Many people see Loss prevention is the act of reducing the amount of theft and shrinkage within a business. Loss Prevention is not simply that, or a method of safeguarding assets, but rather a process and use of internal controls, procedures and technological countermeasures that attack and remove opportunity and temptation from the business. It is my belief that internal or external loss happens for the reasons best described by Donald R. Cressey (April 27, 1919 – July 21, 1987) in the Fraud Triangle. It is my belief that the Fraud Triangle or today let’s call it the Loss Prevention Triangle, the rules are the same.
Financial Pressure is the base of the Loss Prevention Triangle and is the number one reason that causes a person to commit occupational fraud or steal. Financial pressure can include almost anything including medical bills, expensive tastes, addiction problems, marital affairs, etc. Most of the time, pressure comes from a significant financial need/problem. Often this need/problem is non-sharable in the eyes of the fraudster. That is, the person believes, for whatever reason, that their problem must be solved in secret. However, some thefts or frauds today come from been as great a sense of employee disenfranchisement and disaffection toward the organizations that employ them than there is today. Further fueled the recession and the accelerated disappearance of healthcare, pension and other benefits … foreign outsourcing of both hourly and salaried jobs … and increasingly stressful workloads.
Rationalization is a crucial component in most frauds. Rationalization involves a person reconciling his/her behavior (stealing) with the commonly accepted notions of decency and trust. Some common rationalizations for committing fraud are:
- The person believes committing fraud is justified to save a family member or loved one.
- The person believes they will lose everything – family, home, car, etc. if they don’t take the money.
- The person believes that no help is available from outside.
- The person labels the theft as “borrowing”, and fully intends to pay the stolen money back at some point.
- The person, because of job dissatisfaction (salaries, job environment, treatment by managers, etc.), believes that something is owed to him/her.
- The person is unable to understand or does not care about the consequence of their actions or of accepted notions of decency and trust. “I can steal today and sell on eBay tomorrow.”
Opportunity is the ability to commit fraud. Because fraudsters (thieves) don’t wish to be caught, they must also believe that their activities will not be detected. This is where I attack the behavior; I can’t help the attitude with management and the employees. However, in my experience opportunity is created by weak internal controls, poor management oversight, and/or through use of one’s position and authority. Failure to establish adequate procedures to detect fraudulent activity also increases the opportunities fraud for to occur. Of the three elements, opportunity is the leg that organizations have the most control over. It is essential that organizations build processes, procedures and controls that don’t needlessly put employees in a position to commit fraud and that effectively detect fraudulent activity if it occurs.
So this is the key, it’s “opportunity” and it’s in creating the perception that they will be caught or “detected”, if they try, whether or not they were an employee or not. Every video solution I have ever sold in the retail sector was not sold for security reasons. My solutions were always sold to stop internal or external losses, employee theft, shop lifting, frivolous liability claims, etc. Violent crime or break-in’s were always secondary in the minds of my clients. If I had to prioritize my sales in why people buy from me it would look like this:
Fraud Prevention
Loss Prevention
General Liability Concerns
Operations Concerns
Marketing Program Verification
Break-In Concerns
Robbery (Violent Crime) Concerns
General Security Concerns
However, when I design a solution I always think about the evidence value of my views in a violent crime scenario first. I never want to say that the worst case scenario was not a priority; most of my customers counted on me for the design. I learned early on that if you want help from law enforcement, you better give them good evidence. My point is that the retail industry purchases video solutions to protect assets first, then to prevent crime or protect their people, assets and most importantly their “brand”.
