The First Line, And The Bottom Line

McGraw-Hill Homeland Security Summit
May 15, 2003
C. Jeffery Triplette
Vice President, Risk Management Services
Duke Energy

Washington, D.C.

Over the past year and a half, the words “Homeland Security” have become part of our daily language. From Wall Street to Main Street to Pennsylvania Ave., the words “Homeland Security” flow easily from our lips as we discuss the new realities of our world, our hometowns and the places we work.

To give you an example, if you conducted an Internet search on the word “Homeland Security,” Google would come back with about 1.1 million hits. That’s four times as many hits as tennis player Anna Kournikova generates.

On the other hand, singer Britney Spears generates twice as many hits as Homeland Security. So let’s just say our job is not over, yet!

* * * * *

It’s easy for the public to consider the government as Homeland Security’s first line of defense. After all, whom do we see when we turn on the TV? Our president, our senators and congressmen/women, our governors, our mayors—the faces and voices of our elected officials. Our image of defense is the military, the National Guard, our local police force.

But as this session points out, with 85 percent of the nation’s critical infrastructure owned and operated by the private sector, it’s corporate America that must step up and accept responsibility as the nation’s first line of defense.

It’s a different story in other parts of the world. In Europe, the quasi-government agencies may well own the airlines; the railways; the electric, gas and telephone companies. In those areas—without question—the government is the first line of defense.

But in the U.S., private enterprise changes the image of Homeland Security. In fact, people may turn on their TV and see the governor responding to a security crisis, or widespread power outages caused by a natural disaster. What they don’t see is the governor on the phone an hour before that TV address—gathering facts from private sector companies like Duke Energy.

The government has quite a task, too. For example, 95,000 miles of shoreline that must be kept safe 24-hours-a-day. But inside that shoreline, corporate America must serve as the backbone of homeland security for our nation’s critical infrastructure.

I spoke at this same conference last year when corporate America was in its “Wake-Up” mode from 9-11. Companies were either in the middle, or just wrapping up, a re-evaluation of their emergency plans. It was a time for companies to ask questions they hadn’t asked before, to think of scenarios that weren’t on the radar screen before. They needed to broaden their scope about what risk management was.

Despite the tragic circumstances, this was a good “Wake-Up” call for corporate America. Companies took a hard look at their risk-management plans—and found a few holes.

For example, no one would likely own a plant or manufacturing facility without having it covered by fire insurance. Yet it was easy for companies to fail to have proper security or emergency plans for their facilities. They were, in a sense, doing only half the job in regards to risk management.

At Duke Energy, we had a history of well-thought-out emergency plans that dealt with gas pipelines and nuclear power plants. But this past year gave us a chance to look beyond emergency planning for just our operational facilities.

We began to look at our contingency plans for our support and headquarters’ operations—the “hidden infrastructure” making any corporation run. I served in Desert Storm as a logistics officer a decade ago, and part of my command was to make sure we could support frontline troops. It takes about five support soldiers for every single frontline combat soldier. Your company may reflect that in the business world.

Support staff and your support functions may be in harm’s way more than you think. In this year’s Iraqi War, remember Private Jessica Lynch wasn’t a combat solider; she was an Army supply clerk in a maintenance company. We have to remember that our entire enterprise—and our entire employee base—could be a security target.

The good news is that - 12 months since the last Homeland Security Conference - I believe companies are better prepared, have dedicated more resources and have adjusted to the new global realities. The job isn’t complete—and it never will be complete. But companies are asking the right questions, and are taking responsibility to be the first line of defense for this country.

The sobering news is that safety and security comes at a price. And the price keeps getting larger. Recently, I read that a federal electric utility had just renewed a 5-year security contract. The company paid $51 million for the old 5-year contract. It paid about twice that amount for the new 5-year contract—almost $100 million.

One of the themes of this conference is “sharing the costs.” I’m sure we all have examples of how security costs are rising, and the answer of “sharing those costs” isn’t entirely clear.

I know a conference like this is filled with “big picture” and “thought-provoking” ideas. Ideas that are worth going back home and mulling over.

However, I’d like to give you two ideas that are simple enough for you to implement as soon as you get home.

Track your costs—I’m sure everyone is tracking their costs—but to what degree?

I’ll give you an example, for two weeks in September of last year—the Homeland Security raised the national alert level from Yellow to Orange.

At the end of those two weeks, my CEO asked me, “How much did that cost me?” How much more did two weeks at Orange cost than two weeks at Yellow? How much?

I’m sure he wasn’t the first CEO to ask that question. He won’t be the last. But his question got us to examine security costs from a whole new perspective.

It’s not good enough to know the “big picture” numbers. “What’s the overall budget? How much extra did we spend from one year to another?” That’s useful … but that’s the easy stuff.

We need to be able to put dollar figures around the difference between Yellow and Orange. We talked about increased security. How much does that cost a year? A month? Every day?

After 9-11, companies turned to people like me and you and said, “Do what needs to be done!” Now, almost two year later, companies still want to do the right thing. But they are also asking, “Are we going about this in a cost-effective manner?”

The better I can track my costs—the better I can state my case to top management. The same holds true whether you work for a company, a municipality or a state.

The second point I’d like to leave you with is this:

Don’t be afraid to re-evaluate and second guess your decisions
After 9-11, companies re-vamped their emergency and crisis plans and made commitments about how they would respond in certain circumstances.

Today may be a good time to re-visit those commitments you’ve made and to delve deeper into what your emergency response really is.

For example, 24-hour staffing at Code Orange. That may sound great, but does it still make sense when Code Orange lingers for more than a month?

Make sure you have commitments that don’t tax your workers needlessly. Emergency plans are living documents. It’s OK to re-visit them and say, “That sounded good last year, but in reality, it doesn’t make sense.”

Don’t be afraid to flesh out the extra details in your crisis plans. I’m sure there are many plans that call for extra security. But what does that really entail? An extra guard at the door? Or security at locations where you normally don’t have any.

You might know that answer already, but do the people carrying out your plan know that answer? Now, is a good time to expand those details.

The past year has given us different opportunities to exercise our crisis plans. The work now is to make sure the “lessons learned” make their way back into those plans.

Costs and details. Something on which every crisis organization should have a firm grasp.

When we get back home from this conference, and absorb the “big-picture” ideas presented here today and tomorrow, let’s not forget the nuts and bolts items—like costs and details. These are items we need to master, and our bosses, our customers and our investors expect us to master them, too.

So just like Homeland Security’s race to overtake Britney Spears in popularity, our work isn’t over yet, either.

I look forward to your questions for our panel, and hope you have a productive conference. Thank you.