There is an increased emphasis on cyber security in today’s workplace. At the same time, companies are looking to cut costs and become more efficient. As a result of these two trends, the non-revenue generating area of physical security is often neglected, or even worse, faced with severe cuts as businesses allocate their resources to other areas.
While cyber security is certainly important in today’s business world, the simple reality is that companies cannot afford to neglect physical security, either. In the aftermath of the tragic shooting at Las Vegas’s Mandalay Bay Resort and Casino, the hotel and parent company MGM are facing a multitude of lawsuits claiming that the resort failed to take appropriate security measures to protect guests and concertgoers.
No amount of cyber security could have prevented the perpetrator from sneaking firearms into his hotel room and setting up camera surveillance systems in the hallway. But the implementation of proactive physical security measures could have possibly helped recognize the warning signs.
Simply put, every business faces the risk of an active shooter or some other incident of workplace violence. Because of this, making physical security a top priority is essential for your company’s future. Here are four reasons why your business needs to focus on physical security.
1) Reducing Losses
Physical security may not produce any profits, but a lack of proper physical security measures can be disastrous for a company’s bottom line. In 1993, the average settlement for an incident of workplace violence was $500,000, while the average jury award approached $3 million. Surprisingly, more recent data on these averages isn’t available, yet one can imagine that these numbers would only go up as a result of inflation and other outside factors.
Lawsuits are hardly the only way that companies risk financial losses after an incident of workplace violence. There are also the costs of lost productivity as employees miss work (including the possibility of your facility being temporarily shut down). Employees become more likely to seek psychological services or leave the company entirely, leading to increased health and hiring expenses. All of this leads to an estimated $121 billion in losses for United States employers each year.
2) Reputation Management
Another problem businesses face after a violent incident is the impact to their reputation. As Warren Buffett famously said, “It takes 20 years to build a reputation and five minutes to ruin it.” This is especially relevant following an incident of workplace violence, particularly if the incident occurred in part due to poor risk mitigation strategies. The tide of negative public opinion can lead to falling shares, lost customers and online boycotts.
Restoring public confidence in a company is often an expensive and time-consuming process. Marketing and public relations campaigns and other outreach efforts are often necessary for damage control, yet it can take months before customers feel safe going to a store or concert venue again. The combination of reduced income and increased spending on public relations can create serious profitability problems.
3) Liability Insurance
One area where the return on investment of physical security is more easily measured is your liability insurance rate. There are several types of liability insurance on the market, though at a minimum, most companies start with a commercial general liability policy. This provides some level of protection should your company be sued due to injuries sustained by an employee or guest at your facility.
There are many factors that affect a liability insurance policy rate, including your business’s location, industry, the size and condition of your facility, and even the number of employees you have. In other words, the insurance provider makes a rough estimation of how much risk there is of your business experiencing an incident of workplace violence or another problem that would affect your policy.
Because of this, conducting a risk assessment to determine what threats you face and then taking steps to correct them (via physical security) can help lower your liability insurance rates. The implementation of appropriate security measures demonstrates to the insurance provider that you take risk mitigation seriously. The decrease in your insurance rates gives you a measurable ROI that will deliver long-term financial savings.
4) Asset Protection
In this digital age, when we think of someone’s personal information or financial data getting stolen, we have a tendency to assume that this was the result of faulty cyber security. However, this isn’t always the case. Physical security can be just as important for protecting IT infrastructure, computers with sensitive data and other valuable equipment.
Indeed, the portability of USB sticks and laptops make them a popular target for those who wish to gain access to critical data when a company’s cyber security measures make successful hacking unlikely. In 2014, Coca Cola faced a wave of media scrutiny after it was announced that the personal data of 74,000 individuals was compromised due to the theft of a few laptops. No hacking was required. Yet with improved physical security measures, the breach may never have happened.
Physical security improvements such as using photo ID cards to provide access control, installation security surveillance systems and increasing your on-site guard presence won’t just prevent acts of workplace violence — it will also mitigate the risk of losing data or equipment to would-be thieves.
As much as I have emphasized the value of physical security throughout this piece, none of this is meant to devalue cyber security in any way. After all, with hackers trying to steal confidential data and introduce new viruses to disrupt business performance, maintaining a strong cyber security platform will also make a big difference in the modern business world.
However, companies looking to become more efficient shouldn’t think that they need to choose between physical or cyber security. After all, a physical attack can harm technology infrastructures, while a cyber attack could likewise impact physical infrastructure. Both forms of protection are vital for the financial stability and reputation of your company.
Ideally, both physical and cyber security can work together under one security operations center to increase efficiencies and provide a full layer of protection to your business. The risk mitigation benefits that come from optimizing your security practices will ultimately have a greater return on investment than you can calculate through profit reports.