I found the following solution (I feel a little embarrassed as it's very straight forward).
The Flash Player uses a security model which determine what actions a swf's can take. In brief for locally run swf's using methods such as ExternalInterface, these must be registered in a local sandbox. To access your Flash Player Sandbox to update the settings you must access a Flash Application that is only available online.
From this Flash Application (know as "Security Panel"), simply by browsing and selecting the "swf file" or "directory", ensures your Flash Player will treat the local swf as a trusted swf, and you shouldn't run into security issues.
The online Security Panel is located at:
1 - Navigate to the Global Security Settings tab (the 3rd tab)
2 - Click "Edit Locations"
3 - Browse to the folder or swf file
4 - Click OK
5 - Test your application
The Security Panel Site is fully documented and easy to use.
For more information on Security Sandboxes check out:
Hope this helps.
Thanks for sharing your solution.