Leading business insurance broker Alan Boswell Group is warning firms of the danger of cutting back on basic security measures.
Tough economic circumstances often result in tough financial measures being taken. Some business insurance clients are cutting back on their risk management expenditure in response to the economic climate. But John Neil, the Risk Management Consultant at the brokerage, is stressing that this approach could be short-sighted:
The Federation of Small Businesses recently reported that approximately 64% of its members were victims of crime in 2009-2010. And the average cost to each business was £2900.
“While business insurance will provide a good degree of financial compensation, there are always uninsured costs to bear and the general disruption caused by crime can be far-reaching,” he said
In addition, claims costs may be taken into account at renewal time and your business insurance premiums could increase if your loss record is poor.
Physical security is paramount
Theft and burglaries tend to be highly opportunistic crimes which affect many Small to Medium Enterprises (SMEs). Mr Neil points out that the opportunities can be removed and the incidents stopped – or at least minimised – simply by having good physical security in place:
“If necessary, back up your physical precautions with electronic protection and keep valuable property out of the sight of would-be thieves. Remember: if people cannot get into your business premises, they cannot steal anything or cause any damage.”
This advice may seem to be very basic but some businesses clearly feel they do not have the time to address this and feel they need professional help in determining security strategies. However, securing business premises is not rocket science; protection of buildings has been done since medieval times. We can compare the ancient and modern scenarios thus:
|The moat||The security fence|
|The castle||The building envelope (walls)|
|The keep||The safe or strong room|
|The lookout or sentry||The electronic intruder alarm|
Today’s businesses also have the advantage of electronic surveillance, manned guarding companies and a police force.
“I always work on the proviso that your security has failed if your intruder alarm has sounded,” says John Neil, who believes the most important factor in any security regime is the physical security of the business premises.
When reviewing budgets, business insurance customers should avoid cutting back on their security costs. Crime is a very real risk and one that is only likely to increase over the coming months if the economy remains weak. It is well established that economic hardship tends to lead to greater criminal activity.
According to the FSB survey, the most frequent crimes affecting businesses are:
|Type of crime||Proportion of businesses affected|
|Threatening behaviour/ intimidation/aggression||27%|
|Vehicle theft / damage||23%|
|Employee fraud / theft||16%|
|Graffiti, shoplifting, assault on owners/staff and identity fraud was experienced by||between 4% and 13%|
The message from Mr Neil is clear: when you reviewing your budgets, think twice before cutting down on security expenditure. Don’t let your business become another statistic.