Similar to cyber breaches, our foreign adversaries are trying to gain a competitive advantage by gaining inside access, control, or influence over U.S. businesses, and the damage they can cause to a business is devastating. They may gain access through various means, such as through joint ventures, mergers and acquisitions, obtaining board seats, or planting/targeting employees inside the company.
The threat may look different depending on their end goal. It may be to steal proprietary trade secrets, gain access to sensitive controlled unclassified information, disrupt the business operations, break the supply chain, force technology transfers, or any other actions that will help them achieve their end goal. FOCI risks mostly affect government contractors, defense and critical infrastructure sectors, and multinational corporations. Ignoring these risks can lead to legal and regulatory consequences, reputational damage, and national security threats.
According to business.defense.gov/resources/FOCI you can mitigate your risk of FOCI by implementing a few key strategies:
Contract and Relationship Management
- Reviewing contracts and clarifying relationships, affiliations, and/or associations considered risky due to FOCI.
- Ceasing joint ventures or subsidiaries that are based in, funded by, or have an affiliation with a FCOC.
- Ceasing technology licensing or IP sales to any FCOC or FCOC-related entity.
- Transferring voting rights of problematic foreign shareholders to a U.S. citizen residing in the U.S.
Personnel and Governance
- Requiring covered individuals to resign from positions or cease foreign affiliations deemed problematic by the risk-based security review.
- Removing problematic foreign board members.
- Requiring all covered individuals and management personnel to complete insider risk awareness training.
- Requiring increased frequency of reporting by covered individuals through progress report forms.
Financial and Supply Chain Management
- Reducing the percentage of problematic foreign investment in the business.
- Limiting foreign supply chain dependence.
- Removing problematic foreign debt and foreign financial obligations.
For more information about Government Contracting, contact your CIRAS Government Contracting Specialist or complete our Request for Counseling form.