Should You Be Measuring the ROI of Security Services for Your Business?

There is no secret formula to eliminating loss prevention. Developing an effective loss prevention strategy is closer to an art form (with a little help from local demographics). When a strategy is designed based on a current problem with loss, the strategy may become outdated in the future because criminals adjust their activity based on the prevention methods they see being implemented. How can you get ahead of the game?

Many companies choose to evaluate whether current loss prevention techniques are proving effective using generally accepted models that involve collect pre- and post-implementation data and comparing these. In some cases, on-going evaluation is suggested to allow a company to see benefits and weak points in real-time and make needed adjustments along the way.

The Problem with ROI as a Basis for Security Strategy

This goes back to trying to develop a formula for keeping loss to a minimum. As a result, a lot of money gets spent on private consultants, security auditors, private insurance companies, and even the hiring of internal research staff rather than on actual security services.

Loss prevention departments are often under obligation to use a return on investment method of measuring how effective a form of loss prevention proves to be. When the loss department is trained in risk management, mistakes like spending the bare minimum on security can be avoided. Unfortunately, a money-only approach to security often results in bare bones asset protection.

Why Security ROI Is More than Just a Number on Paper

It is understandable that with difficult budgeting decisions, security needs to show proof that the investment is worth it, just like other departments such as marketing. The problem is that there are intangible benefits that don’t appear on an accounting sheet. Consider the following:

• A company avoids updating security because of expenses. A shooting takes place on company property. Can you put a value on the lives that may have been saved had a monitored video surveillance system or an updated entryway security system been in place?
• A company saves $50,000 in wages to nightguards because a new security system has been installed as a replacement. Theft in the neighborhood is high, but the business is never hit because of the advanced security measures. That $50,000 should be included in the ROI for the security system but doesn’t appear that way on paper.

The fact is that installing a modern alarm system can have benefits far beyond anything an ROI analysis will show, even if those benefits are due to the deterrence of future crimes.  Thus, making security decisions based on ROI alone is often a mistake that is only seen in hindsight.