Introduction
With the advent of globalization, geographic and regulatory barriers are slowly dissolving and global markets are opening up. In a global market, there will be increased electronic distribution and competition. In order to survive in the global market, companies much either restructure or die (Bryan and Fraser 1999). Economic integration, the force driving this expansion, is promoting the formation of global markets in accounting, chemicals, food, health care, the mass media, pulp and paper, telecommunications, and many other industries. In a world without economically significant geographic boundaries, the rules are going to change. While some of the changes of the global market are for the better, there are some dangers as well. The good news is that companies will have access to the world’s finest resources: the most talented labour, the largest markets, the most advanced technologies, and the cheapest and best suppliers of goods and services. The bad news is that the risks will be high because every business will have to compete against the world’s best, and integrating markets are volatile and uncertain(Bryan and Fraser 1999). There are also security issues arising due to the rise of global markets. Globalization is increasing the interdependence of the world’s economies and affecting national security and the economic well-being of the American people.
Security Issues
The United States has been the principal architect of global markets and has benefited immensely from the same. But these benefits of global trade have not been equally shared and this has put a strain both internally and externally on the U.S. In fact, global market forces have made the United States more vulnerable to overseas economic crises. Moreover, with expanding global markets, the United States is finding it increasingly difficult to have control over critical technologies and industrial bases that U.S. economic and military security depends on. With the advent of the Internet, it is now possible for electronic government and commercial applications to move across national boundaries posing serious security issues in the context of legal responsibility, consumer protection, and jurisdiction over offences committed online, and many others.
As a result of global markets, the U.S. has entered into several international Trade agreements such as the WTO and NAFTA. Some critics of U.S. trade policy and programs doubt that regional and global trade regimes may compromise U.S. sovereignty and many others have felt that the United States is not seriously monitoring and enforcing over 400 existing trade-related agreements (GAO 2007). In order to promote U.S. exports, over 10 U.S. agencies have programs such as providing financial assistance through loans, loan guarantees, and grants as well as providing U.S. businesses with information on the export process (GAO 2007). Defence companies to are now involved in several business arrangements across national borders.
Domestic firms that develop defence products, produce parts and components for weapons systems, and perform system integration on those weapons are rapidly forming business relationships with overseas firms. This carries potential threats to the technological superiority of the U.S. military and may call for greater investment for defence purposes. The globalization of financial firms and markets along with constantly advancing technology has created opportunities for increased efficiencies but also have increased the probability of undesirable events such as the flow of illegal finances or the spread of financial crises. The fact that these firms are global in scope raises problems about accounting and disclosure models that form the base of U.S. financial markets. Finally, the globalization of electronic commerce while increasing access makes it harder to protect consumers and businesses from fraudulent and abusive marketing as well as adding to audit, security, backup, and disaster recovery concerns (GAO 2007).
As a result of the evolution of global markets, in some industry sectors, such as satellite launches and communications, the line between defence and commercial products has disappeared. In other sectors, companies have made sales to foreign governments through a wide variety of agreements with conditions known as “offsets,” which often involve long-term supplier relationships and technology transfers. These company-based activities can limit the procurement options for the government. When the latest weapons in the U.S. military systems are being exported to other countries, it can have the unintended consequence of improving the capabilities of potential adversaries. Hence, as a result of global markets, the United States may be required to make even greater investments in weapons modernization.
Various regulatory programs and policies that are aimed at providing fair access to markets and protect consumers from fraud and abuse especially in securities and insurance markets have been rendered less effective because of the removal of historical legislative barriers and changes in the structure of the industry due to global markets. To counter the various security threats arising due to global markets, three needs to be a greater focus on intelligence agencies such as the FBI and CIA (Mandel 1999).
Literature Review
The security of traditional markets was maintained largely through laws and regulations that regulated the capitalist class and helped in creating the 20th-century welfare state. A similar struggle is being enacted globally today to protect global markets. Trade agreements are the first truly enforceable international laws created by the United States. While they benefit the capitalist class, they also have become security platforms calling for governments to abide by agreements to protect the environment, promote human rights, achieve health for all and re-distribute wealth through universal education and social support systems (Labonte 2003).
In his article titled “The Next Generation”, Ira S. Somerson says that when countries enter global markets, there is a need to secure property, personnel and information across various cultures and circumstances. This comes under the responsibilities of the security managers. It is very challenging to conduct vulnerability analyses at a global level. The ethics, mores, and political system an organization must deal with change drastically at each international border. The security team must understand each culture and the risks associated with it. Security personnel must also carefully assess and constantly monitor the changing risks to executives travelling abroad. Somerson also points out that global markets have initiated a loss of loyalty between employees and the management so much so employees have started committing security violations with increasing frequency.
Adding support to the argument of Somerson, John F. Donnelly noted in Security Management’s September 1993 “Pentagon Comer” column, “American contractors must realize that, as they become more involved in international business, their employees and technology become increasingly exposed to risks with which they did not have to contend in the past.” Home-based employment is also seen as a major security issue as it involves coping with information security and other security risks incurred by isolating employees from the workplace culture.
It’s not only the people and information that is at stake in global markets. In a research article, Bonvillian et al (2001) point out serious security lapses in the numerous U.S. ports which receive a steady stream of ships from throughout the world and are essential to the nation’s participation in global markets. Researchers say that there are no federal standards or no single federal agency addressing the security of our shipping system though more than 200,000 vessels and 11.6 million shipping containers passed through U.S. ports during 2000. There is no system for thorough physical inspection. Bonvillian et al hold that port and shipping security is significant in the light of terrorism as containers are an ideal delivery system for weapons of mass destruction and its always possible with the use of a global positioning system (GPS) transponder for someone to remotely detonate an explosive at any location (Somerson 1995).
Though people, information and national security are all placed at risk in the global environment, there is a way of solving some of these problems using encryption technology. William A. Reinsch and Bob Goodlatte (1997) suggest using encryption technology for commercial purposes and shaping export-control policies in such a way as to make use of the strengths of encryption technology to protect sensitive commercial information from fraud and industrial espionage.
In the light of security threats around the world and increasing global markets, Cisco has released its first annual report (2007) on the global state of security, spotlighting challenges that businesses, government organizations, and consumers increasingly face in an environment of global markets. The 2007 Cisco Annual Security Report offers threat predictions for 2008 and recommendations from Cisco security experts. While many industry annual reports focus on content security threats such as viruses, worms, Trojans, spam, phishing, etc. Cisco’s report broadens the discussion to a set of seven threat categories including vulnerability, physical, legal, trust, identity, human, and geopolitical categories. This gives rise to security requirements such as anti-malware protection, data leakage protection, enterprise risk management, disaster planning, and more. According to Stewart, information security is no longer just a battle against a virus or spam attack. There are oftentimes legal, identity-based, and political factors involved (Cisco 2007).
According to Martha Harris, globally integrated markets in the oil sector are presenting new security challenges that must be addressed. Energy pipelines, LNG terminals, transmission grids and power plants are critical components of national infrastructure that are vulnerable to terrorists, hackers, disaffected local groups, human error and natural disasters. Environmental degradation is also a possible risk in the age of global markets (Brown, 2003). The risks stem from the incomplete transition to open markets and the unintended consequences of increased reliance on market forces in the context of new threats to security. Both government and private sector leadership is needed to address security challenges say the author. Changes in the global security context of oil are often reflected in three dimensions of the energy policy: security, economics and the environment. In the context of security, reliance on national policies and efforts to promote multilateral cooperation represent two opposite ends of the spectrum (Brown 2003).
Extending on the above research work, Shirley Ann Jackson in her paper titled Energy Security and Global Markets says that an extreme example of energy insecurity results from politically motivated violence. Acts of violence can seriously affect energy resources. Attacks by local militant groups on Nigerian pipelines have been able to cause short-term declines in production. In February 2006, a suicide bomber, reportedly from Al Qaeda, unsuccessfully attacked the Abqaiq oil processing facility in Saudi Arabia, through which fully two-thirds of that country’s oil flows (Jackson 2007). Violent incidents illustrate the potential for exploitation of vulnerabilities in supply chains which increases with increasing global markets (Jackson 2007).
The fact that violent events do affect global markets can be seen in the way the markets dropped low in the aftermath of the events of September 11 – so low that the Federal Reserve, America’s central bank, had to keep cutting interest rates until people calmed down a bit. This low interest led to a spurt of housing loans, some of them taken from smaller banks and lending companies with a bit more interest. During the war, rather than invest in the dollar, people found it easier to invest in oil and gold in the global market thereby pushing high the oil prices during war. However, mortgages of smaller banks were sold to bigger banks which later on hiked the interest rate, leading to the subprime crisis. This crisis has pushed the US markets down, and people afraid of investing in US markets have started putting their money into gold and oil, pushing their prices even higher. It is the speculation over the dollar value that is making the people push up the prices of gold and oil. Thus when security threats occur in global markets, speculation happens and speculation can lead to the oil and gold crisis as is happening now.
Security threats also happen online as most of the transactions in global markets take place across the internet. It has been found that credit card theft is thriving online as a global market. Tens of thousands of stolen credit card numbers are being offered for sale each week on the Internet in some cyberbazaars operated mostly by residents of the former Soviet Union. Security experts say these people who are operating the marketplaces are typically buying the card numbers from so-called black-hat computer hackers. These hackers obtain the card numbers by breaking into computer systems of online merchants and getting access to thousands of credit card records at a time. ”This is highlighting a tremendous lack of security,” said Richard Power, editorial director of the Computer Security Institute, an association of computer security professionals that recently published a report with the Federal Bureau of Investigation on computer crime. ”In the old days, people robbed stagecoaches and knocked off armoured trucks. Now they’re knocking off servers.” In the case of credit card theft, the typical consumer is generally protected from these costs, since consumers are not held liable for most fraudulent charges, but credit-card interest rates can rise because of crime, and consumers may have to deal with the issue of removing charges they did not make (Richtel 2002).
The last 15 years have been truly exciting in the global security market and the industry is today dominated by a multi-billion dollar, global companies like EMC2, United Technologies, GE, and Cisco among others (Bodell 2007). The market is continually expanding and, as the pace quickens, so do change and consolidation. A tremendous amount of consolidation has taken place in just the last few years from a market-driven security market to a technology-driven security market. Paul Bodell, Vice President of Sales and Marketing IQinVision predicts that over the next several years, market change and growth will be driven mainly by technology—primarily the shift to IP networking for all devices (Bodell 2007). This evolution will not only affect the manufacturers, but it will also have a significant impact on the distribution channels, integrators and end-users (Bodell 2007).
Future Possibilities
The expanding scope of activity by criminal organizations and deviant individuals on the global playground appears to require an explicitly international intelligence thrust. Moreover, while in recent years intelligence agencies have followed more carefully transnational shipment of clandestine arms, the transmission of illicit drugs, and movement of illegal migrants, there has still been relatively little intelligence attention paid to the deadly transfers of hazardous materials, infectious diseases, and information disruptions. A reorientation of intelligence seems crucial at the outset because, before new strategies can emerge to address the deadly transfers, a more comprehensive and accurate awareness of the scope and nature of the problem must exist (Mandel 1999).
Somerson feels that it is becoming increasingly important for security professionals of the future to work with computers, on which will reside software programs for management tasks and security functions. One example of the hard data now available from computer database technology is a crime predictability index that predicts the likelihood of crime against persons or property. Another example is the security information and incident tracking database. This relational database tracks incidents, investigations, security personnel, vehicles, assets, key control, and a whole host of other day-to-day security management needs. Future development will make these databases interactive with integrated security system software. In the future, when an incident occurs, the integrated software system will be able to query the security management software and automatically download an incident report and seek relevant data for comparison and reporting. Remarkable new data management technology is evolving, but future security executives must understand computer science and be familiar with a statistical methodology to fully benefit from this technology.
Secondly, in a time of global markets, the information residing in databases and flowing through other technologies should be protected from theft and fraud. It is predicted that during the next twenty years only those companies who have successfully protected their strategic information will survive. Brown predicts that in the future, multilateral efforts will be needed to promote energy security in the century ahead. In the globalization scenario, Brown holds that private sector organizations will play a large role in forming new forms of global security measures to protect global markets (Brown, 2003).
Another important aspect of security issues is the trend in religion. It is difficult to study the next century’s security issues without looking at trends in religious, ethical, and philosophical thought. As Naisbitt and Patricia Aburdene note in their Megatrends 2000, “Religious belief is intensifying worldwide under the gravitational pull of the year 2000.” It is felt that if fundamentalism increases with the approach of the millennium; terrorism and violence will likely follow which will once again create security threats to global markets.
Ethics programs in business have proven to be effective in reducing incidents of fraud, the abuse of intellectual property, and other corporate crime. However, to be truly effective, these ethics programs must be strongly supported by senior management and implemented in such a way that they become part of the decision-making process in global markets.
Ira S. Somerson, suggest that if the security profession is to make dramatic improvements in the years ahead, security practitioners must reach out to the business community. Security management as a curriculum must be taught as part of a business program. Security executives, Somerson says, must be knowledgeable not only in security management but also in marketing, computer science, business administration, and related fields. They should be better risk-takers.
Privatized security units and services can be the future for providing security in the context of global markets. Security privatization is happening mostly in the political-military sphere whereas globalization occurs mostly in the economic sphere. However, both security privatization and economic globalization go hand in hand for three reasons- maximized international efficiency, reduced state control, and increased ability to face risks (Mandel 2002). There are both advantages and disadvantages in using privatized security measures for global markets. On one side, private military companies can help in controlling security risks rather than simply assessing them. On the negative side, the use of private military companies by multinational corporations as a means of managing political risks can backfire and cause destabilizing turmoil that can be difficult to control (Mandel, 2002).
Conclusion
As companies enter global markets, they are likely to face a host of new threats as the future unfolds. Not all of these risks will develop as anticipated, but security practitioners who expand their knowledge and skills, as well as the network of associates with whom they can exchange information, will be best prepared to meet the challenges that lie ahead.
Bibliography
Bodell, Paul (2007). Developments Shaping the Global Security Industry. Web.
Brown, Michael Edward (2003). Grave New World: Security Challenges in the 21st Century. Georgetown University Press.
Cisco (2007). Annual Security Report: 2007. Web.
GAO (2007). Respond to the Impact of Global Market Forces on U.S. Economic and Security Interests. GAO Strategic Supplement. 2002-2007. Web.
Jackson, Shirley Ann (2007). Energy Security and Global Markets. Rensselaer Publication.
Labonte, Ronald. From the global market to the global village: “free” trade, health and the World Trade Organization. IUHPE-Promotion and Education. Vol. X/1. 2003.
Mandel, Robert (1999). Deadly Transfers and the Global Playground: Transnational Security Threats in a Disorderly World. Praeger Publishers. Westport, CT.
Mandel, Robert (2002). Armies without States: The Privatization of Security. Lynne Rienner Publishers.
Richtel, Matt (2002). Credit Card Theft is Thriving Online as Global Market. The New York Times.