Who’s Watching Who? The Rise and Hidden Liabilities of Executive Protection
The upward trends in crime in many US cities[i][ii] and the increased prevalence and visibility of contract security officers at both public and private venues continues to be a focus by the media.[iii] Less reported on and often more intriguing is the increased use of and reliance on executive protection (EP) personnel to fill very specific and personalized security needs for Ultra High Net Worth Individuals (UHNWI) and/or the top C-Suite leadership of corporations.
As to why EP is necessary and increasing, there are myriad reasons – some obvious, while others more subtle. Crime concerns within major cities and growing delays in police response to priority calls are factors[iv], as are political instability and international travel risk concerns. The increased tendency for companies and UHNWIs to take positions on potentially contentious issues, and for disgruntled persons using social media and the internet to lambaste company decisions, stalk, or threaten continues to drive conversations around the need for enhanced protection. The availability of Personal Identifiable Information (PII) on corporate leadership, their families, and UHNWIs, and the potential consequences that arise from such information (individuals showing up at residences, kidnappings) is another significant concern.
The level of EP support needed can vary, and largely depends on the threat profile and threat environment of the individual(s) being protected. Travel considerations, whether the protection extends to family members, and what Board of Directors require and mandate are often balanced against the costs associated with such programs. Additional factors may also contribute to the required levels of support.
One could reasonably conclude that certain industry sectors are more likely to have EP support for their executives. And, although there may be competitive bragging amongst executives in certain industries about the substance and composition of their EP programs, Board of Director requirements or executive requests for such services often drive the scope and capabilities of such programs. Another salient factor in program scoping is the threat profile and operating environment for the executive(s). Has the company and/or executive been specifically threatened now or in the past? Have demonstrators showed up at corporate events? Have medical issues in foreign countries complicated trips? Close calls such as these often trigger requests to explore protective service offerings.
The adoption and use of EP personnel, including security drivers, comes with significant benefits. Executives and UHNWIs being driven by trained security drivers are less exposed to external threats that may affect the safety of the principal during commutes and while traveling. Furthermore, the use of protective services allows the CEO or UHNWI to focus on business matters rather than devoting time to driving, not worrying about security or navigation concerns during travel, or contemplating uncomfortable behaviors and actions from members of the public or disgruntled employees.
While these benefits can justify the use of EP, there are also substantial risks and liabilities that have the potential to adversely affect the principals and the companies or family offices that engage such services. Some of these risks and liabilities revolve around improper training, credentialing, and licensure from the EP company or the agents employed by these companies. Others include the failure to outline in policies and procedures how EP agents escalate and respond to issues based on where they’re operating, such as on company premises with existing security officers and in public settings. There is also the potential for issues to arise from a failure to conduct due diligence on both the EP company and the individuals that will be working in an EP capacity.
SRG is entrusted to advise companies and family offices on EP program-related matters; specifically, red-team assessments, designing and architecting EP programs and sub-programs, like Protective Intelligence (PI) and threat management, and conducting IRS 132 Assessments. One of the common operating models that we continue to see within many of these companies is the absence of internal company-specific policies, procedures, and response protocols for EP program personnel. Instead, these companies often rely on their EP provider’s procedures and response protocols. This model can and does shorten the time for a program going from inception to operation, and benefits security departments that do not have the manpower, resources, or experience required to build such policies and procedures from scratch.
There are multiple downsides to this model, however. Generic procedures and response protocols may not align with the nuances of the client companies’ culture or operating cadence. An adopted generic procedure could outline how something should be done, but in practice there may be discrepancies that deviate from these procedures. Rather than take the time to amend the procedures, these adjustments are adopted through word of mouth or by repetition through institutional knowledge (or not at all).
Such deviations can lead to significant liabilities and increased risk for client organizations. Should an incident that affects the safety and well-being of an employee or a bystander occur, scrutiny will often fall first on the policies and procedures that guide acceptable actions and behaviors. If none exist, or if it is determined that the policy or procedure was not followed or adhered to the way that it was written, there could be significant repercussions.
Case Study: Home Intrusion
Take for example a case when an armed EP agent is assigned to a residence as part of a Residential Security Team, or RST. The following scenario is based on an actual event.
An outsider accesses an executive’s property by scaling a perimeter fence. Armed with a knife, the motives of the intruder are not yet known, but he is armed. An RST member confronts the intruder and in the ensuing confrontation, the intruder is shot and the agent is stabbed. Both are airlifted to a hospital, and both are expected to survive.
In this case, the RST had all the credentials to carry a weapon on the property in the state of the encounter; internal policies and procedures on the use of force were clearly outlined, and the agent was aware of and had received training on the circumstances justifying the use of force. Although the outcome resulted in severe injuries for both parties, clearly defined use of force policies, along with firearm training and proper credentialing helped minimize and even eliminate the validity of any lawsuits that may have arisen from the confrontation. Had clear written policies and procedures on the use of force not been in place, or had the agent not received the proper training, and an injury to a guest, principal, or bystander occurred (or had the intruder not been armed and been shot), the potential for lawsuits, improper conduct, and negligence would likely have been brought against both the agent and the host EP company, and even the principal.
Another downside to long-term reliance on a provider’s policies and procedures is the loss of these guiding documents when a contract changes hands and goes to a new provider. New policies and procedures often belong to the incoming provider. Even if the EP team members and support personnel transition over to the new provider, these new policies and procedures will have to be readopted and relearned. This not only can add delays but does not contribute to the program’s long-term success if documents and processes must be recreated every few years whenever a contract changes hands. Furthermore, guidance for EP personnel to rely on remnants of a previous provider’s procedures while new ones are adopted could also result in repercussions for the host company if policies and procedures mirroring the former provider are still in use.
Beyond the importance of policies and procedures, another area that can lead to significant consequences if not properly overseen and followed is inadequate training or improper/outdated credentialing and licensure. Credentialing and licensure (such as Concealed Carry Permits, first aid) is often overseen and administered by states or state-recognized entities. Concealed Carry Permits (CCPs) allow an individual to carry a firearm within a specific state as long as the criteria and background checks have been met for that state. Statutes, such as the Federal HR218[v] also allow qualified law enforcement officers and retired peace officers to carry firearms within specific jurisdictions as long as the officers or retired peace officers meet the requisite criteria and abide by Federal Laws, such as not carrying concealed weapons into certain government buildings or within certain distances of elementary schools. This does not however absolve the officer from liability should they brandish or discharge their firearm. In the event this does occur, both criminal prosecution and civil liability are real concerns for the individual, the company, and potentially the business or principal.
While the Federal HR218 law does allow former officers to legally carry firearms, they often must still obtain the necessary local and state licenses such as guard cards and other credentialing while working in an armed EP or guard capacity. Should former law enforcement personnel qualify for the HR218, but not have the required credentialing and cards mandated by the state and other institutions, again, the liability will be borne by the individual, by the company, and even the business or principal. Additionally, US federal law, under the Law Enforcement Officers Safety Act (LEOSA), requires a retired or qualified officer to possess both a photographic identification issued by his or her agency and an annual firearms qualification certification in order to carry a firearm in all U.S. jurisdictions.[1] Travelling while armed with a firearm creates an additional layer of considerations. Will the officer be asked to carry a firearm on a commercial or chartered flight? The LEOSA exempts active/retired law enforcement officers from state and local carrying laws. It does not exempt them from federal laws, which regulate firearms on aircraft and federal property.
Likewise, first aid training, and the various specialties within first aid, all require up-to-date credentials. While credential and training documentation can be tracked somewhat easily, there are circumstances for training and licensure that can be overlooked, such as the last-minute replacement of an agent that does not have the specific training to perform a task, or the transport of a firearm (accidental or deliberate) into a state where the agent does not maintain the prerequisite permits and credentials.
A challenge with EP providers with respect to licensure and training is that they often juggle dozens of client accounts with varying degrees of EP support in a variety of industries, from celebrities and UHNWIs to CEOs in the technology, pharmaceuticals, or luxury goods industries. Each industry and individual present their own unique challenges, while the level of support provided can range from continuous, multi-agent coverage to scalable support for specific travel destinations and single agent coverage. This expansive range of offerings comes with benefits; there is often a large pool of agents to draw from, support is easily scalable, and policies and procedures that are needed for specific client accounts and circumstances may be more readily available.
Dozens of accounts and hundreds of people can also complicate training, certification, and licensure for agents, particularly if they are authorized to carry concealed weapons, provide advanced medical care, operate specialty vehicles or equipment, and perform additional functions beyond executive protection. It can also lead to policies and procedures not being fully developed and integrated for the specific client. This becomes very problematic if an incident or injury were to occur and the specific policies and procedures that agents are measured against do not exist or are incomplete. The same goes for training and credentialing.
Unlike credentials and licenses, there are no universal regulations or accepted standards around training within EP. Only recently have efforts begun to create an American National Standards Institute (ANSI) approved Standards for Providing Executive Protection.[vi] While this is a positive step in the right direction, the onus is still on the EP security firms and the companies and clients requesting such services to ensure agents meet the needed criteria to perform their functions safely without exposing the principal or company to liability if an incident were to occur.
To help understand the potential risks and liabilities associated with EP, and how that can affect companies and principals, we feel it is best to highlight another case study adapted from our previous engagements with clients.
Case Study 2: Violence in the Workplace
A CEO and owner of a company has dedicated EP personnel employed by their family office that are responsible for providing coverage and support while the executive is at home, traveling, and while working from the corporate office. The office setting has access controls in place; however, corporate security does not exist. A transient off the street tailgates into the office while the CEO, employees, and EP agent are in residence. The EP agent is able to restrain the transient, but not before several employees are injured by the perpetrator. There are no overarching training, response, or policies and procedures in place (either corporate or for the EP agent). In this scenario, the use of personal EP security in a work setting breached the personal/business threshold to assist with a business security incident, which carries significant risk for not only the CEO but the business and family office as well.[2]
While the use of armed EP agents may be required as part of a protection plan, the decision to use armed agents comes with substantial risks and liabilities. If a principal lives close to state lines within such areas as Tahoe on the California/Nevada border, having to divert a few miles or reroute can potentially put agents in circumstances when they do not have the necessary CCW licensure within the state. If pulled over by law enforcement when agents are carrying a firearm in states where they do not hold the required licensure, the individual, security company, corporation, or even client can face severe repercussions. Furthermore, agents that draw and discharge their weapon as a last resort (even if the circumstance is justified) can potentially face criminal prosecution and/or civil liability.
EP agents may also find themselves in situations where they are asked to assist around the house in various capacities or respond to certain circumstances that necessitate action, such as turning on or turning off utilities following a natural disaster, climbing a ladder to turn off a smoke alarm, or carrying medical kits for first aid-related purposes. There may be written procedures for how to do this (or the agent may “know” how to climb a ladder); however, a failure to train agents in how to turn off or on utilities or perform first aid functions from supplied equipment (EpiPen or oxygen administration) without the prerequisite certifications and training can expose both the agent and the principal to injury or negligence risk, depending on the circumstance.
Given the minefield of liabilities that can be associated with executive protection, what should companies, UHNWI, and family offices be asking and scrutinizing when vetting EP providers?
Due Diligence
Any first step prior to delving into discussions about support, coverage, and specific circumstances of the contract should involve adequate due diligence on the companies under consideration. As part of this vetting and due diligence, companies should be scrutinized to see if they hold the required licensure for the service being offered in the state(s) where the service(s) will likely be rendered. In addition to verifying company licensure, prospective clients should examine whether there have been previous lawsuits against the company, incidents involving the use of force (not in itself a deal breaker), violations of terms, or other incidents that could be deemed red flags that could adversely affect the relationship or reflect poorly on the company should a repeat incident occur once contracts are signed. Lastly, the contract should address the vetting of potential EP agents. Has the company demonstrated due diligence in conducting thorough background investigations on all employed EP agents.
Training and Licensure
Additional vetting should be directed toward the prospective companies’ training and licensing requirements—both for EP agents that will serve on a more permanent basis providing support for a client as well as the temporary agents that will likely be assigned on a rotating basis as coverage needs with different clients expand and contract. This latter assignment presents the greatest opportunity for issues to arise. Should an agent be needed on a last-minute temporary basis to fulfill a coverage gap, it is essential that this incoming agent has the requisite training and instruction to perform the jobs that will be required while on duty.
Insurance
Examination of the necessary insurance coverage amounts that correlate with the type of services that are under consideration should also be assessed. Companies seeking EP services should carefully consider the type of services they will need, and conduct benchmarking and analysis around coverage values; specifically, what similar companies require from their providers from an insurance coverage and premium perspective and what insurance companies generally assign to EP providers that are engaging in EP services.
Once these values and amounts are known, follow-up discussions with EP providers can be held that delve into whether they have or are able and willing to obtain the coverage types and values that are needed for the contract. Special emphasis should be placed on insurance conversations when the use of armed agents is under consideration. If firearms are to be carried, special insurance should also be carried. The liabilities and repercussions for agents, EP providers, and companies and executives are considerable if armed agents are employed without special insurance. Disclosures and conversations around the Federal HR218 and how the statute does not come with any liability coverage protections must also be addressed.
Liability
When a retired, or off-duty peace officer is engaged as an EP agent, both criminal and civil liability are significant issues that should be carefully considered.[3] Issues such as search and seizure, powers of arrest, use of force, vehicle accidents, and many others are all real concerns. Generally, peace officers enjoy a level of immunity from civil liability when they are acting within the scope of their employment. That immunity does not extend to officers providing security for a private business or acting as an EP agent. Historically, lawsuits in different jurisdictions have attempted to impose civil liability on off-duty and retired officers. This creates the potential to adversely affect the principals and the companies and offices that contract for EP services. Lawsuits for wrongful death, civil rights violations, excessive use of force, assault under the color of authority, and false arrest have all been successfully litigated in both state and federal courts.[4] Additionally, crimininal behavior of an EP agent can also subject an employer or business to civil liability. For example, sexual assault or race-based harassment by an EP professional can expose a business to monetary, punitive, and reputational damages. Attorney’s fees, litigation costs, and unfavorable brand reputation are other serious issues to consider.
Clearly Defined Roadmaps
A final consideration that companies should communicate to their selected EP providers is their overall objective in the program. As previously discussed, the organization seeking EP services should at some point have company-specific policies and procedures around EP, and not solely rely on the policies and procedures of the contracting agency. Discussions with EP providers around the need to build out and develop internal EP policies and procedures should be defined, along with testing periods and implementation dates. A clear roadmap will ensure there is adequate time to assess, test, develop, and implement internal policies and procedures that can continue to guide EP programs even as providers change.
At SRG, we assess that the demand for EP programs and agents will continue to increase alongside the realization that police and law enforcement are overstretched and understaffed, and the US government and foreign governments cannot always be counted on for sound advice and emergency assistance should a developing situation necessitate country evacuations or other emergency measures.[vii] As Board of Directors, C-Suite, Executives, and UHNWIs assess the need for EP programs and agents, they should also scrutinize prospective providers and conduct their own due diligence to ensure the companies and individuals have the proper mechanisms, coverage, and policies and procedures in place to minimize the reputational and legal fallout that could occur when an incident takes place or makes its way into the day’s headlines.
[1] 18 U.S.C. § 926C
[2] In legal terms this is referred to as “Piercing the Veil”, which can lead to certain protections under the “Corporate Veil” being forfeited, thus potentially exposing the CEO and the business to lawsuits.
[3] 2007 (9) AELE Mo. L. J. 101 Civil Liability Law Section – September, 2007
[4] 2007 (10) AELE Mo. L. J. 101 Civil Liability Law Section – October, 2007
[i] James Bickerton, “Crime is Making Americans Flee Democratic States”, Newsweek, April 20, 2023.
[ii] Zusha Elinson, “Homicides Are Falling inn Major American Cities”, The Wall Street Journal, June 8, 2023.
[iii] Alana Semuels, “Private Security Guards Are Replacing Police Across America”, Time, May 2, 2023.
[iv] Martin Kaste, “Why data from 15 cities shows police response times are taking longer”, NPR, January 17, 2023.
[v] No Author, “H.R.218 – Law Enforcement Officers Safety Act of 2004”, Congress.gov, July 22, 2004.
[vi] No Author, “Press Release: Standards for Providing Executive Protection”, EP Wired, October 15, 2021.
[vii] Jason Stolpa, “Surviving Hostile Territory: The Dangers Facing US Businesses Abroad”, Sentinel Resource Group, April 27, 2023.