Japanese MNCs and the Threat of Terrorism Abroad

Japan is still in shock and anger following the tragic killing of two Japanese hostages in ISIS-ruled Syria. What does this incident mean for Japanese MNCs? From a risk management point of view, the attack on the Tigantourine natural gas plant in Algeria in January 2013 was far more shocking. At one point, more than 800 workers were held hostage and at least 39 foreign hostages (10 Japanese) were killed. What shocked many large Japanese MNCs was the fact that even a well-prepared MNC could be so vulnerable. Although the attacked plant was located in an unstable area, it was run jointly by the Algerian state firm Sonatrach, UK’s BP, and Norway’s Statoil, and had extensive security measures in place. Nikki, the Japanese engineering firm contracted for the gas field expansion project at Tigantourine, was considered one of the best-prepared firms, with a long history of operations in global hotspots. Even if the recent tragedy in Syria may not have direct political risk management consequences for Japanese MNCs, it still has subtle indirect implications. First, it highlights certain quarters of the world remain dangerous, if not becoming more so. While no attempt to link the killing of Japanese hostages to the murders at Charlie Hebdo is made here, some Japanese do wonder if the Huntingtonian clash of civilizations may actually come to fruition. More importantly, the incident may substantially affect Japan’s political direction, which, in turn, will affect Japanese MNCs over the longer term. After all, the Abe Shinzo government has been known to find every opportunity to depart from Japan’s traditional pacifist foreign policy, with the prime minister already having floated the idea of dispatching the Self-Defense Forces (SDF) abroad for hostage rescue operations and determined to allow the SDF to participate more actively in coalitions of the willing.