Loss prevention is the step businesses take to safeguard their profits. It is often associated with retail since the purpose is to create strategies to protect their inventory and preserve their profits. However, it can apply to all businesses.
A lot of things can hurt the bottom line. Equipment theft, embezzlement, fraud, cargo theft, workplace crime, and more. Simply put, businesses need to do more to deter crime and loss prevention. Not taking a proactive approach can put a business at risk for bankruptcy.
ScienceDirect shares a startling statistic from the U.S. Chamber of Commerce. Up to 30 percent of business failures could be attributed to employee fraud and abuse. So yes, loss prevention matters in your business. Here’s a look at various crime data.
Why Your Business Needs Loss Prevention Strategies
Construction companies, warehouses, and other businesses that depend on large equipment lose millions of dollars every year due to equipment theft. According to the National Equipment Register, the cost of theft ranges between $300 million to $1 billion.
Cargo theft is a huge problem that impacts any business sending or receiving large shipments. It turns out cargo theft is a $15- to $30-billion-dollar problem in the U.S. Loss Prevention Magazine says the problem extends beyond U.S. borders with cargo theft in Canada costing $27 million in 2018.
Even office theft is growing. Thieves have stolen $451 million worth of office equipment as shown in the FBI’s cargo theft report. With more than 600 affected, businesses are the largest of the victim types.
An Association of Certified Fraud Examiners (ACFE) study divulges 5 percent of all revenues lost are the result of fraud. It states the median loss per case was $130,000. Here’s the kicker. In 22 percent of the cases, the losses surpassed a whopping $1 million.
It’s no surprise as to why retail puts a high priority on loss prevention strategies. They contend with the loss of inventory due to error, shoplifting, theft, or fraud to the tune of $46.8 billion every year as reported in the 2018 National Retail Security Survey.
After all this, are you still thinking this isn’t an issue for your business? Well, just about every business has a parking lot or garage. The same goes for sidewalks and alleys. The FBI’s Crime Data Explorer shows 666 violent crimes take place in the parking garage every week.
Moreover, in the same time frame, almost 2,000 violent crimes take place on sidewalks, streets, alleys, and highways. The alleys and sidewalks include the area between the building and the parking lot. Together, these are responsible for 25 percent of all violent crimes. The FBI defines violent crime as homicide, robbery, rape, and aggravated assault.
The bad news is that most businesses don’t do enough with their loss prevention strategies if they have one. The good news is that it’s not hopeless and you can do something about it.
What Are the Benefits of Loss Prevention Strategies?
First, here’s an expanded definition of loss prevention. It’s when a business takes a proactive approach to minimize losing any revenue. As previously mentioned, many things can cause these losses. Theft, crimes on the property, office theft, fraud, and more can eat the profits of a business.
Creating loss prevention strategies will ensure you protect your bottom line as fully as possible. The steps you take to implement the strategies could very well improve customer satisfaction. These can augment your processes, which results in better asset management and spending less time resolving problems.
These strategies can reduce administrative errors, shrinkage, and inventory damage. Your business will become more adept at spotting supplier mistakes or fraud. Most importantly, implementing loss prevention strategies will most likely lead to higher profits and business growth. Implementing these loss prevention strategies to keep more of your profits, support employees, and make customers happier.
1. Start with Employee Buy-in
No change management effort will do well without employees. Involve your employees in the process of developing loss prevention strategies. It gives them a sense of ownership knowing they had a hand in it. They will be more likely to support implementation efforts.
In doing this, the employees will feel like they’re invested in the company’s success, and they will do whatever they can to stop any losses. A good way to get buy-in is to demonstrate the value of creating and executing loss prevention strategies. Walk them through how it will enhance the work environment and customer service.
Even the simple act of showing appreciation can make a difference. Hold employee appreciation events. Maybe have one after the creation of the loss prevention strategies and any associated training to celebrate the success.
2. Create and Enforce Clear Policies
With employee or internal theft being responsible for loss of profits, documenting clear policies can help minimize it. These describe the steps for hiring and new employee onboarding, dealing with substance abuse, describing the consequences of employee theft, and other business processes. Policies will also outline employees’ roles in loss prevention.
For instance, new employee onboarding would involve a background check and drug test. This is standard for many businesses. The policy states that this is required and will occur prior to proceeding with employment paperwork.
Additionally, all new employees will undergo training on processes and procedures. It only takes one employee action to bring down security. If the building relies on an access control system for entry, then an employee letting a stranger enter puts the business at risk. Another important policy to include is regular training for employees. This thwarts complacency.
Educate your employees on what you’re doing to optimize security. Transparency shows you trust them. At the same time, it lets them know they will not likely get away with theft or any crime.
3. Automate Asset Management
Managing inventory can be a laborious process. It doesn’t take much to make a mistake or forget to follow through. The information in an asset tracking tool keeps everyone informed on the inventory and location of all its assets. It’ll cut down on problems associated with lack of inventory or information.
Asset tracking software will come in handy when anything is stolen. You’ll have the asset’s information in the system to support the investigation. If the company has remote video surveillance, analysts can search and review the footage to locate the asset and identify who may have taken it.
Sometimes it’s not a case of theft, but oversight of not updating information. That’s where policies and processes come in. Asset management needs to be tied to accounting processes. You may need to revisit your accounting practices to verify you’re using the best methods to help find shrinkage and administrative errors.
4. Implement an Effective Deterrent
Security offers the best deterrent when you add multiple layers. No one security solution can do it all. Each tends to have its weak spots. However, traditional security systems — security alarms to basic video cameras — are reactive.
You can turn a video camera system into a proactive security solution when you opt for remote video surveillance with artificial intelligence and trained security operators. They have the ability to help stop crimes and damage before they happen. Other security solutions will not always catch suspicious activity before it occurs.
With remote video surveillance, experts install cameras in strategic locations around the property for optimal views. Artificial intelligence receives programming instructions telling the video cameras what to watch for in the feeds. As soon as it finds a match in a specific scenario, it takes action. Usually, it’ll alert the on-call monitoring operator who checks out the suspicious activity.
Artificial intelligence in video surveillance creates a more efficient monitoring and video analytics process. When you combine video analytics and human intelligence, it’s nearly impossible to miss anything dubious.
Video surveillance offers many more benefits besides stopping crime and catching it before it occurs. One thing it can do is help boost productivity. With video cameras watching the entire property, the trained monitoring operators can identify business bottlenecks that can be improved.
You could also lower your liability. Anytime someone has a liability claim, analysts will review the footage for evidence that can help your lawsuit or provide the needed proof. On top of that, it may reduce your insurance premiums and speed up ROI.
5. Continue Improving
Technology advances. Business grows. Employees find more efficient ways of doing things. It’s important to train employees and encourage them to provide feedback. At the same time, keep them informed on the effectiveness of the loss prevention strategies. Knowing the company is making progress will encourage employees to remain vigilant in following policies and processes.
As you implement improvements, the loss prevention program will become an efficient one that lets the organization retain more of its profits.
How do you know what security solution you need? Requirements for security vary by industry and even within a single industry. When you work with Stealth, you’ll rest easy knowing you have the proper technology to proactively protect your property. We can customize analytics to enhance your loss prevention strategies. To get a customized security solution that fits your requirements and budget, please contact us.