Among the many security-providing companies, G4S stands out as the key employer in the London stock exchange, having an influence in over 120 states with a workforce of more than 620,000. Although one may use this information to claim that this security agent is secure, the paper reveals the major risks that are likely to face G4S in the future. Such risks include strategic risk, which will include business environment, investor relations and transactions, financial risks, operations risks, and compliance risks.
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The G4S is likely to face strategic risk due to the speedy changing nature of its operations. Modern technological changes that have taken the world aback will most likely affect G4S. According to Stepanek (2013, p.43), the use of computerised security systems and software that change every night is a risk by themselves. The G4S invests heavily in ensuring that its clients receive the latest technology security systems. However, with the advent of software technology, such systems change every hour. A new technology today may find itself obsolete tomorrow. Cock (2005, p.791) argues that security alarms, metal detectors, radar systems, and other electronic gadgets keep on changing. Competing firms and robbers are also working hard to ensure that they are ahead of the security firms in technologies. For example, Stepanek (2013, p.43) forecasts that the metal detectors used by most of the G4S security officers at major entrances of buildings may not be effective in detecting weapons like bombs and guns in the future. Goodno (2002, p.32) observes that during the September 11 bombing of the twin towers in the United States of America, terrorists were able to shut down all the metal detectors. All attackers managed to get into the airports with their weapons without the least clue by the security officers. Such an advent poses a real risk to G4S in its undertaking as to the world’s largest private security firm. The business environment that G4S operates in is also changing very fast in terms of investors and clientele. Some of the investors in the company have foresight on the kind of business transactions in which the management may want to venture. Redmond (2003, p.86) emphasises having more informed investors may be risky to try to venture into some mergers, acquisitions or new investments. Such investors may withdraw their support from the company or completely withdraw their finances from G4S. It is therefore imperative that G4S acquire qualified financial advisors and evaluate their decisions before implementation. It was due to the rejection by the investors that G4S failed to acquire ISS Company and made a huge loss. The kind of interaction between the company and its clients that the company is likely to have is also a risky venture. The clients can access information about their money and their property at all times. With the advent of mobile telephony and social media, communication has become faster. The company may therefore be overtaken in supplying information to its clientele. Customers should be informed fast by the security firm of any happenings. However, communication systems have been diversified by modern technology. In fact, the world has become a very small village where information is exchanged almost instantaneously. Investor relations are therefore likely to be riskier. The period when the investors waited for annual financial reports sent through mails is long overdue. Annual general meetings in which investors were informed of the performance of the company for a certain year have also been overtaken by time. Today and in the future, the investors are likely to be more informed about the performance of the organisation on a daily basis. The internet has enabled investors to check the performance of the companies they have invested in in real time. Investors are therefore likely to make quick decisions about their remaining in a certain organisation or withdrawing from it. For example, the scandals of the deportations that affected G4S some years back resulted in the withdrawal of many investors. There were also protests from human rights groups. Such kind of withdrawals and protests are therefore likely to increase in the future. Although the company has acquired many other companies and that has entered joint ventures with others in the past, it may be riskier to undertake more takeovers in future. The investors in G4S are now more focused on profitable ventures and undertakings. These investors want to put their money where it is most likely to come out with more profits. The company may be at the risk of acquiring other companies that are likely to make it lose investors and clientele. For example, the G4S Company failed to acquire ISS Company due to such risk after having carried out transactions worth millions of dollars.
The G4S Company is also likely to be faced with financial risks. These risks are likely to involve transactions and structures that deal with finances. For example, takeovers, acquisitions, mergers and new business adventures involve huge sums of money. Going forward, there is the need to investigate and carry out proper audits and research on companies that G4S may want to acquire. Poor acquisition programs will lead to financial losses, as witnessed in previous cases. The company has also performed poorly in the last two years hence poor financial position. A huge financial base makes a company have the ability to venture into many feasible businesses. A good capital base will therefore be important in determining the financial strength of a firm. A good financial position will enable G4S to acquire and take over other companies hence enlarging its territorial dominance. However, the economic recessions that happened in Europe and America are likely to affect the financial position of the G4S since a huge clientele lies in these areas. The company must therefore look elsewhere and be keen on making profits through profitable ventures. The modes of transactions must also be made safer in order to ensure less or zero tampering by corrupt officials and robbery. In the past few years, the company has lost millions of money in transit. The G4S Company lost many millions of money in the failed ISS ltd. Acquisition attempt and in cash transportation. Cock (2005, p.791) argues that security companies have also had their money, transport vehicles, and officers waylaid and robbed off millions of money in Kenya and Uganda. Such occurrences are likely to increase across the world with an increase in world insecurity levels. Threats of terrorism have also increased, and they are likely to increase in the future. As terrorists look for money to finance their activities across the world, the G4S transit fleets are likely to be one of the targets (Goodno 2002). In addition, the rising levels of unemployment in the world are also a risky undertaking for world financial institutions. Robbery and insecurity increase with an increase in unemployment. Allegations of fraud that G4S faces in Britain for tagging criminals may also result in a financial crisis. The allegations are dangerous for a security firm.
Operations risks are also likely to be experienced by G4S going forward. Operations risks will be associated with the cost of administration and operations. With the declining value of the dollar, which is the trading currency in most of the countries that G4S operates in, its operating costs are likely to be at risk. The amounts that the company budgets for may not be sufficient for full and effective operations in a given fiscal year. Unforeseen costs of operations and administration may put the company at risk. According to Phillips (2009, p.16), procedures of sending money, offering security, and ensuring proper functioning of security systems also require tight administration. This is likely to be an unforeseen risk.
Compliance risk is also likely to affect G4S in the future. These are legal risks and are associated with the need for the company to comply with government regulations. There have been changes in government regulations in many countries of the world. Such regulations have come with the increase in levels of insecurity, economic recession and changes in technology. For example, Maguire (2012, p.15) observes that most governments require that companies comply with tax rules, technology advents, human rights rules, employment regulations, environmental regulations and so on. Some of these legal risks are developed by the government as a reactionary measure to curb an occurrence. For example, Zalud (2012, p.20) proposes in case of a terrorist attack that the government of a country may require that the security guards of G4S be vetted by the criminal investigation department before employment. The government may also formulate rules that affect G4S officers in that country, for example, an increase in a jail term for security officers that collude with thieves to rob an institution that they work for, or a hefty fine for to the company from where such an officer comes.
Cock, J 2005, ‘Guards and Guns’: Towards Privatised Militarism in Post-Apartheid South Africa’, Journal of Southern African Studies, vol. 31 no. 4, pp. 791-803.
Goodno, B 2002, ‘Airport Security’, Commonwealth, vol. 129 no. 13, pp. 10.
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Phillips, T 2009, ‘The In-House’, Interview Lawyer, vol. 23 no. 3, pp.16-16.
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