Measuring the return on investment of a product is easy. You add up the expenses related to creating and managing it. Then you take the number of sales and subtract all related expenses.
Unfortunately, it’s not so simple to figure out what kind of return you get on your security investment. It doesn’t bring in sales, but you know you need it. How do you calculate the savings on things that aren’t stolen or damaged because security prevented it? Security can also help cut your liability risk. How do you calculate the cost of a lawsuit you avoided because of security?
The Costs of Not Having Security
With security in place, it’ll be harder for an accuser to prove a company provided inadequate security. That means the company dodges litigation and its associated costs. Besides, it’s hard to link security to a company’s ability to avoid a lawsuit. Of course, you can’t put a price on human lives saved. Nonetheless, no business has a bottomless budget when it comes to security.
Determining the return on security investment (ROSI) will be harder to do if your business has not had a major incident. In construction, an example would be the theft of a $50,000 excavator. In automotive, this could be a theft of a $35,000 new vehicle.
An office building hit by vandalism would calculate the cost of repairs. What it can’t calculate is the cost of employee and visitor peace of mind. When they learn the building has been vandalized, it can affect their health as they worry about their safety. Customers and visitors may stay away.
If someone is a victim of an assault in a parking lot, the costs to consider are the medical bills, the number of hours or days of missed work, lost wages, pain and suffering, and other associated costs. A resident in an apartment building is robbed. Not only does the cost include the value of what the thief stole but also the cost of potentially losing tenants and their rent.
Organized crime hits a retailer and gets away with $30,000 in products. This can hurt future sales as customers learn about the crime and shop elsewhere.
Learning from Las Vegas
To understand the effects of an incident on security, it may help to look at the 2017 Las Vegas shooting. The perpetrator was in a suite on the 32nd floor of a hotel. He fired more than 1,000 rounds of ammunition at concertgoers attending the Route 91 Harvest music festival. He killed 58 and wounded over 400 people.
Security Magazine
says the hospitality industry in Las Vegas responded in different ways. Immediately after the attack, some resorts hired off-duty police and search dogs while setting up armed response teams. Most waited and watched for best practices before taking steps to strengthen their security. A hotel installed metal detectors in the elevators two years after the attack.
The article goes on to explain that determining what security investment to make depends on whether management wants to act right away, wait and see, or take their time. For most businesses, the need to bolster security isn’t driven by any one event.
It’s based on their responsibility to keep their employees, customer, and visitors safe. With too many active shooting incidents occurring in various settings, no one can afford to wait.
Determining the Security Investment
Many variables affect a company’s security investment. The first one is industry. Every industry has different security requirements and best practices. The ideal security solution for construction is not going to be the same as for a retailer. Though they both have buildings with multiple occupants, an office building and apartment will still have different security needs.
Every industry has its own crime statistics. For instance, one of the most often quoted statistics in construction is that construction site theft costs an average of $400 million per year according to the National Equipment Register. The average value of one stolen item is almost $30,000.
That’s not all. Copper theft occurs on construction sites. The Department of Energy report
shows copper theft costs an average of $1 billion (yes, billion) per year. The report refers to a case in which defendants stole copper from 24 power substations. They had to pay more than $242,000 in restitution. That comes out to an average of $10,000 per substation.
You can search for stories of construction theft to find out how much the company lost. In Hawaii, thieves got away with more than $100,000 worth of construction equipment. The price is higher than the value of the stolen goods. With that kind of theft, how much did it delay the project? That costs money.
One thing you can’t put a number on is customer dissatisfaction. A delayed project affects customer satisfaction. Unhappy clients will tell others about their experience. That affects business reviews and future jobs.
Sometimes the company does not report the theft to insurance to avoid increased insurance premiums. Thus, they have to replace the equipment with money out of their pocket.
You also want to look at other threats the company faces besides crime. Construction not only deals with theft but also injuries. National Safety Council
reports the average work-related injury costs $39,000.
These numbers can give you an idea of how much loss is possible without the right security services. Based on these numbers, a construction company may start with a cost of at least $69,000 per year: $30,000 for stolen equipment and $39,000 for injuries. This is one example based on two factors. There are other factors in play that aren’t accounted for because you can’t put a dollar value on it. These can be loss of life, brand reputation, and client discontent.
Comparing the Cost of Security Solutions
Another way to figure out the ROSI is by comparing security solutions. One of the most commonly compared security options is security guards and video surveillance.
Companies hire security guards to patrol their property. They believe having a body on the property deters crime. Whether they’re armed depends on the state’s requirements, training, licensing, and security company.
Video surveillance involves putting cameras in strategic locations around the property. One critical factor that you need with video surveillance is monitoring. Not having someone watching the cameras can be a liability risk.
Think about it. When people see the video surveillance cameras in the parking lot, they assume someone is watching. If something happens, they think the person on the other end will call it in. It gives them a false sense of security. That can be a liability issue. Monitored video surveillance can lower liability.
Depending on the solution, remote video surveillance can save between 25 percent and 60 percent. Between paying for the hardware and the monthly monitoring, you can see a ROSI within four to six months.
Video Surveillance: A Strategic Security Option
Remote video surveillance offers a cost-effective security solution that complements traditional approaches. The key advantage lies in having trained operators monitor your property from a secure, off-site location.
Advanced Detection and Response
Video surveillance systems combine cutting-edge analytics with human expertise to identify suspicious activity in real-time. When the system detects unusual behavior, it immediately alerts trained security operators who can assess the situation and respond appropriately. These operators work from secure command centers, allowing them to maintain objectivity and follow established protocols without the pressure of being physically present during incidents.
Comprehensive Documentation
One of video surveillance’s strongest assets is its ability to provide complete documentation of events. The system records continuously, creating a permanent record that can be reviewed days, weeks, or even months later. This comprehensive footage proves invaluable for investigations, insurance claims, and legal proceedings.
Proactive Crime Prevention
Video surveillance excels at deterring criminal activity before it escalates. When cameras detect someone approaching your property inappropriately, operators can issue warnings through integrated speaker systems and immediately contact law enforcement. They can then monitor the situation safely while guiding police to the exact location.
Reliable Coverage
Unlike traditional security approaches that may face staffing challenges or coverage gaps, video surveillance provides consistent 24/7 monitoring. The technology doesn’t call in sick, take breaks, or experience the high turnover rates common in many security sectors.
Strong Return on Investment
Organizations implementing comprehensive video surveillance typically see rapid returns on their security investment through reduced losses, lower insurance premiums, and improved operational insights.
In short, you’ll get a fast return on your security investment with video surveillance. Here’s a case study of how video surveillance reduces crime and saves money
