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|  | AUGUST 5, 2004
By Paul Magnusson Security: What Companies Need to Do While financial firms have boosted protection greatly, many others have not. But more safety doesn't have to cost a bundle Monday, Aug. 2, was anything but an ordinary workday -- at least in New York and Washington. Police officers carrying semi-automatic rifles rode the capital's Metro subway trains. Commercial trucks were barred from entering Lower Manhattan through the Holland Tunnel. Harried workers in key financial centers -- the New York Stock Exchange, Citigroup's (C ) midtown headquarters, and the World Bank-International Monetary Fund complex in Washington's Foggy Bottom -- endured long lines for ID checks, police dogs sniffing their briefcases, and intense screening on their way to work. But elsewhere in America, screaming headlines about al Qaeda's plans to attack financial targets hardly ruffled the doldrums of deep summer. The nation's tallest building, Chicago's 110-story Sears Tower, didn't add to its 100 security guards. In Cincinnati, Procter & Gamble (PG ) said it was content with its current level of security at home and abroad. COST-BENEFIT APPROACH. Disneyland and Warner Brothers in Southern California added no new security above the enhanced levels that followed the September 11 attacks. The message was the same at Boeing's (BA ) sprawling Seattle aircraft plants. Only in San Francisco was added police activity visible. Computer files captured from al Qaeda operatives in Pakistan mentioned the city's 52-story Bank of America Center -- which also houses Goldman, Sachs (GS ) and Morgan Stanley branches. Three years after September 11, U.S. companies have widely divergent approaches to security -- ranging from lax to intense -- based on whether their industries are considered vulnerable and where they are located. Companies headquartered in Washington and New York, cities already hit by al Qaeda, are spending freely on security and redundant control and communications systems.
LEADING THE WAY. Some "keep betting that it's not going to happen" to them, says former New York Mayor Rudolph W. Giuliani, who now runs a private security consulting firm. "You have to have your head in the sand not to be doing anything about [terror] if you're responsible for large numbers of people." (See BW Online, 8/5/04, "Giuliani: Ignorance of Terror Isn't Bliss") Still, it makes sense for the obvious targets to do the most to boost the security of their buildings and employees. That explains why the financial industry has taken the lead. Building on the hard-won lessons of the 2003 blackout, Hurricane Isabel, Y2K upgrades, and the four-day shutdown of the NYSE after September 11 -- the industry has invested heavily in redundant networks and emergency plans. As a result, the odds that markets and money flows will function if another attack occurs are much improved. Unfortunately, that has turned Wall Street into something of a bunker these days. Investment banks, some of which were forced to abandon their headquarters after September 11, are spending as much as three to four times more on security than they did before the attack. "The financial-services industry is simply smarter than the federal government about this," says Larry C. Johnson, a former CIA counterterrorism expert and CEO of risk-management firm BERG Associates. "LESS VISIBLE MEASURES." Today, the NYSE has an upgraded backup facility -- in an undisclosed location -- that could take over trading within hours of an attack near the corner of Wall and Broad Streets. Vows CEO John A. Thain: "We will not be intimidated by terrorists." Similarly, the Federal Reserve Bank of New York, which responds to crises such as 1987's Black Monday by flooding markets with liquidity, can quickly shift its open-market operations to satellite offices in East Rutherford, N.J., or one of the 11 other regional Fed banks. At Citigroup, whose headquarters was targeted by al Qaeda, the bank is on high alert through the coming Aug. 30-Sept. 2 Republican National Convention. Visitors can expect heightened ID checks and baggage screenings along with "certain less visible measures" that the company won't detail. Granted, none of this guarantees that another massive assault wouldn't disrupt markets. But experts say the truck-bomb attacks detailed in the latest al Qaeda intercepts would not shut down either Wall Street or the economy. In Washington and New York, the latest terror alert had security consultants hopping. "Our phones are ringing off the hook," says Howard Safir, a former New York City police commissioner and now a partner in Safir Rosetti. a New York security consulting firm. He says the specificity of the terror alert "really got people's attention. A lot of [companies] that were hesitant to move forward want to do it now."
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