Managing Brand and Market Reputational Risks

Illicit Trade and Cybercrime are serious security threats that fuel a multi-trillion dollar global illegal economy every year and that harms every sector, market, industry, and community every day.

Illicit trade is a threat multiplier that is enabling violent criminal trafficking syndicates and gangs to expand their operations and illicit empires, terrorist groups to finance their attacks against our communities, and even rogue regimes to underwrite their nuclear programs.

The global illicit economy is booming across a wide spectrum of activities and growing at an alarming rate every year: trafficking in narcotics, humans, counterfeits and pirated goods, endangered wildlife and environmentally-sensitive goods and natural resources, illegal tobacco and alcohol products; sports betting, bribery, and money laundering, to name just a small cross-section.

Numerous international organizations including The World Economic Forum generally have estimated such global illicit economy, and various forms of “convergence crime”, to account for 8 to 15 percent of world GDP, or several trillions of dollars every year to include corrupt proceeds and illicit financial flows.

The global economic value of counterfeiting and piracy could reach US$2.8 trillion by 2022: A 2017 report by the ICC’s Business Action to Stop Counterfeiting and Piracy (BASCAP) and the International Trademark Association (INTA), in partnership with Frontier Economics, estimates on the wider social and economic impacts on displaced economic activity, investment, public fiscal losses and criminal enforcement, and concludes that these costs could reach an estimated US$1.9 trillion by 2022.

The alarming rise in fake products are found in a range of industries, from luxury items (e.g. fashion apparel, handbags, footwear or deluxe watches), to intermediary products (such as machines, spare parts, or chemicals), to consumer goods that have an impact on personal health and safety such as pharmaceuticals, food and drink, medical equipment, electronics or toys.

An OECD report, “Illicit Trade: Converging Criminal Networks,” also gives insight into illegal markets and the connections between different forms of illicit activities in order to help strengthen policies to reduce and deter them.

Thus, it is becoming clearer that illicit trade results in lost profits for companies, job displacements for workers, business closures, economic hardships for governments when less revenue is brought into the treasuries to fund public services, and grave dangers to public health and safety.

Protect Your Brand, Company’s Reputation & Market Value 

But economic loss and impacts are not the only harms that result from illicit trade.

It has direct impacts on our communities when we realize that close to 30 million people are trafficked or in modern slavery; or when communities are increasingly harmed every day from counterfeit medicines, tainted or contaminated food stuff, or when defective automotive and other illicit consumer products kill tens of thousands of people every year, if not more.

Companies must also address the diminished integrity and market reputation of their venerable brands that they have worked hard to build and innovate upon over many years.

Diversion, counterfeiting and smuggling of many of today’s leading brands are very lucrative for criminals — and in some cases, terrorist groups: it is a low-risk, high reward business.

Internet on-line shopping and cybercrime also present a threat to companies and consumers alike, especially as more shopping has moved to cyber marketplaces, where criminals are profiting immensely from peddling their fake and dangerous goods and other illicit commodities, and committing numerous fraudulent and criminal activities.

A new Cybersecurity Ventures report estimates that the financial costs and damages from cybercrime will double annually from $US 3 trillion in 2015 to $US 6 trillion by 2021. In addition to dis-incentivizing innovation and economic damages, the impacts include reputational harm, stolen data, lost productivity, theft of intellectual property, and other costs.

Cybersecurity Ventures also predicts that there will be: 6 billion Internet users by 2022 (75 percent of the projected world population of 8 billion) — and more than 7.5 billion Internet users by 2030 (90 percent of the projected world population of 8.5 billion, 6 years of age and older).

When one couples these statistics with the fact that the global illegal economy is booming and that cybercrime is exploding, one has to truly be incredibly concerned about the massive convergence threats in the future related to the cybercrime and intellectual property infringement nexus.

THE WORLD IS CHANGING AT A BREATHTAKING PACE

Planning and preparing for today’s geo-political security risks, market shocks and volatility, and transnational illicit threat landscapes entail strategic foresight, thought leadership, and pragmatic business planning through market intelligence, advanced analytics, anticipatory approaches, preventive guidance, risk-management assessments, threat mitigation solutions, and holistic convergence strategies.

David M. Luna, President & CEO, LGN

Luna Global Networks is an international consultancy firm providing pragmatic and strategic advice to address some of today’s global security and business challenges related to cross-sectoral illicit threats and cross-border market risks.

Anti-Illicit Trade Strategies and Brand Protection Solutions: LGN expertise centers on situational awareness, convergence trends, advanced analytics, market intelligence, risk management, threat mitigation, and business assurance to counter illicit trade and safeguard your brand integrity, market position and reputation, and long-term economic value.

LGN is well-prepared to help tackle among the most pressing illicit trade threats and governance challenges across borders, markets, and industries through anti-illicit trade and convergence strategies that target illicit markets more holistically; net-centric partnerships and strategic alliances that harness collective action; and the leveraging of blockchain and other transformative technologies that help produce smart supply chain solutions.

Learn more about LGN @ https://lnkd.in/d6YQE2n

 

 

David M. Luna is a former U.S. Diplomat and national security official. He is a frequent speaker on transnational threats, international affairs, geopolitical risks, illicit trade and the global illegal economy (“dark side of globalization”) and convergence crime that impact the US homeland, and destabilize global security and world order. He is the Chair of the Anti-Illicit Trade (AIT) Committee of the United States Council for International Business (USCIB). Mr. Luna previously served as the President (Chair) of the OECD Task Force on Countering Illicit Trade; Chair and Vice Chair of the APEC Anti-Corruption and Transparency (ACT) Working Group, U.S. Coordinator, APEC ACT Pathfinder Dialogues on Fighting Corruption and Illicit Trade; co-Chair of the U.S.-China Anti-Corruption Working Group of the Joint Liaison Group (JLG) on Law Enforcement; Vice Chair of the World Economic Forum’s Global Agenda Council on Illicit Trade and Organized Crime (and Member of the Human Trafficking Task Force); co-Chair G-7 Experts Group on Combating Illegal Wildlife Trade; U.S. Coordinator, Dialogues on the Crime-Terror Nexus and Dismantling Transnational Illicit Networks; U.S. Representative, Global Forum on Fighting Corruption II-VI; and other diplomatic initiatives and public-private partnerships on anti-crime and global security.

 

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