All too often, when our security experts conduct physical security site surveys for our clients, we can actually see the physical manifestation of a “security mindset”…

undercapitalized and inadequate fence, gate, light and security camera systems, that instead of providing security, leave the company and its people vulnerable and unprotected.

The Pitfalls of Security as a Line Item Expense

There are a number of specific reasons why this happens but most often we find that companies look at security as an expense, necessary perhaps, but one to control and reduce, as opposed to an investment which offers holistic protection to the company and its constituents 24/7.

Here is how this “security as an expense” approach typically plays out:

1. On the personnel side, companies buy in to the power of a uniform and a badge, and the perception of security these symbols convey. Plus the brand power of the some firms – “Hire Wells Fargo and you have Sheriff Wyatt Earp to keep you safe.” Isn’t that enough?

2. In terms of Physical Security, there are the fences, gates, lights and cameras themselves. Most companies’ physical security measures have evolved hodge-podge over time, often over many years and management teams with no real coordinated or overarching strategy. Plus, like with any physical system, it’s never a “one and done” type of thing. All physical security systems require regular maintenance and upgrades that many companies never bother with.

Illusions and breakdowns like these have a number of overt and covert consequences to companies including exposure to theft, vandalism, injury or harm and illegal acts and possible employee misbehavior. We find without exception that inadequate security measures compounded by the erroneous and dangerous assumption that just because “we have security guards, fences, lights and cameras, we are safe” is a dangerous illusion that in fact puts the company at significant and if known, unacceptable risk.

Safety and Protection of People, Property, Products and Brand is Priceless

Security investments focused on protection, on the other hand, are another matter. Protection implies the proactive, coordinated investment and adoption of physical risk management and security best practices across the business, focused on the company’s people, products, property and brand at all times.

That is why our senior security team not only includes leaders with decades of military and law enforcement experience but also a certified physical security inspector/designer. These experts have collectively not only seen it all, but are able to work with clients to identify threats and vulnerabilities as well as develop cost effective solutions, investments focused on minimizing risk and providing the levels of protection needed that supports the business.

In the Protection model therefore, guards are more than tough looking men and women wearing a uniform and a badge creating an illusion of security. They are trained officers that have the experience and support to actually reduce physical risks and promote safety.

At the same time:

• Fences and gates are cost effective systems that allow for safe ingress and egress to a facility night and day, with unimpeded sightlines.
• Lighting provides full illumination without pools of darkness where individuals can hide and remain unseen.
• Security camera systems provide total site coverage and give security personnel tools to not only continuously monitor a facility but also to respond immediately when a threat presents itself, and not simply serve as a passive record of daily activities.

The Business Benefits and ROI of Protection

As noted in theground-breaking report, The Risk/Earnings Ratio: New Perspectives for Achieving Bottom Line Stability study sponsored by international commercial insurance provider FM Global and conducted by research firm Oxford Metrica, findings clearly indicate there are negative consequences to cutting back on physical loss prevention resources which as a result then cut into profits and shareholder value.

The inverse is also true, increasing resources can increase earnings stability and shareholder value.

In other words, there is a direct correlation between physical risk management and earnings stability, which means that pro-active investments in security initiatives across the business is not a simple expense but rather an appropriate investment in the business.

Here are some other statistics from the report to consider relative to the value of protection and a business, large or small:

The average risk of a property loss is 20x larger for companies with weak physical risk management practices than for those with strong practices.

The average loss at a location deemed to have weak physical risk management practices exceeds $3 million, compared with approx. $620,000 for a company that manages its physical risks well. (almost 5 times greater average $ losses!)

Companies with best practices in managing their property risks produced earnings that were 40% less volatile than companies with less advanced physical risk management.

Companies with strong physical risk management practices, on average, produced earnings that fluctuated by 17.9%; companies with weak physical risk management practices, on average, had earnings that fluctuated by 31%.

Add it all up and this means that implementation of a best practice physical security strategy across the business is a core business investment.

How does your business relate to security/protection? Is it a line expense?, or core business investment?

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