There are times when I find
myself amazed that I can still be amazed. After nearly two decades in law
enforcement and security, I still see mopes and miscreants with some new twist
on wrongdoing that leaves my head spinning. More amazing are some of the
decisions made by otherwise intelligent and rational individuals. And I am
talking about many of the leaders of the organizations surrounding us in our
communities.
I recently heard one story of
a large project in which security had been heavily considered throughout the
planning and implementation. It was a surprise to the organization’s security
leader to hear a side comment in a meeting about a warehouse full of expensive
equipment, located off-site in a nearby city. When the security leader asked
about the security of the location, it was mentioned that the building and
equipment were covered by insurance.
It does beg the question of
whether or not insurance truly equals security. True, security professionals
are taught that insurance is one method to reduce or manage risks. However,
even with the best insurance policy in the world, there are downsides of
relying on insurance to recover any losses, whether due to a theft, vandalism
or other disasters.
When deciding on the best
approach to the risks, there are several issues to take into account and
consider if you are going to rely on insurance as your risk management tool.
1.
Deductible.
Clearly, the amount you would have to pay out for the deductible should be
evaluated. For a commercial account, the deductible could be thousands of
dollars. For some companies, a large portion is self-insured, meaning the loss
could be tens of thousands or even a hundred thousand dollars, just in the
deductible alone. That same money could be wisely invested in security measures
that would limit or even eliminate the losses.
2.
Discounts. Often
insurance carriers will provide discounts for having the right security
measures in place. The savings help justify the investment.
3.
Time to replace. If critical items are stolen or damaged, it is
important to consider the time involved in replacing those items. You may have
to determine what was lost or damaged and there could be substantial lead time,
especially if goods have to be customized or are shipped from overseas. How
well can you manage without the merchandise that was lost and for how long?
4.
Availability of replacements. Time is not the only consideration with
replacements. Sometimes, the materials are simply hard or even impossible to
find. This will depend largely on the type of goods and industry. There are
many industries where certain common goods may be tricky to obtain for one
reason or another, or even there could be an all out shortage. Even if
insurance covers the loss, you may have a difficult time actually replacing the
stolen materials. There is also the time it takes to inventory what is left,
place new orders and re-stock those goods, affecting the productivity of
employees.
5.
Negative publicity. Depending on the type of organization you
work for, there is a certain risk of negative publicity if certain materials
are not available or on hand. Imagine a hospital dealing with the negative
publicity due to a shortage of medicine like Tamiflu during the flu season, or
even a shortage of saline solution (a very real problem). There have been cases
in which schools were vandalized and had to close for a day or two while
repairs were made. Insurance alone will not build confidence with customers or
restore faith in the safety of the organization.
If you are in a situation
where insurance seems like the right approach to dealing with the risk of
losses, then be sure to truly evaluate and assess the potential downsides
rather than just taking the easy path and hoping nothing bad happens.
Get a Business Black Belt for your organization
– visit www.businesskarate.com/karate-belts.
Eric Smith, CPP is the leading authority
on organizational self-defense. He has extensive experience in law enforcement
as well as security management. Eric is available for staff education and
security awareness training as well as business coaching to help organizations
provide safe workplaces. To learn more email Eric at businesskarate dot com.
If you
would like to reprint this post, please contact Eric at Eric at businesskarate dot com.
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