In today’s heavily interconnected, digital world, the importance of investing in security measures cannot be overstated. Beyond the obvious protection it offers against threats and risks, security investments play a pivotal role in protecting your business from unplanned expenses.
According to Forbes, 1 in 5 businesses fail within the first year. One-third of businesses fail in the second year. By the fifth year, half of the businesses will fail. Therefore, the first five years of business are critical.
What are the main reasons for this failure? The first Is the lack of market demand. This is something you can control by studying the market before jumping into a new business. The second most common reason for a business failure is not having capital. Security and other investments can help prevent running out of cash.
The reason security investments can help stave off unexpected expenses is because security can significantly mitigate financial losses. These incidents can be caused by cyberattacks, theft, vandalism, and other unforeseen events that can be deterred with the right security solutions.
The High Cost of Unplanned Expenses
In ordinary times, unplanned expenses wreak havoc on financial stability. This can be caused by anything from emergency repairs and legal fees to lost revenue and reputational damage. This doesn’t even include security breaches, which can have a staggering impact on a business financially as well as on its reputation.
According to an IBM report on data breaches, the average cost of a data breach in the U.S. is almost $10 million. The global average total cost of a data breach is almost $5 million. To contain a breach takes an average of 277 days.
The longer it takes to contain a breach, the more expensive it gets. The expenses associated with a data breach consists of incident response, customer notification, public relations activities, legal fees, investigation, regulatory penalties, and litigation.
This hasn’t even addressed the costs associated with inflation. Everything is far more expensive than it was three years ago. Many companies have laid off employees. The economy is faltering. The supply chain continues to limp along. With the supply chain suffering, many items cost more, and they are low in supply due to the lack of materials to make them.
Emergency repairs are common unplanned expenses. Pipes break. The HVAC stops working. The longer something stays broken, the more expensive it could be to fix it. Another unexpected expense is crime. Crooks don’t commit crimes neatly. Thefts often cost more than the value of the stolen items.
How Crime Affects Business
Not only do businesses have to replace the stolen item but also repair whatever gets damaged. The destruction may be visible to outsiders who drive past the business. Damaged property has a tendency to make people feel unsafe. This hurts the company’s reputation and decreases the chances of people coming to the business. Security investments can help minimize expenses. More on that shortly.
Crime and damage also affect productivity. Companies that have vehicles and parking lots are at high risk for catalytic converter thefts. The world may have come out of one of the largest epidemics, but it’s brought about new challenges like theft of catalytic converters.
In 2018, there were only 1,298 catalytic converter thefts. The year after saw 3,389 catalytic converter claims. Then the pandemic happened. The National Insurance Crime Bureau data tells the story. The thefts skyrocketed to more than 16,000 in 2020 and continued to climb as the most current data from NICB reveals there were 52,000 catalytic converter thefts in 2021 and 64,000 in 2022.
Catalytic converter thefts will put a hit on productivity. If a business doesn’t have the vehicles it needs to do business, then it will hurt the bottom line. Catalytic converters could be hard to replace because of the supply chain woes. It takes longer to get a replacement and it costs more than it did before the catalytic converter theft epidemic started.
The fallout associated with crimes could also affect employee productivity. They may feel uncomfortable or worried. They may not be able to focus. They see a reminder of the damage every time they come into work.
A company may have liability insurance, but the payout may not be fast enough. The insurance company has to do an assessment, review the insurance policy, conduct an investigation, and other tasks before writing the check.
While a company waits for insurance to come through, it’s still stuck without its replacements for stolen items and whatever repairs it needs. However, if the company has the proper security investment, all of these financial and other costs can be avoided. Here are how investments can aid in controlling expenses.
Security Risk Assessments and Audits
Conducting regular security risk assessments and audits is a fundamental step to identify vulnerabilities and ensure the effectiveness of security measures. By bringing in professional security consultants, companies can gain valuable insights into potential risks, areas of weakness, and recommended improvements.
A security risk assessment is an evaluation of the physical and digital infrastructure. It identifies potential threats and creates mitigation strategies. These assessments help companies better allocate their resources to verify their security investments and close the areas with the highest vulnerabilities and risks.
Cyber Security Investments
The rapid digitization of business processes has led to an increased vulnerability to cyber threats. Obviously, cyberattacks compromise sensitive data as well as disrupt operations. Customers will be angry their data has been compromised, which does irreparable harm to the company’s reputation.
It will come at the cost of lost business and cleaning up the mess. By investing in robust cybersecurity measures, businesses can help protect themselves from these devastating consequences.
Effective cybersecurity strategies contain a multi-layered approach, which include the following:
- Firewall and intrusion detection systems: Deploying firewalls and intrusion detection systems helps prevent unauthorized access to networks. They also notify administrators of potential threats.
- Employee education and training: A company can invest in the right security, but all it takes is one human misstep and all of it will be for nothing. Therefore, providing comprehensive security training to employees is crucial to lowering the risk of human error. It can be as simple as falling victim to phishing scams, accidentally disclosing sensitive information, or propping the door open for a stranger.
- Regular software updates and patches: Keeping apps and systems up to date with the latest security patches reduces vulnerabilities that attackers can exploit. Some companies separate their security updates from their regular updates. It’s absolutely vital to stay on top of security updates for all technologies including Internet of Things (IoT).
- Data encryption: Encrypting sensitive data ensures that even if it is intercepted, it remains unreadable and useless for unauthorized people.
Investing in these cybersecurity measures can significantly reduce the likelihood of data breaches and other cyber incidents. It helps protect the company from substantial financial losses and all the other side effects of a data breach.
Physical Security Investments
Many companies know the importance of cybersecurity being a part of their comprehensive security strategies. However, many overlook or don’t prioritize physical security measures. Physical security is as important as cybersecurity.
According to the FBI Uniform Crime Reporting (UCR) Program, property crimes such as burglary and theft accounted for an estimated $15.8 billion in losses in 2019. Larceny-theft accounted for 73% of all property crimes. Implementing effective physical security measures can significantly cut the risk of property crimes. This, in turn, helps prevent unplanned expenses associated with property damage, stolen assets, and operational disruptions.
Physical security needs to consist of a range of protective measures. These can include access control systems, security cameras, monitoring of the security cameras, fencing, lighting, and employee training. These investments serve as effective deterrents and can help prevent incidents such as theft, vandalism, and unauthorized access to facilities.
All these security options can greatly reduce your risk of unexpected expenses associated with crimes. Remember your employees can make a mistake and create a security gap. Access control systems and video cameras with remote monitoring can help close that hole. Monitoring operators can watch for and report employee security lapses.
It’s not just security that companies need to worry about. As mentioned earlier, flooding can be an expensive problem. The longer the flooding goes undetected, the more expensive and extensive the damage. Remote video surveillance can also help catch things like this much faster and reduce the amount of damage.
A trained monitoring operator works with video analytics to watch all the cameras around the business property. It’s possible to integrate this with an access control system. This helps businesses better manage who enters the building.
Be Proactive with Security Investments
Investing in security measures is an essential component of financial stability. By proactively addressing potential risks and vulnerabilities, companies can help prevent unplanned expenses related to cyberattacks, theft, property crimes, and non-compliance penalties.
Risk assessments, cybersecurity measures, and physical security investments are crucial in safeguarding finances and preserving long-term viability. Adopting security as a strategic investment is a prudent financial decision and a commitment to protecting assets, reputation, and peace of mind.
Check out this case study to discover how video surveillance helped lower crime and save money. To get a customized security solution that fits your requirements and budget, contact us. Texas Private Security License Number: B14187.
