What’s the cost of having no security? is the question posed by Douglas Greenwell, Sales and Marketing Director, G4S Security Services (UK).
Businesses inevitably find themselves being pulled in opposing directions where budgets are concerned and the current economic climate makes this all the more challenging.
This is particularly apparent when executives have to ‘sign-off’ sizable security budgets at the start of each financial year. On the one hand is the perennial concern over heightened risks from an ever expanding range of threats and on the other, the need to demonstrate appropriate use of resources to the company’s investors and shareholders.
An increasingly uncertain economic outlook means that businesses will be looking at ways of reducing costs. Unfortunately, security is still regarded by some executives as an area where businesses can make budget savings because the financial benefits are often difficult to calculate until it is too late. Measuring security risks is inevitably difficult compared to fixed expenditure on, for example, new IT system upgrades. Consequently it may be all too easy for businesses to be blasé about the need for effective security, and look to allocate budgets elsewhere.
Unfortunately, while companies’ budgetary restrictions tighten during times of uncertainty, the security risks faced by these companies are ever-present. These risks range from the natural or the accidental to the deliberate; from the strategic threat of terrorism through activist groups, such as the animal rights lobby, to the disgruntled or malicious employee.
Before a business can begin to review its security provisions, efforts must be taken to understand exactly what needs protecting and the potential risks the business would be exposed to if insufficient or no action was taken. Vulnerability and risk assessments are essential to expose areas of weakness and evaluate short-term expenditure against potential long-term cost.
Actual physical damage that may be the consequence of either activist groups or former employees can be relatively simple to measure in financial terms. According to figures from the British Chamber of Commerce, UK businesses suffer losses of £19 billion every year as a result of crime. Clearly some sectors are affected more than others; businesses in the transport, distribution and storage sector are reported to suffer the highest losses, an average of £17,391 per company per annum.
Businesses, however, need to be aware of the broader implications of cutting expenditure on security and recognise the less obvious losses they can incur simply by having a lowest unit cost approach. For example, a business can easily count the physical cost of vandalism caused by protesters and weigh that up against the expense they saved on security measures, but when they factor in damage to the brand reputation caused by news coverage of the protest, the equation can look very different indeed. With one in ten companies reporting that crime has impacted upon their reputation this is clearly a significant factor .
Ultimately companies rely on their people, whose well-being in the work environment they are charged with ensuring. A working environment which clearly lacks effective security provision can be as unpleasant as it is unsafe to work in and the company’s efficiency can be damaged as a consequence. 26% of businesses claim that incidences of crime committed against them have impacted on staff morale . It may be difficult to be exact about the actual cost of such, but that doesn’t make it any less significant.
Easier to calculate in terms of cost is that which businesses may incur if, to save money, they fail to comply with licensing regulations and employ unlicensed staff. Though such staff may in some cases provide security at a lower cost than licensed providers, their skills base and experience have not been accredited, and as such the companies employing them risk invalidating their public liability and business insurance. The potential costs of taking such a risk are clearly huge. What is more, businesses that allow unlicensed security officers to work at their premises could be leaving business critical and confidential material at risk, and endagering the health and safety of their employees. Licensed providers employ security personnel that are reputable and trained to a high standard to deal with any security incidents and crisis situations that may arise.
This is not to say that effective security can be easily achieved by budgetary allowance alone. Indeed the too commonly held perception that security and risk control needs to be expensive can distract businesses from the key principle that some of the most effective measures often cost nothing. These can include: raising general security awareness, wearing identity passes, challenging an unknown face, preventing tailgating and providing only limited disclosure of potentially sensitive information. With some reports claiming that 70%-80% of business loss is due to internal theft, the need for internalised security awareness is self-evident .
Many companies still have not woken up to the importance of raising wider security awareness amongst staff and planning for unexpected situations. Investing time and money in adequate training and preparation will reap dividends if an adverse security situation should arise. However, this investment requires buy-in by senior management and the prescience to recognise the potential costs of ignoring the need for an adequate ‘security culture’.
Ultimately, security provision should not be viewed as a procurement issue, with the lowest bid constantly sought. The fact that cost-benefit analyses may be harder to draw up for security than other areas should not deter those at a senior level from looking at its provision as a long term investment for the financial sake of the company.
In viewing security in this way, decision-makers need to recognise the potential costs to their business across a broad field, considering not only their physical assets but also the cost of potential risks and the general well-being of their staff. What is more, those staff need to embrace a ‘security culture’, in which budgetary expenditure is by no means the only element required for a secure environment.
