1. What is the intelligence market? What about business intelligence?

Business intelligence is a key component in the decision making process by shareholders or management. When a corporation makes a decision to invest in new products, services or in another company, it does so based on research, market analysis, economic trends or other factors. So the decision is made based on economic information. Corporate delivers to partners a certain type of information that adds value to the company's day-to-day operations, regardless of when it is delivered, before new products/services or investments are made or post-factum, when the company suspects that it is the target of internal or external aggression.

All these decisions are made on the basis of business & competitive intelligence products, they are not made "blindly", they make the difference between a turnover increase or bankruptcy.

The intelligence market is a hybrid market, which developed on the ruins of the former private detective profession (the famous PI, i.e. private investigator), but which has come to differ fundamentally from it, by having evolved dramatically in the business consulting sphere, changing almost entirely the work processes, the applicable methodologies and the scope of work. As an essential part of business consulting, the intelligence market is essentially a culture of compliance, of protection against the risks inherent in any business area, of anti-fraud culture and of informed decision-making.

Corporate intelligence, or corporate intelligence, is first and foremost an invaluable aid for local, foreign or new-comer investors who are unfamiliar with the market they wish to develop, and who want to understand the key components that characterize a particular market. It is a support market, dedicated exclusively to the business environment, aimed at streamlining development processes and maximizing risk protection.

2. How has the Romanian market for business intelligence services evolved in the last 3 years?

The market for business & competitive intelligence is growing, a consequence of the fact that the business environment is becoming more professionalized, shareholders and management are realizing that information delivers knowledge and that it is a useful and important tool in the decision-making process. Think about the fact that we are sometimes talking about financial operations worth hundreds of thousands or millions of euros, or you cannot perform in an increasingly competitive environment with methods of 10-20 years ago. It's not all about digitalization, certain activities need to be performed by specialized human resources, we are not afraid of the future and we are not afraid of technology, the knowledge or documentation of suspicions will still be done by humans.

In the last 3 years, the intelligence market in Romania has experienced a much greater openness to foreign investors and to those companies that navigate through complex operational processes, a multitude of collaborators and a multitude of competitors. This represents a positive change without any doubt, and is also based on the way the business environment has reacted to the recent legislative changes regarding the protection of personal data and protection against money laundering. All these changes subject the business environment to major risks and it is normal to see companies concerned about their protection, assets and reputation. And the corporate intelligence market means exactly that: protecting companies from often unseen risks.

In other words, the intelligence market is extremely dynamic, and, being an underlying market, it adapts to the constant evolution of the business environment.

3. Do you have a value for this market? Can you make an estimate here?

From our estimates, although the market is far from being mature, we estimate the value of contracted services for the past years to be around 10 million euro, annually, with the usual fluctuations, but the trend is positive.

The crisis has crystallized the market in which we operate, we are in the top 5, some of our competitors have different business models, but in corporate services and by the nature of our daily operations, we are in a real top 3.

4. How developed is this market abroad compared to Romania?

Business & competitive intelligence companies in the West or in the Anglo-Saxon space have been around for a very long time, some for 20-30 years, others are listed on the stock exchange, have offices in major financial centers, in London, New York, Zurich, Dubai, etc; there business people take seriously the principle of the need to know and to prevent, in a business environment characterized by an increasingly fierce competition, supported by the galloping technological evolution of the last 10-15 years. What's more, most of the clients of these companies are listed entities, and brand reputation is sometimes worth more than a financial loss. Somehow, the "law of the jungle" still exists in business, and in a transaction worth tens or hundreds of millions of euros, economic information is what makes the difference between the winners and losers.

The foreign intelligence market is much more developed and enjoys a completely different openness, and this is due to a multitude of factors. First of all, the foreign business environment is subject to a different culture, much more oriented towards compliance and social responsibility. For example, there is a major difference between the way a foreign company reports a suspicion of domestic fraud and the way a local company does.

Secondly, as I said above, the intelligence market in Romania is still, unfortunately, associated with the private detective culture, which raises suspicions about the real usefulness of intelligence services and their seriousness. We believe that the business environment in Romania has not yet been sufficiently educated and familiarized with the subject of corporate intelligence services and they do not yet know their nature and usefulness.

5. How do you see this segment evolving in 2021?

On a positive note, we are optimistic about 2021, but very optimistic for the years to come, because the market in which we operate has not reached maturity, we still have a long way to go, and this is for several reasons, I will try to list a few:

Lack of prevention culture in the business environment - here is an almost sociological phenomenon because we as a people do not have a culture of prevention in our DNA, we go to the doctor only when we have pain or some ailment, we do little to prevent disease, believing that we will overcome it with a cure; our business environment is somewhat the same, we don't invest in prevention or mechanisms to counter fraud, we wait for it to happen, and then the shareholders or management don't know where to turn to, law enforcement structures are not always the solution, and they are not responsible for prevention.

Another reason is the psychology of the CEO, who is generally reluctant to approach this type of service: indirectly, he would admit to the shareholders or the board that he has a problem that he did not know how to manage, an unjustified fear, but because the partnership with us is a value added to the company, and the principle of confidentiality is fully respected, in all these years there have been no leaks, security breaches or other incidents.

I also mention here, although there are other reasons, the lack of notoriety of the existence of this kind of services on the Romanian market; I mentioned earlier about the situation in developed economies, where the business & competitive intelligence market is mature, with companies calibrating their service offer on the evolution or trends of the business environment. ¾ of the shareholders or managers with whom we interact tell us that they did not know that these services exist, that there are companies in the field or that they do not understand the added value we deliver. As an example, in the M&A market, the third step, after the big consulting firms and legal team, is a specialized agency of our profile that does an "enhanced" or "in depth" due diligence, i.e. documents on the ground, confronts the dry reality of the numbers/statistics with the reality on the ground, the business conduct, the company's reputation among partners, the culture of the organization and other elements of interest. 

6. What are the market growth drivers for business & competitive intelligence?

Changing the mindset of business people, I think, would be a first important factor.

Like any business, we are connected to the evolution of the economy, we grow with it and we are stable in times of crisis, because the crisis is a potentiating factor of the crisis, favoring the fraud phenomenon.

We consider that we are doing a kind of pioneering on the Romanian market, a part of our time is dedicated to meetings with new clients or partners, we are invited to profile or business events, we are approached by law firms that have realized the importance of our services and recommending the companies in our portfolio to access them.

Being a support market for the business environment, it is deeply influenced by the socio-economic development of the country and by all the elements that bring additional challenges to business people. We can include here also the legislative changes mentioned above (GDPR policies, AML and, more recently, the transposition of the European Directive on whistleblower protection) and digitalization, as this has opened a real Pandora's box in terms of Business Email Compromise fraud.

7. What is the profile of the clients using these services?

On the corporate intelligence side, given the specific nature of this market, clients are mainly multinational companies in the retail, investment, banking, insurance, manufacturing, manufacturing, pharma, IT, etc. industries.

8. Can you estimate, roughly, how many percent of large companies (and here we need to define this area somehow - either in terms of employees or turnover, perhaps) access such services?

I think it's premature to estimate a percentage of companies or corporations accessing business & competitive intelligence or risk management services, the reasons I listed a little earlier, but we are optimistic. The EU membership status, as well as the economic growth figures, increased notoriety will significantly influence the number of companies that will approach our services, and once the results are delivered we will be able to say "sky is the limit".

But I can confirm that in the European or Anglo-Saxon space, all large companies have worked occasionally and others work routinely with such services. It is only a matter of time before this will happen here.

As figures, an optimistic estimate, somewhere around 201TPTP3T of companies use this kind of services, on an increasing trend, but there are industries where this percentage is lower, the reasons I mentioned above.

9. What are the most common situations faced by companies accessing such services?

The most common is the need for knowledge about situations, people or companies of interest, which is necessary for the decision-making process at company level.

Another category of clients are interested in improving their risk management and compliance systems, and are confronted with internal fraud or potential internal fraud, which may jeopardize their reputation and assets. This is only natural, as it is estimated worldwide that internal fraud causes massive financial losses, which can be as high as 5% of turnover.

But there are also many clients who are interested in enhanced due diligence services, which they use before transactions or when they enter the Romanian market and want to know as much as possible about the market, about competitors (market intelligence) and about the object of their investment.

10. When do they turn to you? What do they want to solve?

The activity of our company is focused on the two main moments, ante-factum, the initial, prior knowledge, before the moment of closing a transaction with a new partner, investment or takeover of a company, and post-factum, when the shareholders or the company's management has suspicions about the existence of fraud within the organization.

This depends on the services they are interested in - as a general rule, clients use either preventive intelligence services (due diligence/ enhanced due diligence, market intelligence, background checks, etc) or remedial services, such as occupational or cyber fraud investigations.

Customers are interested in solving problems that may pose major risks to their business processes, data protection and reputation.

11. From which industries do companies that access intelligence services mainly belong?

We address all companies and corporations, there is no affinity for a particular sector or line of business. Each business has its own specificities, therefore risk management is calibrated according to its parameters, on the identified needs and the pursued goal. The companies that use these services are banks, insurance companies, law firms, pharma, investment funds, retail, industrial services, oil & gas, real estate, recycling/waste management, construction, IT, logistics, debt recovery, telecom, consulting, etc.

Virtually any company can access these services, the need for knowledge exists everywhere, the business world is evolving, and these tools are useful both before transactions and where fraud is suspected. 

Almost every month we have requests from sectors of activity in which we have not operated before, which stimulates our professionalism and creativity in identifying solutions to support management in the decision-making process. Where we have frequent requests, we have set up specialized departments within the company, investigators and analysts who are familiar with how fraudsters operate, or experts who know the elements of interest to clients in due diligence projects.

12. How has the COVID-19 pandemic influenced this market?

Pandemic was an interesting and constructive exercise at the same time. We were far-sighted, we knew that a major crisis like the health crisis would lead to a contraction of the economy, and any economic crisis is a fraud enhancer. Economic logic has shown that during a crisis, companies are more exposed to fraud.

The Covid-19 pandemic has brought about a multitude of sociological and psychological changes, which in turn have influenced the number and type of occupational frauds faced by large companies. The work from home shift, when not properly and wisely managed, can be a vulnerability from a data security and privacy perspective. The pandemic has also generated, at least in its first part, financial losses for many sectors, and speculation on fraud opportunities has become a constant.

From an investment perspective in Romania, we believe it is still too early to make a judgment. But we believe that we will have to deal with dynamic changes, as many companies are choosing to close certain sites, open new ones or even to re-profile.

13. How has your business evolved over the last year? What new services have you added to your portfolio?

We were pleasantly surprised by the openness shown by certain lines of business, I will now refer to local or foreign investment funds, which have understood the need for "in depth" knowledge of the factual reality of a company in which an investment is to be made or to be acquired, experience has shown us that there are discrepancies between the figures in a report and the reality on the ground. If until now transactions were centered on reports by consultants and legal teams, lately we are called for a deeper analysis, which can only be done on the ground, where the HUMINT component of our activity brings to light new elements related to the business conduct of the management, the atmosphere in the company, its reputation, practices etc; not once, the legal team has been called to modify the terms of the transaction after our team has delivered the due diligence report we have prepared or sometimes the transaction has been cancelled.

For reasons of confidentiality, we cannot disclose all the economic sectors where we operate, but we have responded to the need to know by creating specialized departments within the company, where we have seen a significant increase in requests in a particular area, analysts and field teams are aware of the reality on the ground, legislative changes and how to operate when it comes to occupational fraud.

Coming back to the example given earlier, in developed economies, in an M&A or investment fund transaction, the 3rd component is our report, after the financial advisors and the legal team.

14. How do you expect business to develop this year?

We believe that 2021 is a year of transition, as large companies recover from the Covid-19 pandemic and restructure their internal processes and the budgets they allocate to different business sectors. The past year has exposed the vulnerabilities faced by certain business sectors and has forced many customers to take a hard look at their internal protection systems. At the same time, we believe that this year is transitioning to a new wave of investment, where the effects and after-effects of the pandemic will take their toll.

15. What investments are planned for 2021? What directions are you looking to develop?

We invest in continuous human resources training, in specialization and training, by industries, customer needs, modes of action or operation, in technical infrastructure and recently we have identified capabilities in the area of artificial intelligence, elements that will add significant value to our deliverables.

The market in which we operate is a very dynamic one, and we have made it our business to meet the needs and requirements of our customers. In this sense, we are constantly investing in our working methodologies and related logistics, in order to constantly meet the technological needs in the first place - and here we are especially focused on preventing cyber attacks and training our customers to eliminate or reduce the risk of data breach.

At the same time, we are constantly investing in know-how, and learning with, and learning alongside, our customers, because we know that in an extremely dynamic world, we need to keep pace with their economic and social development needs.

16. What is it from your range of services that you would like to highlight in this first press release?

We believe that it is essential to emphasize our contribution to new investments, as market intelligence, competitive intelligence and enhanced due diligence services can provide a breeding ground for new companies. We firmly believe that an informed decision can save unnecessary investments and help the business environment to have a fruitful and targeted start.

We also believe that businesses need to be aware that there are high-level, highly sophisticated solutions (such as fraud investigations and personnel infiltration) for the compliance problems they face, which can help companies to uncover costly fraud early, while defending their reputation.