Customized Intelligence Services/Global Vantage

Memorandum for Offsite Meetings May 6-7, 2010

Customized Intelligence Services/Global Vantage

Background

STRATFOR began as a consultancy doing customized intelligence services and custom reports. Our earliest clients included corporations such as McDermott International, a leading engineering and construction company, Albemarle Corporation, a manufacturer of polymers and chemicals, and the Baton Rouge Chamber of Commerce which wasplanning a trip to Japan and needed guidance on the country, its business focus and what the Japanese may be interested about in Baton Rouge. We also did a custom study on water desalination in the Caribbean for a hotel chain. In other words, we took whatever consulting work came our wayand worked for whoever would pay us.

Our first really large revenue client was PDVSA, Petroleos de Venezuela, SA, who engaged us to perform customized intelligence services for them.The experience with PDVSA was a real learning experience and taught us a hard lesson in how not to be dependant on one major account.

Over the years we have had a few very large ticket CIS clients who required highly customized intelligence services that were not only very resource intense and time consuming for George and me, but were not leveragable. We accepted them purely because they paid large amounts of money that we used to build out the company in place of looking for investment capital.

Our stated goal is to move away from the one-off CIS products that involve time consuming, possibly dangerous and non-leveragable intelligence operations, and focus on a publishing model. The question is how to build such a leveragable product to meetthe needs of corporate clients that fits with the STRATFOR brand and is not like other “consulting” products available on the market from the likes of Eurasia Group or Oxford Analytica?

Global Vantage

GV was designedas an intermediate product betweenmulti-seat/site licenses and CIS.GV at this stage is not a very coherent product and is more of a catch-all for any corporate work, but usually involves one or more of the following:

1. Monitoring of open source information – based on the OSINT system under Stick.

2. Research – a client asks us to look into something for them that we don’t have readily at hand.

3. Analysis of a specific topic or country.

4. Tapping some of our sources to help answer a question or perform background checks on individuals or companies.

Client needs

From my experience working as project manager for NOV over the past 3 years (and based on earlier Fortune 500 CIS work we’ve done) I see the main corporate client needs at this level being:

Access to intelligence and information 24/7
Getting answers to questions specific to their company in a particular country
Having the ability to order up a custom analysis on a specific topic, company or country
Needing country briefings as part of their strategic planning process
Needing briefings by George for board of directors and audit committee briefings as part of their due diligence process and responsibilities to shareholders
Asking us to find out what’s behind a specific problem the client is having in a particular country.

How we can meet those needs?

We can meet the needs of #1-5 by combining products we already have such as GV, executive briefings and custom reports. The basic GV monitoring product would form the basic module and additional modules could be added at higher price points. If we add the proposed databases to the package we would have a very solid product that would be useful at the managerial level and in many cases at the executive level. I am doubtful that executive level clients would use the databases themselves but having them available for lower level managers to access may be attractive.

We cannot meet #6 without going into the field and performing specialized intelligence operations. If we plan to continue to bring in this type of work (and it does have the attraction of bringing with it a lot of money) we should also plan to build out a covert capability which would take months, if not years, and be very costly in terms of training and recruitment and also risk. This seems counter to our stated goals and I suggest we look seriously at alternative high-priced services such as packaging #1-5 above for sale to corporate clients.

How do we expand the GV product?

We have built the system for fulfillment of this service but it’s cumbersome and could be more streamlined. I see the Global Vantage product as being easily expandable if we can do two things:

1. Automate the stream of tagged GV items to be sent to clients directly (perhaps through a dedicated writer who does quick edits) andalso copied to the briefer OR develop a GV portal where the client can sign up for certain countries and receive monitoring for basic geopolitical developments, disruptions to business issues, energy related issues or security related issues in those countries.

2. Find and train additional briefers – the ADP pool is a good place to look for these briefers or the junior analyst pool if someone has skills needed for being a good client manager.

If the system was automated we could use our current briefer pool (Korena and Anya) for the interactive part rather than the manual delivery of the monitoring items. We would need a realistic IT assessment of what is involved in the tagging and automation of these items.

To give a better idea of what capabilities we have already to satisfy potential new customers, the following is the current list of countries that are monitored on a daily basis by the OSINT team based on monitoring guidance given them by the briefers. The information should be delivered real time and is often time critical for the client. It should also be available 24/7.By automating the delivery system and removing the briefer we would be better able to meet the real time needs. Clients who have interests in these countries can be serviced through this approach.

FULL COUNTRY MONITORING

For each of the countries in the chart below, issues in all of the foregoing categories are labeled with a “GV” tag.

Basic Political Developments
National Economic Trends
Business, Energy or Environmental regulations or discussions
Activity in the Oil and Gas sector (including regulatory)

MESA / LATAM / EAST ASIA / EUROPE / AFRICA / FSU / NORTH
AMERICA
Egypt / Argentina / Australia / Austria / Algeria / Azerbaijan / Canada
India / Bolivia / New Zealand / France / Angola / Belarus
Iran / Brazil / Brunei / Germany / Republic of the Congo / Romania
Kuwait / Colombia / Indonesia / Italy / Equatorial Guinea / Kazakhstan
Libya / Ecuador / China / Denmark / Gabon / Russia
Pakistan / México / Malaysia / Netherlands / Cameroon / Ukraine
Yemen / Venezuela / Singapore / Poland / Nigeria / Uzbekistan
Saudi Arabia / Peru / South Korea / Norway / Sudan
United Arab Emirates / Trinidad and Tabago / Thailand / United Kingdom
Oman
Syria
Tunisia
Turkey
Qatar
Iraq

Again, the value to the client of the monitoring part of the GV service is the delivery of time critical information that gives them a heads up for disruptions to their business and for decision making (actionable intelligence). The second value is providinginteractivitythrough the briefer with the ability to ask questions and access analysts.

I have listed below the specialty monitoring we do now that could be leveraged for new clients in the energy services industry,financial sector, manufacturing and other multi-national corporations that face security threats due to the location of their facilities.

SPECIALITY COUNTRY MONITORING:

COUNTRY / SPECIAL MONITORING ISSUE
Belarus / Heavy Manufacturing
Brazil / Shipbuilding industry (particularly oil and gas rigs)
General -- Political and economic outlook of the country – things that will have a large impact on these outlooks.
Security -- Changes to the security environment, especially including threats to expat managers or middle management of foreign business operations. Kidnapping and cargo theft are of particular concern.
Canada / Security developments and threats to the 2010 Vancouver Olympics, to include security threats or challenges for visitors, as well as corporate sponsors.
China / Intellectual Property Rights
Labor Activity, Strikes, Protests, Terrorism. Including updates and analysis of the situation in the Uighur Autonomous region of China and Tibetan region. Information regarding the security situation in the area, changing Chinese government views of the situation in these regions and changes that could impact Western travelers in these areas.
Balance between Center and Local/Regional regulations
Econ/Investment -signs of instability in banking sector, major shifts or accelerations in economic trends (FDI, real estate prices); general shifts in government stability or control; China’s foreign energy investments; nuclear energy developments.
Energy -- Growing energy demands. Any forecasts or future plans of oil/nat gas industry.
Economics and Finance -- Major economic developments in China, Chinese stock market trends – shifts in investment trends, regulatory trends, major political events that will affect prices/stock market, developments in energy /effect of China’s energy consumption on global prices
Impacts to MNCs -- Security and regulatory developments that have the ability to impact client operations in the technology or manufacturing industries, or that have the potential to change future business operations.
Colombia / Terrorism/insurgency activity______
Haiti / All things security-related, to include protests, riots, looting, kidnapping, murders. Client is also interested in any logistical challenges, as well as food shortages and other challenges to recovery and reconstruction efforts.
India / Militant Activity/Terrorism (particularly Bangalore, Mumbai, Noida, Chani, Coimbatore). Very concerned with the potential for militants to change their target set and attack IT infrastructure or westerners within the country. Concerned with transportation networks for goods and services through the country. Concerned with groups intentions and capabilities.
Labor/Social unrest
Energy -- Interested in all major oil and natural gas developments, to include pipeline deals, supply deals, and exploration and production projects
Iraq / Political stability in Iraq, within the Kurdish Regional Government (KRG), as well as between the KRG and the central government
KRG relations with Turkey
Security threats with a focus on threats posed by al Qaeda
Developments in the oil and gas sector
Possible impacts of the Iran-Israeli conflict on Iraq
Israel/Iran / Looking to answer the question of if/when Israel will attack Iranian nuclear facilities and what sort of regional impact a strike would cause, including impacts to Western business operations and brand reputation.
Kosovo / Instability, unrest; Regulatory changes affecting mining industry or foreign investors generally; U.S. involvement in governance, business
Malaysia / Changes in the perception of westerners and western business in the country.
Militant problems throughout the country that threaten to disrupt operations.
México / Terrorism and Organized crime activity
Regulations -- Regulatory changes affecting extractive industries, mining.
Social Instability
Nepal / Security situation in Nepal, especially as it impacts Buddhists, including temples, and security problems that could impact Western travelers.
Nigeria / Kidnappings, attacks on energy installations/infrastructure
Norway / Shipbuilding industry (particularly oil and gas rigs)
Pakistan / Terrorism/Militant activity
Panama / Canal developments, new TRADE agreements with any other countries.
Peru / Threats to the energy industry and foreign business travelers posed by indigenous and environmental activists
Terrorism-threats posed by the Shining Path or other groups
Political Stability
Natural Disasters
Major economic developments with a focus on regulation that applies towards foreign energy investors
Developments in the oil and natural gas sector
Russia / Any activity involving Gazprom
South Africa / Preparations for the World Cup in 2010, and changes in trends in the security environment in the months leading up to the games.
Saudi Arabia / Personal Security/Terrorism
Oil and gas developments
South Korea / Samsung Heavy Industries/Shipbuilding Industry
Sudan / Terrorism and Rebel activity
Thailand / Political Instability
United Arab Emirates and Qatar / Personal Security/Terrorism
Shipbuilding industry (particularly oil and gas rigs)
Venezuela /

Government and Political Stability
Political instability and unrest
Significant changes within government ministries or emerging forces of political opposition
Corruption and fraud
Military role in government
International tensions, war and intervention
Security Concerns (with a focus on the cities of Caracas, Maracaibo and the Barcelona-Puerto la Cruz metropolitan area)
Terrorism
Insurgency
Incidents of general crime, to include murder and kidnapping of both residents and foreign business travelers
Organized criminal activity
Law enforcement capabilities
Economic Concerns
Major economic indicators
Nationalizations
Significant labor actions
Trade conflicts or sanctions discussions
Social Stability
Changes in unemployment rate
Other social tensions and unrest

Yemen / Militant and Insurgency Activity with a specific focus on AQAP, the al-Houthi insurgency and possible Somali militant infiltration.
Piracy and threats in the Red Sea and Gulf of Aden
Political Stability-threats to the Salih government

Additional Services

In addition to the services described above (#1-5) we produce the following for NOV that could be added to #1-5 above and repackaged for other clients at higher price points.

1. Monthly country geopolitical forecasts (written monthly as a product by the analysts and selected for each customer specifically by their countries of interest – we already do this for over 30 countries each month).

2. Semi annualor quarterly country briefings by STRATFOR analysts for management level or exec suite – in person or via vtc.

An example of one we did for NOV was a 3 hour session for their Executive/Management Team to include:

Global Overview – 1 hour - George

Regional overviews – 15 minutes each forR

Middle East/South Asia

Russia/Central Asia

Africa

China

East Asia

Latin America

For this client the regional/country briefsfocused on geopolitics with a slant towards energy interests and security.

Conclusion

Our current monitoring product (GV) for clients should be the basis for expanding corporate services including custom reports but not including field operations. In order for this to be viable we would need to:

1 Train another briefer

2. Automate the basic tagging and flow of information OR create a GV portal for delivery

3. Focus on developing more human source information – insights.