Mid-South Society of Insurance Management
Meeting, February 9, 1978, 6:00 p.m.
Cafe St. Clair
SPEAKER: Mr. Ira A. Lipman
SUBJECT: Security and How-It Relates to Loss Prevention and Risk Management.
Brief History of Guardsmark and some of the Risks of doing security business are:
Occupational Injuries–e.g. falls, hit by object, auto accidents, attacks, etc.
Liability to Others–e.g. Guard fails to perform as directed–deserts post or fails to lock doors, creating an errors and omissions type claim. Or, guard does bodily harm to a third party or makes a false arrest creating a bodily injury and personal injury type claim. Incidentally, Guardsmark has reduced its armed guard service from over 25% to about 2%. This is risk management in action. Another exposure is third party theft, whereby guard fails to report theft by outsiders due to collusion or failure to maintain proper lookout. A liability claim may also result from damage to property in Guardsmark’s care, custody and control. An example of this would be fire damage to property resulting from willful or negligent acts of guard.
Automobile Liability–Guardsmark has a fleet of 104 automobiles, i.e. hired, owned and non-owned vehicles. In many instances the guard uses clients’ vehicle to patrol area, thus increasing the chance of both physical damage to clients’ vehicle and third party liability.
Theft by Employees–Like any business, when you have a large number of employees you are bound to have employee theft. This, of course, is the reason for bonding all employees. This is also why many companies employ Guardsmark to perform investigative service. So called “petty theft” can be devastating to a marginal business. B. How Security Relates 1. As indicated in item 4 above, undercover investigations can assist you in detecting theft of all kinds…and also assist in developing adequate plant security measures.
Loss by fire, theft, destruction of property can be substantially reduced, if not completely removed by timely use of guard service. It is next to impossible to purchase insurance for repetitive type losses. Even if it were possible, it would not be economically feasible. There- fore, loss prevention and loss control has become “by- words” for risk managers. More self-insurance and containment of claims through prompt and efficient handling is essential.
Use of burglary alarms, closed circuit TV’s, smoke alarms and proper locking devices all assist in providing security when used wisely. Insurance is looked upon by some as protection against loss, when in its truest sense it simply provides partial reimbursement after the loss.
Loss Prevention– Must begin at the outset. Whether one is constructing a new building or opening a new business…all recognizable risks, exposures, hazards, etc. must be taken into account. Fire doors, fire escapes, fire protection devices—sprinklers, extinguishers, etc.- -all contribute to loss prevention. Prompt call to the fire department by a guard, of course, is one of the surest ways to contain a fire loss.
Loss Prevention Through Training.
Training may take several forms. It begins by properly training an employee on how to do his job in a safe manner–to prevent personal injury- or injury to others. Safety messages to employees by means of a “payroll stuffer” will help. Periodic safety meeting by field personnel is a must.
A review of loss data by each manager is essential. A continuing assessment of exposures is also essential. When the risk outweighs the potential gain—it’s the kind of risk to avoid.
One sure way to get the attention of managers is to charge losses against their profit and loss statements. Field personnel will not become safety conscious until their managers and supervisors demonstrate they are dead serious about what happens.
Summary–How Security & Loss Prevention relate. 1. We have tried to identify some of the risks of the security business…and how we deal with them.
We have stressed the importance of loss prevention and how securing one’s operation is essential to controlling losses.
We have also stressed the importance of training and the part it plays in loss prevention.
Importance of Risk Management–it could spell the difference between the success and failure of a business. It takes bottom-line dollars to pay losses and that cuts into profit.
Why I support RIMS!