Drafting in specialist security consultants is a prerequisite for any company wanting to send employees to Iraq. And since the official ending of hostilities in May, security companies have experienced a boom in the demand for their services. Kroll Associates, AKE Group, Control Risk, Olive Security, and ArmorGroup Services Security Consulting - to name but a few - are among a small army of companies all vying for a piece of the action.

These firms form an elite group that employ mainly ex-special forces military personnel. But such rare skills do not come cheap. Charges range upwards from about $1,500 a day per man for short-term contracts in higher-risk environments, though longer-term contracts can be arranged on a lower per diem basis. The smallest contracts may require up to six security consultants with the number of men deployed increasing as the scale of the task required grows. For the bigger jobs, up to 100 specialist security personnel may be required on the ground. Annual salaries for highly qualified security consultants can range from between $55,000 to $85,000 depending on their role.

Competition among the security companies is fierce. And a price war among the companies bidding for the lucrative contracts with big multinationals has squeezed margins. Even so, the pickings remain rich and most security companies are understood to have operating profit margins of about 20-25 per cent. Florida-based ArmorGroup has so far scooped the biggest prize, winning the contract to provide blanket security throughout Iraq for the US reconstruction contractor Bechtel.

Faced with the high risks posed to both human and physical assets in Iraq, reconstruction companies have little option other than to pay for protection. 'Some businesses underestimate the importance of security,' says Chris St George, commercial director of Olive Security. 'But from the moment that you step over the border you are exposed to a myriad of hostile risks.'

Olive, which mainly employs former members of the UK's Special Air Service (SAS), was one of the first firms to move into Iraq and has since worked on US Agency for International Development (USAID) and US Army Corp of Engineers (USACE) reconstruction projects. In its own assessment of the security situation in Iraq, the company warns: 'While the threat posed to civilian workers from terrorist activity is yet to become manifest, Iraqi insurgents have already claimed the lives of civilian workers associated with the CPA (Coalition Provisional Authority) and reconstruction.'

This outlook was vindicated by the unexpected suicide bomb attack on the UN headquarters in the outskirts of Baghdad which resulted in the death of special envoy Sergio Vieira de Mello. The attack came just over a week after an estimated 300-500 pounds of explosives ripped apart the Jordanian Embassy. Both attacks emphasised the precipitous deterioration of security in the capital.

Elsewhere in Iraq, the situation appears little better. In Basra, for example, UK security forces controlling the town are finding it increasingly difficult to maintain order. Five days of electricity outages in mid-August culminated in hundreds of Iraqis flooding onto the streets to vent their frustrations by rioting. The security firms themselves suffered their first fatality near Basra when a Nepalese Gurkha working for Global Security was shot dead on a UN mail delivery.

Yet, regardless of the risks, some among the international media and private sector continue to ride their luck in Iraq without proper security back-up. 'Security firms are raking it in,' says an international contractor looking at Iraq. 'It is entirely in their own interests to exaggerate the risks on the street. They have you over a barrel.'

However, the security companies are adamant they provide a vital service in the effort to rebuild the shattered country. 'The first thing to understand is that anyone working in Iraq will be entering a semi-permissive environment. There are no secure lines of communication, transport, security or service support. More importantly, the threat is nefarious and difficult to define. The reality is that any Westerner travelling on their own presents a soft target. Single vehicles travelling without communications or support take the biggest risks. These have been the cause of several near misses,' says St George.

Travelling to Iraq is in itself a daunting challenge for most. The route via Jordan requires no visa but entails a six-hour drive with the constant risk of hijack. The alternative route to Baghdad through Kuwait and Basra requires a cache of security passes and an equally onerous drive along possibly the world's most dangerous highway. Having the right security when faced with such logistical quandaries is a wise move.

For the hard-pressed coalition ground forces, the security companies offer welcome support. Members of the Iraqi resistance are understood to receive a bounty of between $5,000-25,000 for each US soldier killed. Commanders on the ground can ill afford to assign vital manpower and resources to the mollycoddling of businessmen, and are relieved when such services are provided by the private sector.

However, the influx of security companies working in Iraq has raised questions over the quality of personnel on the ground. The industry is loosely regulated and the CPA has no formal registration process for security firms. Vetting is also an issue which often becomes an impossible task for companies training and employing local guards.

'There is a growing concern over the quality of trained close protection personnel. On a number of occasions security companies have been caught out. The larger projects, which require a heavy security presence, are difficult to manage and there is a growing trend to turn over staff. Retention of expertise on the ground is becoming a big issue as the capacity of some consultants working in Iraq is gradually diminishing. It's only a matter of time before there is a major drama,' says St George.

Beyond the rarefied confines of Iraq's troubled borders security companies are experiencing an upturn in business across the Middle East. From guarding expatriate compounds in Algeria and Saudi Arabia to close protection tasks in Beirut, business in the region is booming. The entire industry is estimated to be worth around $500 million a year in the Middle East.

'Demand for security services among companies is reactive,' says Josh Mandel, senior Middle East analyst at Control Risk Group. 'After the beginning of the Intifada three years ago we began to see an upturn in activity, then after 9/11 we were again very busy. A number of consultants were telling people to stay away from the Middle East which is not the point. The aim of security services should be to help people to continue their business, not frighten them off. Visiting Damascus and Cairo following the attacks in the US did not suddenly become more dangerous overnight.'

The security companies themselves are not only looking at providing muscle on the ground. 'It is not simply a question of providing armed guards and hard security,' says Mandel. 'Threat and political risk assessments that may affect a particular company or project; contingency planning for evacuation and due diligence on Iraqi firms are all elements of the work we are doing in Iraq.'

Security consultants are also teaming up with insurers to provide first hand risk assessments. Insuring individuals against injury and loss of life in Iraq is an expensive business and few insurers will touch personal liability without reputable security protection. Even then, premiums are high: few full-cover policies are available for less than $100 a day, even on long-term contracts.

Insuring facilities and equipment is even more difficult and expensive. 'We have only written a handful of cases in Iraq,' says Nick Robinson, war and political risk underwriter with Lloyds-based Wellington Underwriters. 'The physical risk for insuring kit and fixed assets is the most expensive in the world. We work closely with AKE Group who provide us with a detailed assessment on the ground.'

Iraq may be the extreme case, but the concept of assessing risk and taking the necessary steps to mitigate it is not new to those doing business in the region. Security services may not come cheap but for many companies wishing to venture into the Middle East's nether regions - where both the risks and the rewards can be high - they are becoming increasingly important. n