The Loss Prevention Approach to Business Security

The Loss Prevention Approach to Business Security




Depending on your rare needs, situation, and location you may need one or all of the obtainable electronic solutions to your security issues. This is why we take the Loss Prevention Approach to providing security solutions.

Too often alarm companies and security contractors take the “get in and get out” attitude when selling security. The customer calls up an alarm company because they “need” a burglar or fire alarm and the alarm company gives them exactly that without asking what or why. They want to make a quick sale and get on to the next one.

These days, forward thinking security vendors will take the Loss Prevention Approach to providing a complete security solution. A complete security solution will address present and future threats to your business and help unprotected to loss prevention in all areas of your operations.

A burglar alarm by itself will rarely deter, protect or solve anything. The author has witnessed many a burglary where the thief truly broke in by a window that had an alarm company’s sign right on it! Talk about deterrent- it was worthless! Many thieves are very aware of slow police response to burglar alarms in most big cities. They know that tripping the alarm method nothing if the police take twenty minutes to arrive or don’t already bother to respond at all.

A complete security solution and loss prevention plan would dictate window bars to slow the burglars long enough for police to arrive. It would ensure there are no false alarms to lull police into non-response. But the loss prevention approach also method helping the business owner or managers get a manager on all losses.

We know that more losses are caused by employees than by burglars. Did you know that 87% of losses come from employees while only 5% of shrinkage is from shoplifting? Further, 46% of employee theft occurs right at your checkout! Internal inventory shrinkage, shoplifting, slip & fall lawsuits, employee inefficiency, employee violence, embezzlement, improper accounting, fraudulent returns, waste, and low productivity are responsible for more business loss than burglaries. If you want to be more profitable than you need to look inward in addition as outward.

Does that average you can go without alarms, of course not? But consider the effect of just one item of your retail inventory. For example, let’s say an employee helps himself to a hot new DVD player. You, the owner must now replace that item, so already you have to pay double- the original and the substitute. While the substitute DVD player is on order a customer comes in and wants one, since you don’t have it you’ve lost a sale and perhaps a loyal customer. Maybe your salesman that would have sold that player becomes disheartened at losing the sale and works less hard on the next sale or already decides to make up the shortfall in another way.

So the cost of just one missing item can be magnified many times. Although this example applies to retail, commercial and industrial confront similar problems. We were once asked to apply these principles to a dairy. This location was truly a bottling plant which accepted the raw milk from dairy farmers and then processed, bottled and distributed it to local supermarkets.

Upon a careful look at their operations we discovered some interesting and startling facts. The dairy farmers delivered their milk 24 hours a day- completely unsupervised! No one had considered the possibility that virtually anyone could excursion up and have total access to bulk milk tanks. Not only did this open the owners of the plant to threats from terrorists, which could easily poison the milk but also from extortion. A person knowledgeable of these facts could easily call up the owners and say “pay me $10 million dollars and I’ll tell you how I tampered with your milk”- whether they truly did it or not. Not only could this consequence in an expensive ingemination but an already larger loss of consumer confidence.

The solution to this operation was card access to insure only empowered trucks were able to go into the grounds and deliver milk and an extensive video surveillance system throughout the production facility. The cameras doubled as operations tools since now all aspects of the milk processing could be observed from a central location in the control room. As it turned out, the camera system truly contributed more to production efficiency than security but the operators were obtain in the knowledge no one could tamper with any part of the time of action without being observed.

The Loss Prevention Approach to Security Solutions will be a meaningful factor in choosing the right security contractor for your business, facility, or already your residence. A good security expert will be familiar with your specific business- or will take the time to learn. A security solution will require an investment of time both on the part of the security contractor and yourself to understand all the threats and how they relate to your specific operation.

It may take more than one walk by and spending time with meaningful employees to form a complete program. In fact, your employees already probably know all the weaknesses of your security. On such a fact finding tour of a large retailer, we were speaking with one of the dock workers who pointed out the trash compactor. This loyal employee was fed up with her associates who regularly threw out perfectly good merchandise as being “damaged”. They then later went back to the compactor after hours and retrieved them to take home.

This store put all their effort into preventing external threats when a large sum of money was simply pouring out the back door. An alarm contact was soon installed on the trash compactor door along with a camera observing it in addition as several on the loading dock. Not only did shrinkage drop dramatically but employee productivity increased in addition since they now knew they were being regularly observed.

Think it can’t happen at your business? We frequently visit “family” owned operations where all the “employees” are trusted family members. In every case we are told, “I don’t have a problem with employees, they are all family.” In every case we found internal theft- many times of meaningful amounts due to drug problems and already gang affiliation. In one case, an owner’s son regularly allowed his drug dealer gang to loot the business after hours.

already if your employees are totally honest and loyal you may nevertheless suffer the consequences of poor thinking, inefficiency and laziness on their part. Our favorite example was a large retail food market. All the employees were well paid and provided a generous discount so internal theft seemed to be minimum. The store did manager large amounts of cash and this was kept in a locked safe- or so the owner believed.

When we walked by we tried an age old trick which my father taught me. We simply went to the safe and turned the combination dial until we heard it click and opened it! The employees didn’t like having to go into the complete combination every time they had to put cash inside so they always left it on the second to last number. Trouble was anyone wandering by the store and aware of this could have simply opened the safe unobserved and taken the day’s receipts. The solution? A drop chute into the safe so it didn’t have to be opened every time cash needed to be deposited and cameras to keep an eye on things.

So the Loss Prevention Approach is designed to both provide solutions and keep your losses to a minimum! The Loss Prevention Approach not only must take into account past and present threats but also anticipate future ones.

THREATS

Individuals and businesses confront many kinds of threats. If traditional threats weren’t enough, in the first part of the 21st century, we now have to add terrorists. In designing an effective security system, we need to understand each threat, its effect on the business, and what measures to take to counter those threats.

External Threats

Business Open

Holdups

Takeover Robberies

Forgery, fraud

Office Theft

Warehouse theft

Executive threats and personal safety

Workplace violence

Vandalism to company character

Vandalism of company vehicles

Vandalism of employee vehicles

Terrorist

Fire

Earthquakes and natural disasters

Business Closed

Burglary

Fire

Earthquakes and natural disasters

Vandalism to company character

Vandalism of company vehicles

Terrorist

Internal Threats

Employee theft of goods and inventory

Forgery, fraud, embezzlement

Employee theft of company assets and tools

Employee theft of proprietary information or customer data

Time card fraud

Increased premiums for worker’s compensation insurance

Decreased productivity

basic roles or processes not operating correctly

We would advise that you copy this list of threats and keep it handy. Use it as a checklist to estimate your security and business operations to see if you are unprotected in any area. While some may not seem to be candidates for an electronic security solution, almost every one can be impacted in one way or another by the right system design.

Fraud, forgery, and embezzlement for example, can be addressed in several ways. With a obtain facility or financial area, there is less chance an employee will gain access to checkbooks or cash without your knowledge- or if they do you will certainly be made aware of the fact. Cameras in strategic places can help deter fraud and forgery. Thieves do not like to be recorded or photographed, it inhibits their actions!

Some of these threats are obvious- such as keep up ups and burglary or fire. Many are less likely to be taken into account when designing a security system. The Loss Prevention Approach delves deeper and looks at those less obvious threats.

Each of these threats represents not only real cost to the business but also hidden or undocumented expense, which in some situations can be already more meaningful than the obvious cost. Vandalism to a company means may seem a minor cost and inconvenience; but if the permanent loss of the use of that means method an important delivery can not be made, it could average the loss of a valuable customer and meaningful future revenue.

Theft of tools or test equipment, while expensive to replace, also can average loss of production, and loss or delay of orders. These days, customers will quickly go in other places to acquire the service they want. The loss of a $3000 tool could ultimately cost you $30,000 or more in lost future orders.

already vandalism or theft to employee’s character can have real effect on company profitability. The employee becomes distracted, perhaps disheartened, and frustrated by financial loss. They may sue the company or at the very least be less productive, perhaps making basic mistakes. Or they could decide to recoup their loss by stealing from the company. It is very easy for an honest employee to rationalize getting already if they perceive the company was at fault for their loss. Employee moral is a basic aspect of a good Loss Prevention program.

Threats to the safety of executives can have already more devastating effects. Having your chief financial officer or IT manager distracted when they should be making basic business decisions can impact your profitability for many years.

So when budgeting for security, it is vital to consider all factors in your decision. Consider all possible losses to the business or facility and take all these into consideration.

Let’s discuss each threat and possible system solutions so you get an idea of how the Loss Prevention Approach works and what each kind of security system can provide.

External Threats (Non-employees)

Business Open

Security Threats

Holdups

Takeover Robberies

Forgery, fraud

Office Theft

Warehouse theft

Executive threats and personal safety

Workplace violence

Vandalism to company character

Vandalism of company vehicles

Vandalism of employee vehicles

Terrorist

Non-Security Threats

Fire

Earthquakes and natural disasters

All the security threats while the business is open can be addressed to a large degree by securing the facility or place of business. While this would seem obvious, it is a fact many businesses do not take such threats seriously and fail to follow already elementary precautions or procedures. Simply locking doors and gates and installing some kind of access control can limit the thief’s ability to gain entry. Cameras will serve to deter and document many of the above crimes. In fact, their insignificant presence is often enough to cause a thief to look in other places for “softer” targets.

If your particular business caters to the general public and consequently requires complete access by outsiders (such as retail establishments) then clearly the task will be much harder and more complicate. If at all possible, consider separating the public and private business areas. for example, already in very small facilities, the financial office or area, in addition as the stockroom or warehouse, can be secured and controlled.

Cameras will also be of major assistance in retail. Cameras can be installed to deter shoplifting, check forgery, loading dock thefts, and theft or vandalism of customer, employee, and company vehicles.

While terrorists probably won’t be much of a threat in the retail business, they could well be in commercial and industrial facilities. Again, securing the facility itself will also serve to “harden” it as a target. Don’t forget unprotected areas such as air intakes for HVAC systems which are easy to reach from outside. These can be covered by cameras with motion detection software.

Non-security threats such as earthquakes and natural disasters assistance greatly from simple pre-planning and emergency procedures. Once you have an adequate fire monitoring system in place; you should have written emergency procedures.

Emergency procedures should cover evacuation paths and plans, muster areas (where to gather after the evacuation), emergency phone numbers for local authorities and especially contact numbers for all your employees and personnel.

Internal Threats

Employee theft of goods and inventory

Forgery, fraud, embezzlement

Employee theft of company assets and tools

Employee theft of proprietary information or customer data

Time card fraud

Increased premiums for worker’s compensation insurance

Decreased productivity

basic roles or processes not operating correctly

Internal threats are those perpetrated by employees (or partners). Luckily, most of the same systems and solutions for external threats apply to internal but in most situations they need to be redirected. For example, some cameras may need to be aimed looking inward instead of outward.

Time card fraud is a special case- and a potentially large loss item depending on the number of employees. already in small shops however, time card fraud over a period of time can consequence in startlingly large sums of lost money. One of the best solutions for this problem is “biometric” (see the biometric section or glossary for more information) kind readers which insure only that specific employee can clock in or out. If you don’t want to go to that expense, just one camera viewing the time clock can be an effective deterrent- if you review the recording and take action. Once the employees know you’re watching, they will refuse to clock each other in and out.

Workman’s compensation claims arise from workplace accidents and on the job injuries – some of which are false. Cameras can be very effective in reducing such claims- either false or actual- by deterring horse play and unsafe practices such as forklift racing (yes it happens!), overloading, poor loading, failure to use safety procedures and safety harnesses, and other bad habits. But again, the manager or owner has to review the recordings and take immediate action when such behavior is observed.

A bonus of camera and access control systems is that they will also go a long way towards improving productivity and already observing basic processes and roles. All threats can be negated or at the minimum reduced by well designed and thought out electronic security and fire systems.




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