Why Manufacturing Companies Need to Be Concerned About Security and What to Do About It

Posted by Sean Murphy on March 30, 2020

Cyber breaches have gotten a lot of attention as companies that are victims of large-scale hacks make the news. These incidents push companies to invest more in cybersecurity. However, spending more on cybersecurity will not help prevent cargo theft and other physical security crimes.

Consider this. According to CargoNet, the average cargo value per theft was more than $150,000. Additionally, the estimated total of cargo stolen in the U.S. and Canada has reached almost $23 million as of the second quarter of 2019.

And there's more. The Association of Certified Fraud Examiners (ACFE) says internal fraud is responsible for more than $3 trillion in losses. Manufacturing companies also contend with employee theft. A Hiscox study referenced in CNBC discloses that U.S. businesses lose more than an average of $1.1 million dollars every year to employee theft. The median loss for small and midsized businesses was almost $300,000.

Although it's hard to determine who will embezzle, the story states employees who commit theft may leave clues. In most cases, they make expensive purchases that don't align with their salaries.

There's more. The U.S. Chamber Foundation estimates four burglaries occur every minute. The organization says workplace violence costs businesses $36 billion every year and 30 percent of business failures are due to crime. Thus, businesses that don't take steps to bolster security could be at risk for bankruptcy.

It stands to reason that manufacturing companies need to consider cyber threats as well as physical threats when setting their security budgets. Manufacturing companies can boost security with these eight steps.

These 8 Steps Will Help Prevent Employee Theft and Fraud

ACFE shares eight tips for clamping down on employee theft and other crimes.

1. Improve internal controls

This is where having documented processes and procedures can prove valuable. Create policies to prevent the same employee from handling everything related to financing. These include writing checks, reconciling bank accounts, collecting money, and bookkeeping activities. This is precisely why nonprofit organizations require two signatures for writing and cashing checks.

2. Conduct background checks

Before bringing on any new employee, run a background check. It's one of the simplest things to do that can save you a lot of headaches.

3. Do financial and fraud audits

A financial audit occurs on a regular basis to verify all of the company's financial statements are accurate and the company's performance is on par with expectations.

The purpose of these audits is to investigate a company's finances to find fraudulent activities. The key to conducting fraud audits is to bring in outside accountants. Auditors look at bank statements, cash accounts, journal entries, and other finances to spot unusual transactions and inaccurate accounting statements.

4. Prosecute suspects

Some companies skip the prosecution in fear of bad publicity. Companies that don't prosecute send a message to employees that they can get away with the crime. There's always a risk someone will find out anyway. It's better to be proactive and prosecute it to communicate to the public that you have controls in place to catch criminals and that you will not tolerate it.

5. Train employees

Most companies hold training for all new employees. Ensure that security and ethics are part of the training. Most security technologies can only do so much to deter crime. An employee can do a simple thing to create a hole in security such as letting a stranger in the building. Fortunately, there's technology that can watch for that. More on that in a moment.

It's also important to hold refresher training on ethics and security every year. It reminds employees to stay vigilant.

6. Implement anonymous reporting methods

Employees fear retaliation, so they won't report suspicious activity. Erase concerns of revenge by making it possible for employees to submit reports anonymously. Explain how the anonymous reporting process works. For instance, if the reporting is done through an online form, some may not do it. They know their IP address can reveal who submitted the report.

7. Watch behavior for hints

One of the biggest hints that an employee may be committing crimes is when the employee makes expensive purchases that don't match up with the person's salary such as buying a luxury car. Another sign of a problem could be doing less of their assigned work duties.

8. Install video surveillance with monitoring

Remember that example of how an employee can let a stranger into the building without question? That creates a security hole. The stranger could be a thief. Video surveillance cameras can close that gap since they can capture a stranger entering the property. If that stranger turns out to be a thief, the video recordings will help identify and catch the thief.

Video surveillance is a proactive security solution that can do much more than close security holes. A reactive security solution does not do anything until after something happens. For example, a security alarm system that has been triggered by a break-in. By the time the police arrive on the scene, the suspects are likely long gone. Video surveillance can spot someone approaching the manufacturing company property, typically before they do any damage.

How Video Surveillance Can Deter Crime and Stop Fraud

Using a combination of analytics and human intelligence, the system alerts a trained security operator who is watching live cameras of a potential problem. The operator checks out the action. If indeed there are intruders, the monitoring operator can issue a warning through the audio speaker.

Should the trespassers continue to approach the property despite the audio warning, the operator calls law enforcement. While waiting for the police to arrive on the scene, the operator can track the suspects' movements and stay on the line with the police. Often, the police arrive and apprehend the suspect before damage occurs.

By the way, the operator isn't on the property. The operator is located in a safe place elsewhere, which makes it easier to react appropriately.

Onsite security guards may or may not properly respond based on what the situation requires. They're human and their fight or flight response may compel them to run away. Remember, security guards are not police officers. They don't receive the intensive training officers do. Some security guards aren't even required to undergo training at all.

During times when the operators aren't watching live, the security cameras continue to capture everything. Occasionally, a company finds out something happens days or weeks after it occurred.

For instance, a vendor claims their truck was damaged on the property. You'd request a video review in which experts will search for the incident to see what happened. They might find the truck arrived on the property already damaged. This helps prevent fraud and saves on the cost of a lawsuit. Video review and analysis services can help reduce or eliminate insurance claims and court cases.

How Stealth Monitoring Video Surveillance Works

In this video, a suspect pulls up to a parked 18-wheeler in a warehouse parking lot and pries open the door of the semi. Watch what happens.

A security operator spots a trespasser before the alarm system went off. The suspect picks up many items. The police arrive and catch the suspect red-handed.

Video surveillance not only deters crime but stops fires from spiraling out of control. In this video, the security operator sees smoke coming out of a property and calls the authorities. They arrive before serious damage happens.

You can see many more videos of Stealth Monitoring in action to learn how we deter crime and minimize damage.

How Manufacturing Companies Can Get Started with Physical Security

Before investigating security solutions, you'll want to do a risk assessment. This determines what security solutions you have in place and where you may be vulnerable. During the assessment, you'll analyze crime reports to see what kind of crimes strike near your manufacturing company's property.

Companies often overlook studying the area's weather patterns and history to determine potential risks. These include tornadoes, hurricanes, earthquakes, fires, and other nature-made disasters.

The risk assessment also gives you a useful starting point in creating a security plan. You may want to bring in a trained security specialist on the risk assessment. If you work with a company like Stealth, the first thing we do is send our trained security specialists to meet with you at your property to talk over your security requirements.

After the discussion, our team will customize a solution for you. This solution outlines the locations of the strategically placed cameras, audio speakers, and schedule for remote video surveillance hours. You may want to add other security services such as an access control system. What you need depends on your business and requirements.

You may also get your insurance premiums lowered. With remote video surveillance in place, you could cut your risks. You're also less likely to go to court when you produce video evidence that supports your case.

Your manufacturing company has a responsibility to ensure everyone's safety. An effective physical security program can help protect your employees, visitors, and assets. The right security solutions can provide a quick ROI and, possibly even boost your bottom line.

How can security help your bottom line? Security Solutions for the Manufacturing and Warehousing Industry from Frost and Sullivan explains:

"While it is difficult to calculate a tangible ROI on security, it is essential to use technology to solve some of the business issues impacting the manufacturing industry, namely use of heavy equipment, inventory control, improving employee productivity, and shift work. Increasing availability of customized solutions to address each of these business issues has helped manufacturing companies use technology to improve their bottom line."

Have questions about physical security for manufacturing? Contact us.

Posted in: Crime Prevention, Video Security Systems, Security Guards & Savings, Video Monitoring