This is the stage that is set for foreign businesses, visitors, and your insured interests alike. It is a stage dressed with diffuse poverty resulting from a lack of economic development and other factors that allows for high murder and serious assault rates. Armed robberies, sexual assaults, burglaries, and larcenies are prevalent and increasing. Businesses suffer from internal crime of every type known. The murder rate is as high as 30 per 100,000 people, as reported by many news periodicals including The St Thomas Source. For comparison, the USA and some European murder rates are 4.8*, and as low as 0.5* per 100,000 people, respectively. Serious corruption exists in many facets of the police and government and in many businesses. This means that civil litigation and criminal proceedings are severely slanted in favor of a citizen's or island's interests.

“Can't beat 'em so join 'em,” you think?

Well, Americans are subject to the Foreign Corrupt Practices Act (FCPA) which is applied criminally by the Department of Justice and civilly by the Securities and Exchange Commission. Serious penalties await those who cross their trip wire.

The British have a similar act that is often described as the American FCPA on steroids. Note that both acts will apply to foreign nationals as well, if certain conditions apply. One example is for a foreign national to forward an illicit payment through an entity that is chartered in the U.S. or Britain. The acts will be applied and serious efforts will be made to pursue nationals and foreign nationals alike.

The problems for the Caribbean have become more complex and serious within the last decade as a result of unrelated events in North and South America, reflecting the law of unintended consequences. A combination of political and law enforcement factors have led to the decline of the South American drug cartels. As the American governments place more pressure on the North American drug distribution routes, and according to the U. S. State Department, inter-cartel rivalries resembling small army unit combat actions with grenade launchers, heavy automatic weapons, and well trained combat snipers, and as, unbelievably, the illicit manufacturing and deploying of drug smuggling submarines intensifies, the cartels have sought distribution routes that meet less resistance. Enter the Caribbean islands that form a natural land mass chain from South America to 200 miles off the Florida coast.

Add in all of the above problematic ingredients of Caribbean governance, business, and culture, coupled with the need for the drug cartels to develop new less risky distribution routes, and you have all of the ingredients that have made the Caribbean a new major drug importation route. The natural byproduct is gang warfare, serious violent crime, kidnap for ransom, formerly unheard of use of weaponry in street-crime, along with the associated official and business corruption.

Many of the major global carriers no longer write primary standard risks in the Caribbean. This has been left to local non-standard companies and Lloyds syndicates; ditto for the banking sector. Yet, you can unintentionally face these difficult to manage risks.

The global economy demands increasing business travel to all points including the Caribbean. Vacation and extended personal travel are more prolific even during the economic downturn as air and sea carriers and the hospitality industry make drastic cuts to attract Caribbean bound travelers. Time shares, property and second home ownership are more common today. As a result, many of your insurable interests may be at higher risk than originally believed. Perhaps it is time to re-evaluate risk management for life, disability, accident and health, property and various business policies, including kidnap for ransom.

There are some islands that are not as severely affected with these risks as others. Those that have strong economic infrastructures generally are flourishing. They face other types of risk though, including, but not limited to financial, fiduciary, and contractual risks. All cited risks can be reasonably managed by consideration of enterprise risk management (ERM) methods with a unique practical management approach, which will be the focus of our next article.