(MONEY Magazine) – Two years ago Rudy Giuliani stood at the center of a major national crisis and became America's Mayor. Since leaving office, Giuliani has parlayed his crisis-management skills into a new career. His Giuliani Partners advises companies and governments on ways to prevent, combat and prepare for unexpected catastrophes. In addition, Giuliani recently teamed up with Bear Stearns to form an investment partnership to provide capital to companies with promising methods or technologies that can enhance the security and safety of the workplace and the world. For more on what Rudy thinks about the current state of our security--and the retirement security of his old friend, New York Stock Exchange chairman Dick Grasso--read on.

INSANA: Give me an idea what exactly you're up to these days. What are your business interests?

GIULIANI: Giuliani Partners does two things: consulting and investing. The consulting part of the business is in the area of crisis management and security. So we work with Entergy, for example, on its security and evacuation plans for Indian Point and other nuclear facilities, using the expertise of the former [New York City] fire commissioner, Thomas Von Essen; the former police commissioner, Bernard Kerik, who has been running the police in Iraq; and the former head of emergency services, Richard Sheirer, and a group of their people. And we do a similar kind of work for a pharmaceutical company. We're advising the Mexico City police on how to reform their department to reduce corruption and crime.

Q. What about the investment side? This seems to be a relatively new component of the business.

A. The investment side was always a goal. Part of the purpose of establishing Giuliani Partners with Ernst & Young was to have an investment side to complement the consulting work that we do in security. We're looking at companies that are already established, already doing some level of work, but haven't quite blossomed. The idea is that we would take a position in such companies and improve them.

Q. So you're going to be an active manager or more like a passive fund?

A. As active a manager as you have to be to really improve the business. It might be being on the board; it might be putting some of our management people into the company, it might be trying to help figure out what's the best technology. Let's say identification. There are a lot of different methods for identification: photographic, iris scanning, fingerprint. What's going to be the most effective? What companies have the best opportunity to expand? And how can we help them do that?

Q. How does that relate to what you do as consultants?

A. We consult with Nextel to help them put together a communications system that would allow for interoperability. What do emergency responders need and how do you satisfy it? Nextel needed to develop just a process. But [as investors] we're looking for companies to develop.

Q. How far do you think we've come in terms of securing the critical infrastructure of the country since Sept. 11?

A. You can never get to the goal of 100% security, but we're much better off than we were because we're now focused on the problem. The city of New York, which was probably always the best prepared because of the nature of the emergencies that we have here, is probably better prepared now. A lot of cities are taking it very seriously. Businesses are concerned with risks that they weren't concerned with before.

Q. Where are we least prepared?

A. The thing that bothers me the most is that the terrorists confronting us like to do the unanticipated because it is the best way to get the most out of their limited resources. Now you're playing a game in which anything you don't anticipate is the thing that's vulnerable.

And I would like to see more being done on the private side. Most buildings are run not by the government but by private companies. Most people work for a private employer. I think we need a lot more participation from the private sector. We have to think about how we are going to keep the people in this building secure. On the day of the blackout, this building's backup generator allowed people to get out by elevator. Now, that aids the city in its response.

Q. Mike Cherkasky from Kroll, the risk-consulting company, says most of the stuff that needs to be done is readily available.

A. The biggest drawback is expense--you have a lower profit. The time that it becomes enormously valuable is when, because of it, you can get back to work two days faster or three days faster. Just think of the amount of money that the stock exchange saved during the blackout by being able to come back the next day. Coming back in one day probably paid for the entire investment that the exchange made in its backup generators and duplication plan. That's the way chief executives have to start thinking.

Q. Now that particular chief executive, Dick Grasso, has been getting beat up about his salary package.

A. Dick Grasso was the guy in New York City that probably thought about terrorism and security way before anybody else. All of that stuff he did really made it possible for the stock exchange to reopen after the Sept. 11 attack. Remember, the telephone lines went out in lower Manhattan, and they were out for a month. He had to put back together in a few days probably the most intricate form of communication that existed in the country, and that has to work split second; otherwise, there'd be a loss of confidence. And it was a miracle that they were able to get it back by that Monday. And all of that investment and security in the three, four, five years prior to Sept. 11 is the reason they were able to get back so quickly.

Q. Do you think Dick's being unfairly maligned of late?

A. Yes. I think Dick is a remarkable chief executive. He's taken the stock exchange to an all-new level of achievement. And he paid for himself on Sept. 11. He saved the stock exchange.

Q. Sept. 11 was a redefining event for you. As you reflect back over the last two years, what is your thinking with respect to that day and what's likely to happen going forward?

A. It was such a horrific event that I've come to terms with the fact that you don't put it in place. I feel I have an obligation, as somebody who survived, to try to help the people who were affected by it and also to try and prevent it from happening again.

Q. New York has made a remarkable comeback, yet it is still one of the toughest periods in recent memory for this city. How long do you think before New York can turn around and be as solid as it was prior to Sept. 11?

A. New York is on the same financial footing it would be on if Sept. 11 hadn't happened. The national economy has been underperforming. When the national economy has a long-term recovery, New York City is going to be performing right along with it and maybe even outperforming.

New York City is so much affected by the market because that's our big business. We used to think it contributed somewhere between 30% and 40% of the city's economy. When we were sitting down trying to figure out what the city's surplus was going to be, the main thing the Office of Management and Budget did was look at profitability on Wall Street, because it was a predictor of everything else. It contributes to the income tax. It contributes to the sales tax. It contributes to all of our business taxes. All of that jumps when you have a great year on Wall Street.

Q. Time for a tax rollback in New York?

A. I think there's always time for a tax rollback. I am a very big believer that if you return money to the private sector, it has an energizing effect on the economy. I don't understand the debate about that, unless you had a jurisdiction that was seriously undertaxed and therefore couldn't provide any services. We reduced the hotel-occupancy tax by about 30%, and the receipts from that tax, within about two to three years, were $100 million to $120 million more than they were when the tax was higher, because all this convention business that we were losing came to the city.

Q. What do you make of the national political scene right now? Hillary Clinton is suddenly trailing President Bush by only seven percentage points in the latest poll, and she's not running.

A. Well, whenever I was not running, I was always winning. I'm very nonobjective because I consider President Bush a great President.

Q. Are you in the private sector for good or just as a layover to other things?

A. I've never done anything in my life for as long as I was the mayor. I did that for eight years. So I expect that I'll be doing something else in the future, but right now, being involved with all these businesses, being involved internationally, this is a period of tremendous growth for me. At some point, I'll probably want to be back in public life.

Ron Insana is co-anchor of CNBC's Business Center and author of Trend-Watching, published by HarperBusiness.