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TODAY’S LOSS TODAY’S LOSS PREVENTION PREVENTION Thomas Mohr Thomas Mohr Loss Prevention Manager Loss Prevention Manager Family Dollar Family Dollar Distribution Center Distribution Center Front Royal, Virginia Front Royal, Virginia
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TODAY’S LOSS TODAY’S LOSS PREVENTIONPREVENTION

Thomas MohrThomas Mohr

Loss Prevention ManagerLoss Prevention Manager

Family Dollar Distribution Family Dollar Distribution CenterCenter

Front Royal, VirginiaFront Royal, Virginia

HISTORICAL OVERVIEWHISTORICAL OVERVIEW Modern Police Roots – Sir Robert Peel – in 1829 Modern Police Roots – Sir Robert Peel – in 1829

Crime Prevention first started.Crime Prevention first started. Pinkerton is considered the father of private Pinkerton is considered the father of private

security.security. 1980, Association of Chiefs of Police, made crime 1980, Association of Chiefs of Police, made crime

prevention a standard police function.prevention a standard police function. CPO – Crime Prevention Officer – a public servant CPO – Crime Prevention Officer – a public servant

with police powers.with police powers. LPO – Loss Prevention Officer – private sector LPO – Loss Prevention Officer – private sector

deriving authority from an employer.deriving authority from an employer. Since 9/11 all police and all private security Since 9/11 all police and all private security

sectors, fall under the jurisdiction and control of sectors, fall under the jurisdiction and control of The Homeland Security Department. All Security The Homeland Security Department. All Security Directors and Loss Prevention Managers have Directors and Loss Prevention Managers have certain governmental guidelines they must follow, certain governmental guidelines they must follow, and have special powers in national security and and have special powers in national security and terroristic situations.terroristic situations.

LP FOUNDATION TOOLSLP FOUNDATION TOOLS

Five tools that form the foundation of Five tools that form the foundation of a good Loss Prevention program.a good Loss Prevention program.

11STST LP TOOL LP TOOL

RISK ANALYSIS – Estimating expected RISK ANALYSIS – Estimating expected loss from a specific threat – has 3 loss from a specific threat – has 3 steps:steps:

1. Loss Prevention Survey1. Loss Prevention Survey

2. Identifying vulnerabilities2. Identifying vulnerabilities

3. Determining probability / 3. Determining probability / frequency / frequency / costscosts

Process leads to the Loss Prevent Process leads to the Loss Prevent Profile.Profile.

LOSS EVENT PROFILELOSS EVENT PROFILE

LOSS EVENT PROFILE:LOSS EVENT PROFILE:

1. Type of Risk1. Type of Risk

2. Probability of Event2. Probability of Event

3. Consequence of Event3. Consequence of Event

22NDND LP TOOL LP TOOL

PLANNING – Results in a design for PLANNING – Results in a design for reaching objectives – must fulfill reaching objectives – must fulfill organizational goals – Respond to:organizational goals – Respond to:

1. What is cost?1. What is cost?2. Is it practical?2. Is it practical?3. Is it cost effective?3. Is it cost effective?4. Will Management support 4. Will Management support strategy.strategy.

33RDRD LP TOOL LP TOOL

EVAULATION – A critical tool once EVAULATION – A critical tool once program is implemented. Ways to do program is implemented. Ways to do this:this:

1. Pre test / Post test design1. Pre test / Post test design

2. Experimental / Control Group 2. Experimental / Control Group DesignDesign

4TH4TH LP TOOL LP TOOL

RESEARCH – Four basic steps:RESEARCH – Four basic steps:

1. Statement of the problem1. Statement of the problem

2. Hypothesis2. Hypothesis

3. Testing3. Testing

4. Conclusion4. Conclusion

55THTH LP TOOL LP TOOL

STANDARDS – Promotes uniformity; STANDARDS – Promotes uniformity; derived from Company Regulations, derived from Company Regulations, FDA, DEA, DHS, TSA, DOT, UL, OSHA FDA, DEA, DHS, TSA, DOT, UL, OSHA and othersand others

CRIME ANALYSIS AND LPCRIME ANALYSIS AND LP

Crime analysis, a systematic approach to Crime analysis, a systematic approach to studying crime problems, collects, studying crime problems, collects, categorizes and disseminates accurate, categorizes and disseminates accurate, timely and useful information to line timely and useful information to line personnel.personnel.

Four specific steps of crime analysis:Four specific steps of crime analysis:1. Data collection1. Data collection2. Analysis2. Analysis3. Dissemination3. Dissemination4. Feedback4. Feedback

LP MANAGERLP MANAGER

Lets say something about the LP Lets say something about the LP Manager’s role.Manager’s role.

ROLE OF LP MANAGERROLE OF LP MANAGER Reflects needs/objectives of upper Reflects needs/objectives of upper

management and needs to :management and needs to :1. Establish Priorities1. Establish Priorities2. Develop Written Polices2. Develop Written Polices3. Form Integrated Management Teams3. Form Integrated Management Teams4. Develop Audits and Surveys4. Develop Audits and Surveys4. Initiate Investigations4. Initiate Investigations5. Develop Data and Evidence collecting 5. Develop Data and Evidence collecting 6. Develop Systems to Monitor6. Develop Systems to Monitor7. Manage the Logistics of the Data Flow7. Manage the Logistics of the Data Flow8. Training to Assure Results8. Training to Assure Results

KEY QUESTIONSKEY QUESTIONS

Does LP Manager have:Does LP Manager have:

1. Upper Management Support1. Upper Management Support

2. Adequate Budget2. Adequate Budget

3. Appropriate Level of Authority3. Appropriate Level of Authority

CRIME PREVENTION

FOUR D’S OF CRIME FOUR D’S OF CRIME PREVENTIONPREVENTION

DETER - criminal attacksDETER - criminal attacks DETECT – attacks that occurDETECT – attacks that occur DELAY – attack to allow time for DELAY – attack to allow time for

responseresponse DENY – access to selected targetsDENY – access to selected targets

ENVIRONMENTAL DESIGNENVIRONMENTAL DESIGN

Environmental design, or physical Environmental design, or physical planning, is an approach to crime planning, is an approach to crime prevention in residential and prevention in residential and commercial areas by coordinating commercial areas by coordinating efforts of architects, loss prevention efforts of architects, loss prevention practitioners, and police.practitioners, and police.

CPTEDCPTED

Crime prevention through Crime prevention through environmental design (CPTED) environmental design (CPTED) advocates that the proper design and advocates that the proper design and effective use of the building effective use of the building environment leads to a reduction in environment leads to a reduction in crime and the fear of crime.crime and the fear of crime.

CPTED 3 BASIC STRATEGIESCPTED 3 BASIC STRATEGIES

Natural access controlNatural access control Natural surveillanceNatural surveillance Barriers (Territoriality)Barriers (Territoriality)

““DEFENSIBLE SPACE”DEFENSIBLE SPACE”

Written by Oscar NewmanWritten by Oscar Newman Strategies from a New York housing Strategies from a New York housing

project.project. Essence of the concept is that better Essence of the concept is that better

residential security can be brought residential security can be brought about through environmental and about through environmental and architectural design coordinated with architectural design coordinated with crime prevention methods.crime prevention methods.

ENVIRONMENTAL SECURITY ENVIRONMENTAL SECURITY (E/S)(E/S)

Is an urban planning and design Is an urban planning and design process which integrates crime process which integrates crime prevention with neighborhood design prevention with neighborhood design and urban development.and urban development.

The basic premise of (E/S) – design The basic premise of (E/S) – design and redesign of urban environments and redesign of urban environments so that crime opportunities are so that crime opportunities are reduced. However It has no effect on reduced. However It has no effect on white collar crime.white collar crime.

REDUCTION OF CRIME REDUCTION OF CRIME THROUGH (E/S)THROUGH (E/S)

Increased perpetration time – more Increased perpetration time – more difficult to commit crimedifficult to commit crime

Increased detection time – enhanced Increased detection time – enhanced by lighting, landscaping, fences, etc.by lighting, landscaping, fences, etc.

Decreased reporting time – more Decreased reporting time – more observation by many peopleobservation by many people

Decreased police response timeDecreased police response time

Defensible Space ConceptDefensible Space Concept

Territoriality – attitude of maintaining Territoriality – attitude of maintaining perceived boundaries. Outsider quietly perceived boundaries. Outsider quietly recognized, observed.recognized, observed.

Natural Surveillance – ability of inhabitants Natural Surveillance – ability of inhabitants to casually an continually observe public to casually an continually observe public areas.areas.

Image – involve the ability of design to Image – involve the ability of design to counteract the perception that the area is counteract the perception that the area is isolated and vulnerable to crimeisolated and vulnerable to crime

Safe Area – high degree of observation Safe Area – high degree of observation

RISK MANAGEMENTRISK MANAGEMENT

Next will will discuss the subject of Next will will discuss the subject of risk.risk.

CATEGORIES OF RISKCATEGORIES OF RISK

PersonalPersonal PropertyProperty LiabilityLiability

RISK ANALYSISRISK ANALYSIS

First tool is assessing risk.First tool is assessing risk. PML – assesses vulnerability and PML – assesses vulnerability and

responses to riskresponses to risk

1. Possible maximum loss – if target 1. Possible maximum loss – if target is totally destroyed or lost.is totally destroyed or lost.

2. Probable maximum loss – is 2. Probable maximum loss – is amount of loss a target is mostly amount of loss a target is mostly likely to sustainlikely to sustain

ALEALE

Annualized Loss Expectancy (ALE) – Annualized Loss Expectancy (ALE) – this formula is used specifically when this formula is used specifically when doing a quantitative risk analysis – doing a quantitative risk analysis – such as terminating if another such as terminating if another generator should be added to the generator should be added to the plan used when computing a return plan used when computing a return on investment (ROI)on investment (ROI)

Crime Risk ManagementCrime Risk Management

Risk AvoidanceRisk Avoidance Risk Transfer ( Buying Insurance)Risk Transfer ( Buying Insurance) Risk Abatement (Reduction)Risk Abatement (Reduction) Risk SpreadingRisk Spreading Risk Acceptance (Wish for the Risk Acceptance (Wish for the

best)best)

INSURANCE RATESINSURANCE RATES

Insurance rates are dependent on Insurance rates are dependent on two variables:two variables:

1. Frequency of claims1. Frequency of claims

2. Cost of each claim2. Cost of each claim

BONDSBONDS

BOND – Legal instrument where one party BOND – Legal instrument where one party agrees to indemnify another party if oblige agrees to indemnify another party if oblige incurs a loss from the person bonded.incurs a loss from the person bonded.

Type of Bonds:Type of Bonds:1. Fidelity Bond – if bonded employee after 1. Fidelity Bond – if bonded employee after investigation to limit risk, violates the investigation to limit risk, violates the trust, the insurance indemnifies the trust, the insurance indemnifies the employer.employer.2. Surety Bond – Failure to perform as 2. Surety Bond – Failure to perform as agreed (Contract Bond)agreed (Contract Bond)

INTERNAL THREATSINTERNAL THREATS

Next we will discuss internal threats Next we will discuss internal threats and losses.and losses.

PREVENTION FROM PREVENTION FROM INTERNAL THREATSINTERNAL THREATS

Internal theft is the greatest on going threat Internal theft is the greatest on going threat to business.to business.

It is difficult to obtain accurate statistics as It is difficult to obtain accurate statistics as to shrinkage attributable to employee theft.to shrinkage attributable to employee theft.

Internal losses occur by several methods:Internal losses occur by several methods:1. Pilferage – stealing in small quantities 1. Pilferage – stealing in small quantities over a long period.over a long period.2. Embezzlement – taking money/property 2. Embezzlement – taking money/property entrusted to their care.entrusted to their care.3. Shrinkage – unexplained loss of physical 3. Shrinkage – unexplained loss of physical inventory.inventory.

WHY ASSOCIATES STEALWHY ASSOCIATES STEAL

Personal ProblemsPersonal Problems Environmental InfluencesEnvironmental Influences RationalizationRationalization

THEFT TRIANGLETHEFT TRIANGLE

Motivation (Desire or Need)Motivation (Desire or Need) Rationalization (It’s Owed to Me)Rationalization (It’s Owed to Me) Opportunity (Means to Commit)Opportunity (Means to Commit)

DANGER SIGNSDANGER SIGNS Counter Productive Behavior – destruction of Counter Productive Behavior – destruction of

equipment, accidents, poor production, equipment, accidents, poor production, absenteeism, etc.absenteeism, etc.

Suspicious Actions – groups, long bathroom Suspicious Actions – groups, long bathroom breaks, returning late from break, whispering, breaks, returning late from break, whispering, note taking and passing, overly friendly with note taking and passing, overly friendly with vendors, drivers and contractors.vendors, drivers and contractors.

Financial Irresponsibility – Calls from CreditorsFinancial Irresponsibility – Calls from Creditors Financially Squeezed Associate – consistently Financially Squeezed Associate – consistently

asking for a pay raise, asking for a bonus, asking for a pay raise, asking for a bonus, suddenly looking to switch positions, etc.suddenly looking to switch positions, etc.

Management CountermeasuresManagement Countermeasures

Internal Controls / Separation of Internal Controls / Separation of responsibilityresponsibility

Auditing (Inspect what you expect)Auditing (Inspect what you expect) Management SupportManagement Support Policy and Procedural ControlsPolicy and Procedural Controls HotlineHotline Thorough InvestigationThorough Investigation Confrontation with employee suspectConfrontation with employee suspect ProsecutionProsecution

PHYSICAL PHYSICAL COUNTERMEASURES COUNTERMEASURES

Access controlAccess control ID systemsID systems Lock / Key ControlsLock / Key Controls AlarmsAlarms CCTVCCTV Safes / VaultsSafes / Vaults

SAFETYSAFETY

Lets review some LP safety issues.Lets review some LP safety issues.

SAFETY AND LPSAFETY AND LP

Unsafe acts cause 85% of all Unsafe acts cause 85% of all accidents, unsafe conditions cause accidents, unsafe conditions cause the remaining 15%.the remaining 15%.

Incident – is anything from serious Incident – is anything from serious injury to a breakdown in quality injury to a breakdown in quality controlcontrol

Accident – is an undesired event Accident – is an undesired event resulting in physical harm to a resulting in physical harm to a person or damage to property.person or damage to property.

ACCEPTABLE WAYS TO ACCEPTABLE WAYS TO REMEDY ACCIDENTSREMEDY ACCIDENTS

Constant inspectionsConstant inspections Job safety analysisJob safety analysis Early discovery of unsafe conditionsEarly discovery of unsafe conditions Identification of hazardsIdentification of hazards Investigation of all accidents and Investigation of all accidents and

near misses as soon as possiblenear misses as soon as possible

HAZMATHAZMAT

Hazardous Material Program:Hazardous Material Program:

1. Identify hazards that are present1. Identify hazards that are present

2. Know how to respond to an 2. Know how to respond to an incidentincident

3. Set up necessary safeguards3. Set up necessary safeguards

4. Employee training 4. Employee training

5. MSDS (Right to Know Program) in 5. MSDS (Right to Know Program) in placeplace

PLANNINGPLANNING Planning – designed to fulfill organizational Planning – designed to fulfill organizational

goals / objectives. Can be:goals / objectives. Can be: SimpleSimple ComplexComplex Short termShort term Long termLong termAll procedures need a set time for revision.All procedures need a set time for revision.This is key, You must set aside a specific time toThis is key, You must set aside a specific time toRevisit each Policy and Procedure.Revisit each Policy and Procedure.Generators Change – So should the policies andGenerators Change – So should the policies andprocedures.procedures.

BudgetsBudgets

Top/downTop/down Bottom/ upBottom/ up

What is a budget – a plan stated in What is a budget – a plan stated in financial financial terms.terms.

Types of budgets:Types of budgets: Line item – each item expressed by lineLine item – each item expressed by line Program – expenses are appropriated for Program – expenses are appropriated for

specific activities / program or project.specific activities / program or project. Capital Budget – infrequently purchased / Capital Budget – infrequently purchased /

high dollar itemshigh dollar items

A BUDGET REQUIRES …..A BUDGET REQUIRES …..

A manager to operate the plan in A manager to operate the plan in three dimensions:three dimensions:

1. The operation /project must unfold 1. The operation /project must unfold as planned.as planned.

2. The operation / project must take 2. The operation / project must take place when planned.place when planned.

3. It will not exceed the planned 3. It will not exceed the planned costs.costs.

BUDGET COSTSBUDGET COSTS

Budget costs are classified under one Budget costs are classified under one three categories:three categories:

1. Salary expenses1. Salary expenses

2. Sundry expenses – all non – salary 2. Sundry expenses – all non – salary expensesexpenses

3. Capital Expenses – which are physical 3. Capital Expenses – which are physical improvements, physical additions or major improvements, physical additions or major expenditures for hardware, generally expenditures for hardware, generally considered one time expenses.considered one time expenses.

Thank YouThank You

I hope you found this LP review helpful.I hope you found this LP review helpful. Loss prevention is key to any business, it Loss prevention is key to any business, it

is the executive branch to decide, if they is the executive branch to decide, if they are devoted to the bottom line. are devoted to the bottom line.

Executives whom ignore loss prevention Executives whom ignore loss prevention or who are not supportive of their LP or who are not supportive of their LP departments, could end up as many departments, could end up as many companies before them, out of business companies before them, out of business or on the stand as in the ENRON case. or on the stand as in the ENRON case.

CreditsCredits

Presented by Thomas MohrPresented by Thomas Mohr

Art and Animation by Microsoft Power Art and Animation by Microsoft Power PointPoint

Produced by Thomas MohrProduced by Thomas Mohr

Any use without permission or Any use without permission or purchase ispurchase is

Forbidden by law. Forbidden by law. 3/18/2006.cp.tm.va.228013/18/2006.cp.tm.va.22801


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