Accidents, incidents and near misses can be dangerous and costly with far-reaching consequences, but no matter how many measures you put in place to prevent unexpected events, they can still occur. Sure, there are many ways to minimise risks and act in a streamlined and efficient manner when incidents do happen, but it’s essential to track potential losses from incidents that have not yet occurred, allowing you to better understand the financial (revenue), productivity (expenses) and personal impact of incidents, should they occur in the future.
So how do you accurately calculate the cost of a potential incident? Firstly, you must consider all of the incidents that may occur and attempt to categorise them. For example, you may segment potential incidents into the following types:
Once you have decided on the incident categories, you can see if there were any losses in each of these categories historically. Let’s say that your company paid out for personal damages suffered from work-related injuries on 20 occasions at a total cost of £80,000. You can produce an estimate by dividing the total you paid out by the number of work-related injuries, giving you an incident average of £4,000.
If you’ve not had an incident occur in the past, yet you can reasonably expect one in the future, this formula would simply not work. For example, we know that by using the same formula, the incident cost in this scenario is going to £0. In this situation we recommend you browse online for statistics or by talking to other companies operating in your sector. According to a report by CII (Chartered Insurance Institute) titled ‘Reputation Risk in a Social Media Culture’ 52% of businesses suffered due to damaging social posts, prompting an average loss of £46,815. It’s not going to be possible to get perfect data by using industry statistics that you find online, however, data like the example above will give you a much better idea than £0.
In an ideal world we would only ever make important decisions using hard data and real numbers, however, the business world continues to evolve at a rapid pace, and you’re not always going to be in a position where you have access to accurate loss data and estimates. That’s not to say that a particular threat or incident type is not real. We understand that key stakeholders and management teams will question your estimates, especially when you’re hoping to allocate more budget to a particular incident type based on data that’s nowhere near perfect, however, you can at least begin important discussions about the latest threats, whilst ensuring your company remains vigilant to new threats and incident types.
As important as it is to measure the frequency of incidents, it’s important to understand the cost to your business. For example, it’s possible for several incidents to cost your organisation thousands of pounds more than other low impact incidents. By combining frequency with a quantifying value, you can put yourself in a better position to comprehend the true impact of each incident, whilst measuring incidents in relation to each other.
According to the ‘Retail Security in Europe: Going Beyond Shrinkage’ report by Crime&tech, UK retailers lose more than £10 billion to shrinkage every year. Stock/product shrinkage can be attributed to a wide range of causes such as
Whilst focusing more on your inventory data is a good place to start, you’re unlikely to see a major improvement until processes are quicker, simpler and more efficient. For example, if your inventory-driven shrinkage numbers are only available every quarter or a couple of times a year, it’s difficult to label, forecast, and improve performance. By utilising cutting edge loss prevention and case management software, you can make it incredibly easy for your team to log and record shrinkage incidents accordingly, whilst maintaining a real-time account.
Here at Zinc Systems, we focus on helping organisations improve the speed, efficiency and accuracy of incident reporting, enabling a more proactive and accurate approach to Security Incident Reporting Systems (SIRS) and loss prevention.
If you’d like to learn more about our platforms, or wish to speak to us about how real-time reporting and a more effective use of intelligence can benefit your organisation, please get in touch with our team today.