Organisations attempting to combat shrinkage face an increasing barrage of challenges. Shoplifting continues to be a major problem for retail and data security is now pervasive across every industry.
The increasing presence of cybercriminals and cyber terrorists pose a much greater threat, and a single hacker sitting in his bedroom can cause far more loss than any single shoplifter ever could. Wide hitting cyber-attacks may cause significant harm to the company's reputation, especially as compliance may require public disclosure of certain types of loss through cyber-attack.
In some global industries such as oil and gas, or shipping and logistics, acts of terrorism or hijacking and piracy can be devastating. According to a report issued by the World Bank, the UNOCC and Interpol, pirates took between £204 million and £248 million from high seas hijacking activity off the coast of Somalia between 2005 and 2012.
Whether loss is through hacking, hijacking or simple in-store shoplifting, losses can be prevented through the use of data gathering and software-based analysis to determine where and how losses are occurring, and how best to prevent those losses in the future.
Obtaining visibility of crime
While loss prevention was at one time mitigated only with physical security measures such as CCTV, mirrors and security guards, there is a growing trend among all industries to embrace a more organised and technology-centric approach to loss prevention. The gathering of structured and unstructured data for the purpose of analytics and identification of hidden trends, often referred to as 'big data,' has huge potential, not just for FTSE 100 companies. Best practices focus on prevention through identifying key loss-related trends and proactively gathering intelligence throughout the organisation will deliver better results.
Software tools for evidence gathering, capturing incident data at each location, and conducting detailed risk assessments throughout the organisation are available and increasingly providing better ROIs as Advanced Analytics tools can help identify and predict trends and offer tools for mitigation and management across regional or global operations.
In addition to the obvious cost/benefit ROI of such systems, and greater profits achieved through less leakage, ancillary benefits accrue such as reduced insurance premiums and better compliance.
The technology-led approach
A good software-driven, data-rich approach to loss prevention can capture details of any incident that occurs – information that will be useful in minimising future loss, as well as in responding to each incident comprehensively and with appropriate documentation. This type of incident management functionality not only allows the organisation to respond, but also to prevent future incidents by identifying trends across multiple locations, identifying root causes (lack of security checks, high crime rate locations or too infrequent penetration testing on networks, for example).
Then, that technology-based approach to loss mitigation should build in a complete security risk assessment, which allows input of all relevant data to determine the risk level at each location, and any actions that should be taken in the future.
Reducing loss from inside
Loss prevention should take into account internal as well as external loss – by connecting the loss prevention system with the point-of-sale system, fraudulent activities such as unauthorised discounting, cash shortages or other incidences of internal theft can be easily spotted and tracked.
Employee theft is a serious problem with internal theft most frequently being the largest contributor to loss among retailers. According to the Centre for Retail Research, employee theft and fraud cost UK retailers £1.7 million during 2012-13 and while this number went down 4.8% on the previous year, it still accounts for over a third of the overall cost. But it doesn't stop there. Theft on the part of employees, as well as on the part of shoplifters, certainly makes up a big part of loss, but not all loss is theft – much can be attributed to error. Even unintentional employee errors can make up 20 percent of a retailer's loss. These errors may involve mistakes made in checking in inventory, cash register mistakes, or unintentional but erroneous discounting.
These types of losses too, can be easily tracked using software-based analysis, and once a pattern of error has been determined, this can be easily mitigated with proper training.
Repelling rising crime
According to the British Retail Consortium (BRC), for 2012/13 retail crime in the UK rose to its highest level in nine years and cost retailers a total of £511m with the average cost rising by 62% to £177 per incident. One of our major retail clients is experiencing different trends and percentages, with the rate and cost of external and internal security incidents decreasing over the same period. Why? It’s because by accurately capturing all incident data from their multitude of stores and warehouses they have the intelligence they need to perform successful investigations and to deploy resource to security trouble spots. Such is their level of success in this, they regularly exchange information with the Metropolitan Police and that contribution has been highlighted by the force as significant in the fight against retail crime.
Finally, most law enforcement agencies will confirm that criminals tend to take the easy way out – simple deterrents will often discourage crime. Whether it is internal theft or external theft, an organisation with a reputation for lax security will be a bigger target. Implementing a process-driven, technology-based system of loss prevention, and subsequently making that information known to in-house staff as well as the public, will go a long way towards deterring crime. Toward that end, successful prosecution of wilful acts of theft will act as a deterrent for future attempts. Prosecution depends heavily on proper documentation, and a standards-based system of collecting and recording evidence will contribute towards a successful prosecution.
Partners in crime prevention
This standards-based system not only ensures fairness at all times, it ensures that all incidents are recorded appropriately and without bias. Rivo has recently engaged with the National Business Crime Solution (NBCS). The NBCS is a cross-border partnership with UK law enforcement in which the worst affected sectors such as retail and logistics/distribution share crime data in order to learn from the national trend information that is analysed and produced by the service. The valuable data that our clients in retail and logistics are capturing now contributes to a nationwide scheme that all UK business can potentially benefit from.
Securing a strong reputation
A software-driven approach to loss prevention, implementation of best practices and standardised reporting will contribute to a drop in both unintentional and wilful loss, and will position the organisation using such a system as having a reputation for not being an 'easy target.' With our wealth of experience in handling our clients’ security and loss prevention needs, we have a solution in our Rivo Safeguard system that could well be the mechanism for your organisation to buck this rising tide of business crime and maintain a reputation for being a business that criminals stay away from.
The Rivo Security solution
Rivo Safeguard for Security & Loss Prevention enables your organisation to mitigate and reduce crime by understanding the nature of security and loss throughout your enterprise-wide value chain. With a ‘no-stone-unturned’ approach to loss prevention, the value of security vulnerabilities encountered by the business can be measured and quantified.
With our incident management capability, detailed intelligence, trends and evidence on security infringements and observations can be gathered and visualised by our Incident Mapping capability – a geographic representation of security-related incidents by location to enable targeted deployment of preventative measures. Incidents can even be reported anonymously. Investigations and any subsequent Corrective & Preventative actions can be seamlessly and automatically generated, reducing the response times to either react to or proactively prevent instances of recurring or organised crime.
Rivo’s Advanced Analytics brings together all the security data and analysis throughout your loss prevention processes and combined with other enterprise-wide metrics to obtain true visibility of security risks and the effectiveness of preventative measures.
All internal security and loss prevention policy documentation as well as industry specific regulations can be centrally controlled, updated and approved with Rivo’s Document Management. Training on new or updated security processes and prevention methods can easily be monitored; ensuring staff are competent and aligned to the latest standards. Rivo’s Training & Competence Management provides the visibility on this and around expiration or non-completion of courses.
Our intuitive and comprehensive software solution allows you to capture all crime incidents to identify trends, determine the worst-hit areas and eliminate reoccurrence. This capability is part of an integrated suite of risk management solutions within one application hosted in the cloud and available anywhere.