KFR is now the primary way that terrorist groups in North Africa and the southern Philippines fund their operations, with more than $100million collected in the past 10 years.

DFAT data shows that 32Australians have been kidnapped since 2001, although most were not “professional” KFR cases. Fortunately, all were released. Most recently there have been the high-profile cases of Douglas Wood in Iraq (2005), Nigel Brennan in Somalia (2008-2009) and Warren Rodwell in the Philippines (2011-2013). Wood was freed as a result of an Iraqi neighbourhood security sweep that fortuitously included the house where he was being held; Brennan was freed after his family paid a ransom, and the same occurred with Rodwell.

There were also less-publicised cases like the unidentified Australian dual-national NGO worker held in Somalia 2008-2009. The NGO conducted negotiations with the support of a security consultancy firm, and the Australian and colleagues were released after payment of $US4.1 ($4)million. In 2011, an Australian ship’s captain dual-national was taken hostage with his crew by Somali pirates. The captain, crew and vessel were released two months later after the shipping company paid a ransom.

The Australian government policy is that it will not pay ransoms because that would encourage terrorists and criminals to kidnap Australians. The downside of this policy is that it gives the main Australian agencies involved – DFAT which has a duty of care, and the AFP reacting to a criminal act – very little leverage in a “professional” KFR situation. Having DFAT and the AFP engaged in KFR negotiations can also be counterproductive because kidnappers expect governments to be able to pay much more than families can afford, and they generally do not believe Western governments when they say they do not pay ransoms.

According to The New York Times, over the past decade, Britain, Germany, Italy, Spain, France, Austria, Sweden and the Netherlands have paid more than $130 million to terrorist groups, mostly through mediators to free European hostages – but publicly deny they have done so. The US Treasury Department estimated in 2012 that terrorist organisations had collected about $120 million in ransom during 2004-12.

Rescue in KFR cases is usually not an option. Even suspicion of rescue preparations can be enough to get hostages killed – particularly in North Africa.

A costly Special Forces rescue attempt at Amenas, Algeria in January led to the death of 39 foreign hostages. In March, seven foreign hostages in northern Nigeria were executed by terrorist group Ansaru when local media reported that British rescuers had arrived in the country. In the Philippines, rescue is reliant on the Armed Forces of the Philippines and the Philippines National Police but they lack local support in Muslim areas where hostages are usually held. Any rescue plan is likely to lead to the kidnappers being tipped off to move the hostages, or to get ready to kill them if an operation is mounted.

It is unlikely that Australia is ever going to be in a position to unilaterally conduct an external hostage rescue operation.

The more likely scenario in North Africa is that we would be part of a larger negotiation in which some countries would be prepared to pay substantial ransoms to rescue their nationals. The former American ambassador to Mali says France alone paid $17 million in 2011 to free French hostages taken from a uranium mine in Niger. As a result of dysfunctional multilateral approaches, each country tends to fend for its own citizens in a multinational KFR. In such a scenario there could be pressure within Australia for Australia to do the same.

There is less Australian public sympathy if KFR involves individuals who are in a dangerous area by choice, as was the case with Brennan and Rodwell. The public attitude seemed to be that they were stupid to be where they were given DFAT advice about the high risk of being kidnapped. However, we cannot just turn our backs on fellow Australians for behaving foolishly.

The Brennan family were very disparaging about the efforts of DFAT and the AFP, claiming that the agencies ran out of credible options, prolonging resolution for far too long. At one stage, Nigel Brennan was allowed to make a proof-of-life call from Somalia - but the phone number given to the kidnappers at the AFP headquarters in Canberra was unmanned for the Easter 2009 weekend, despite the family being assured it would be monitored 24/7. Once the family went outside offificial channels to engage a professional payment-for-hostage negotiator, Brennan was released within months.

We are yet to hear much about the Rodwell kidnapping from the family perspective. Foreign Minister Bob Carr praised the efforts of DFAT and the AFP to free Rodwell but it remains unclear what they actually did for him, as most of the substantive effort seems to have been undertaken by family members in Australia and the Philippines, and by the Philippine authorities.

Looking at the situation realistically, under a strict no-pay policy, Australian government agencies can only play a limited role in KFR situations. They can go through the initial process of making contact with the kidnappers, try to establish who they are and where they are, establish rapport with them - at least initially until offificers get reassigned to other duties, liaise with foreign governments, require continual proof-of-life, and use Australian offificials based closest to the KFR to try to maintain contact. If the kidnappers prove to be inexperienced we may be able to work with local authorities to resolve the problem expeditiously. But the only real prospect of getting most KFR hostages out alive is through the payment of a substantial amount of money. Internationally, more than 85 per cent of KFR cases are resolved by making ransom payments.

DFAT and the AFP do not want to be in the business of facilitating payments so negotiation in most cases needs to move within weeks to involve an experienced third-party, like London-based AKE, red24 or Control Risks, to bargain with the kidnappers and make any payment-for-hostage exchange. In the Brennan case, it was necessary to include co-hostage Amanda Lindhout in the Australian payment arrangements because her Canadian family had few assets and were advised not to pay anything by the Canadian government. Eventually the hostage takers accepted money from the Brennan family and generous Australian benefactors, like Dick Smith and Bob Brown, in exchange for both hostages.

Hostages seldom have KFR insurance, although it should be a contractual prerequisite for any employment in Africa, Afghanistan or Iraq - as it usually is in South America. This would mean that the employer's insurer would be the party organising negotiations for payment and release.

It should be possible for the Australian government to establish an insurance policy for all Australian travellers to be covered to a certain level, say $250,000, which would not be enough to single Australians out for KFR, but would give the insurers' hostage negotiators something to work with to encourage the hostage takers to keep the hostage alive. The premium could be part of the passport fee, rather like third-party insurance for car registration. To discourage deliberate risk-taking, any KFR payment could be made repayable by hostages over time after their release.

At present there is no common strategy among Western nations about how to handle multinational KFR situations, and it is probably only a matter of time before the lack of a common approach comes home to bite us. We need to be engaged now in working with other governments and reputable KFR consultants on how we might deal with multinational hostage situations - and not wait until one involves Australians.

In summary, if we are to maintain our government's no-payments policy, we need to put hostages' relatives in touch within weeks with a reputable international agency experienced in conducting payment negotiations (as the British government does).

We need to have a mechanism for helping Australian families fifinancially in KFR situations so that they do not face fifinancial ruin.

We need to work out what we are going to do when Australians are involved with other nationalities in a group KFR situation.