Sep 07, 2021 MicroBilt News
Non-health insurance fraud alone costs more than $40 billion per year to Americans, says the FBI. Loss prevention is only one part of risk management and risk control that financial companies need to practice.
No, financial products are not stolen off warehouse pallets or from retail shops. They are taken advantage of mainly through various forms of fraud. One such fraud is identity theft, which increased by 45% during 2020, reaching over $712 billion in loss.
How can you develop a loss prevention strategy? Are there any true loss prevention solutions for managing loss? Keep reading to find out.
Why Have a Loss Prevention Strategy?
For every business, loss prevention strategies must be a high priority and very robust. This includes not only physical security management, but cybercrime prevention, and social engineering prevention too. Small investments in these areas will improve your margins due to less accepted losses.
Your employees will be safer, you’ll be safer, and you can all get on with your work, assured of that safety.
What to Include in Your Loss Prevention Strategy
No matter if the loss prevention is physical or digital, there are a few things every loss prevention strategy needs to consist of. Some are obvious, others a little less so.
- Have clear policies
- Use simple, clear language for your training
- Keep accounting updated
- Encourage employee buy-in on loss prevention
- Use multiple deterrents as an approach to loss prevention
- Monitor your shrinkage or loss trends
- Automate inventory and identification controls
- Continue adapting to a changing landscape
Retail loss prevention has long used visible RFID tags and cameras (even ones that don’t record) to prevent shrinkage or loss. Physical security controls can also help digital losses by recording access to equipment such as server terminals and RFID badges.
Outdated software is a major concern for administrative losses and errors. Keeping your software up to date and technologically advanced is crucial to catching and fixing such errors. Using software with an “API-first” approach will be crucial to your survival.
APIs should be at the heart of every software provider you’re using. APIs are “application programming interfaces,” that help you to interact with the massive amount of data and services your provider has with ease.
They’re flexible and powerful tools that help everyone involved. It’s easier for all parties to do their jobs to their best.
They give you and the provider:
- Access to data
- Extend functionality
- Security and customizability
Using the right software can help you monitor your loss prevention strategy over time, help you adapt, be a deterrent to losses, keep accounting in the loop, and be a simple part of your employee training and buy-in.
Verification Tools You Need
Phishing is getting very sophisticated, and it costs businesses and individuals tens of millions of dollars every year.
It’s a form of security threat called social engineering. The world of cybersecurity is very robust and very quick to act. Security holes are plugged and patched almost as fast as they are discovered.
Social engineering and phishing rely on tricking something more vulnerable than a firewall — you. 99% of wire fraud, malware installation, and data disclosures need human interaction for success.
Essential tools every business needs for verification are:
- Bank verification
- Identity verification
- Payment solutions
- Background screening
- Business credentials including license verification
Knowing you’re doing business with the right person requires these tools but also a bit of training. One of the most effective ways to prevent loss to your company through training is to guard against phishing. Here are a few tips to start with:
- Verify every email address is valid
- Look at link addresses before you click them
- Keep your browser updated
- Use a firewall
- Be aware of popups
- Never give out personal information through email or email links
Loss Prevention Is Risky Business
There’s no silver bullet for loss prevention — it’s in the name. Loss prevention is a risk control philosophy based on preventing and controlling loss, not eliminating it entirely. This is because it’s understood that certain products and losses are inevitable.
To maximize the benefits of your optimal loss prevention strategy, you need a plan for developing it using the above points.
To be effective you must identify areas of loss due to internal theft and external theft. These could be:
- Physical location
- Administration errors
- Handling cash
- Product security
- Background checks
- Drug screening
- Lack of training
- Confusing red tape
- Employees without any empowerment
- Vendor or supplier fraud
- Wiring or ACH fraud
- KYC or AML checks for customers
Enacting background checks for employees and KYC or “know your customer” will help you deter loss before it happens. Being proactive is the best approach, rather than reactive.
Verifying vendor information proactively, especially when sending money through wiring or ACH, is a way to avoid financial loss to mitigate external theft.
About 30% of losses in retail are through employee theft, 36.5% is through external theft, 21.3% through administrative losses, and 5.4% through vendor errors and fraud. Finding your obvious security gaps and closing them in advance is your best defense.
How MicroBilt Can Help
MicroBilt provides ID verification and authentication tools such as ID Verify, Watchlist Search, and ID Authenticate. These tools use multiple data sources, such as the Federal OFAC watchlist.
MicroBilt has been helping businesses with risk management and risk control for over 40 years. You need enough accurate information to make good business decisions. This is true for financial decisions and loss prevention decisions alike.
Usually, big data isn’t available or feasible for small and medium-sized businesses. MicroBilt has the tools and the know-how to help you to sit at the same table as large companies with large budgets for big data.
Whether you’re planning your growth, screening a potential tenant or new hire, or keeping up with regulations, we have the information and insight to get you where you want to be.
Contact us today to have a partner in your loss prevention strategy.