The latest Business Crime Survey April 2008 produced by the British Chamber of Commerce (BCC) provides some very interesting comments and statistics many of which are echoed by the British Retail Consortiums Crime Survey, published annually in October. Although that survey only looks at retail crime many of the same themes come through.
• Lack of confidence in police response.
• No business crime strategy or focus from the police or government.
• Significant levels of under reporting.
• Crime having a detrimental effect on staff retention and recruitment.
• Crime costs businesses serious money, no matter which sector, location or size.
The BCC survey calculates business crime losses to be £12.6 billion for 2007 a rise of 20% from the £10.5 billion in 2004. A huge sum that cannot be absorbed by business and so has to be passed onto the consumer in either increased costs or reduced levels of service.
The survey has calculated that for businesses with 1 to 9 staff the mean loss from crime was £3,900, this rises for businesses with 250+ staff to a mean loss of £101,600, the average loss being £12,200 per annum.
This is loss relates only to crime, your other shrinkage losses caused by damage, waste or poor administration are on top of these figures and can easily add up to an annual loss of 2%+ of your turnover.
The BCC survey reports that business crime also has a negative impact on inward investment, staff retention and recruitment; we all know how difficult and expensive it is to recruit, train and retain quality staff. How many businesses can or do link their HR budget to the increased local crime levels?
So if we are all agreed that business crime is costing everyone money why aren't we doing more to prevent it?
The BCC survey makes four very good recommendations; however, the chances of any one of them, let alone all four, becoming Government, and therefore Police Policy within the next two years are slim. And with the current track record of the Government on business crime, its probably unlikely in the medium term.
With 63% of respondents to the BCC survey reporting either none or only some of the crime incidents they suffered in the previous 12 months, the police are not going to push for changes in crime data capture and therefore influence the government to change its strategic focus and KPI's on crime. It's a classic chicken and egg situation, unless all crime is reported to the police they can claim (rightly) not to know the true levels of business crime. The police and the government can also level the accusation back at businesses that if it was such a massive issue then they would report it, wouldn't they?
We know why businesses don't report all crime, because it takes time, and time is money for all enterprises but especially those in the SME sector. Can you afford the time needed for you or an employee to deal with the police and spend hours on what could be a minor crime and nuisance, but could end up costing more in down-time than the crime cost in the first place? Add to this the fact that police might not even turn up, or if they do and they crime the incident, in all probability will not apprehend the offenders.
So do businesses just sit on their hands and hope? Or do we allow ourselves to be convinced by that major human delusion, it won't happen to me? The BCC survey, BRC survey, government statistics the UK media and our own experience tells us that in all probability it will happen to us and may have already done so. And just in case you are thinking well it has happened to me but lightning striking twice...... Please push that out of your mind because crime statistics show that victims of crime are more likely to become repeat victims especially when you look at acquisitive crimes like burglary, robbery, theft, and vehicle crime.
The BCC survey shows that 44% of respondents had never sought any crime reduction advice. 23% had sought advice from the police; the remaining 33% had spoken to insurance companies, security companies, the Chamber of Commerce and a variety of other sources.
Now let's consider who is best placed to offer advice and when? Firstly you should seek advice before an event, so that's now!
The police have excellent Crime Reduction Officers who are trained to offer advice and recommendations on a whole range of crime related matters. However these guys are relatively thin on the ground and as we know business crime is not their current focus or Force priority. The other issue is that they do not have the time to complete multiple visits or invest significant time in a physical security project; this is not a criticism, merely a fact.
Security companies will want to sell you, manned guarding, an intruder alarm to meet the EN50131 standard or CCTV systems that will help you comply with the DPA or a whole range of other products. Most of which will be described as the panacea to all your woes or the silver bullet you need to defeat crime. In fact there is no silver bullet solution no matter how convincing the sales person is.
Insurance companies and the association of British Insurers (ABI) offer a whole range of advice on protecting your risks, but will they visit your premises and spend the time to help you remove or mitigate the risks? Did you know that most policies cover burglary where there has been a forced entry but employee theft is not covered by your insurance unless you have requested a specific policy?
All businesses need to be viewed in the round, a holistic approach will consider all the relevant factors, some you will be aware of others may never have crossed your mind, but they all need to be reviewed and measured. Each location and business operation must be viewed in its own right; you do not want the post code lottery of car insurance. There is a whole range of factors that need to be assessed before any considerations are given to the purchasing of a 'solution'. For example, the local environment, its demography and geography need to be considered together with local crime levels and policing resources. The overall risk(s) can then be calculated and weighed against the probability of an incident at your business premises. A 'resource to risk' approach may not involve capital expenditure but may require changes to policies, procedures or working practices. Or it could involve a mixture of procedural changes and the use of technology.
It is quite astonishing how many businesses spend significant sums on the latest security equipment but don't even consider the impact new equipment will have on current policies and procedures, or how the their staff will interact with the equipment to deliver the best possible value for the business and a return on the investment.
Have a plan. Templeton College at Oxford University conducted research into the impact a disaster can have on shareholder value, and found that in the period immediately after the disaster those businesses with a plan, which was fully and effectively implemented, recovered more quickly, retained customer confidence and staff morale. Those without a plan and ineffective crisis management saw the opposite effect and saw losses of 15% in share value in the ten days following the incident.
The best way forward (if you employ someone in house then you are probably already doing this)is to see crime, shrinkage, loss and business continuity as one combined area that should be covered by the words,' Profit Protection' because when you address these issues effectively that's what you protect, your profits. An experienced profit protection and business continuity consultant can provide you with the time, knowledge and experience to;
• Identify the risks.
• Asses and quantify the risks.
• Review other influencing factors and draw on your team's knowledge.
• Calculate the probability and potential impact on the business.
• Produce advice and recommendations to remove or mitigate the risks.
• Provide advice on changes to policy and procedures.
• Provide recommendations with detailed specifications for security equipment, where necessary.
• Provide training and development resources for your team(s).
• Investigate internal crime and work with your HR teams to remove the issue.
• Deliver project management for any equipment tendering, procurement and commissioning.
• Review the changes you make and provide an evaluation of successes and failures with feedback.
Conclusion
Inactivity is not a viable option. As the 'credit crunch' starts to bite and everyone tightens their collective belts you will need to hold onto every last pound of profit. Some careful investment now in planning and resolving issues that are often pushed to the back of everyone's minds will not be wasted in the long run.
Jim Gibson MA CMgr
KONTRA Consulting
Acknowledgements:
1. British Chamber of Commerce - A Business Crime Survey April 2008.
2. British Retail Consortium - Retail Crime Survey 2006 /07.
3. Knight R and Pretty D - The Impact of Catastrophe on Shareholder Value. Templeton College Oxford
