to take that risk. Although high end security may be necessary, it is important to strike the right balance between over the top intrusion and leaving the executive open to harm.