The Chain Link Theory of Loss Prevention

My career in Investigations and Loss Prevention began in the United States Army as a Military Police Investigator and later as a Physical Security Inspector before entering the exciting world of Retail Loss Prevention. I was a Security Manager and Polygraph examiner with a large discount department store chain before moving into the convenience store industry. If I learned anything in my 30 plus years of experience in law enforcement, private security and retail operations it is these three things –  

• A loss prevention program is like a chain. Each link in the chain represents your policies, controls, equipment systems, and everyone in the organization.
• Your program, in this case, your chain, is only as strong as your weakest link.
• The weakest link in that chain is always, without exception - people!

 

All of the pre-employment screening, training, fancy systems with the bells and whistles, the shrinkage committees, shipping and receiving policies and procedures, vendor controls, cash controls are only as good as the people we employ, train, supervise and inspect on a regular basis. 

The predominant contributors to retail losses, according to the National Retail Security Survey Final Report, 2010,states "employee theft…is the single most significant source of inventory shrinkage."

 

 

Retailers Attribute 45% of All Inventory Losses to Employee Theft!

 

First let’s take a quick look at the word “shrinkage”. It’s become a politically acceptable term for the consequences of poor management.  In my experience as both an investigator and manager in the retail environment I was taught that there were acceptable levels of shrinkage and that the term covers the full spectrum of: 

o   Employee Theft o   Customer Theft o   Vendor Fraud &Theft 

o   Administrative & Paperwork Errors 

We have even gone as far as to breakout cash losses separately from “shrinkage” when we all know that the majority of our cash losses are the result of employee theft. 

In future blogs I will share with you some of my thoughts and experience (including some mistakes) preventing and detecting Employee Theft.

 

Bob Cadigan

Risk Management Services Loss Prevention