Loss prevention exam 1
Loss prevention exam 1 retl 330
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This 8 page Study Guide was uploaded by Sarah Albert on Friday January 29, 2016. The Study Guide belongs to retl 330 at University of South Carolina taught by karen edwards in Spring 2016. Since its upload, it has received 66 views. For similar materials see Loss prevention in Retail at University of South Carolina.
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Date Created: 01/29/16
Loss prevention concept of establishing policies, procedures, and business practice to prevent the loss of inventory or money in a retail environment developing a program around this concept will help you to reduce the opportunities that these losses can occur and work to prevent the loss rather than react to them after they occur why does a retailer need to understand lp when a retailer experiences a loss, they are losing direct profitability lost inventory requires replenishment at a cost to the retailer and lost money cannot be replaced cost of these losses go direct to the bottom line of a retail balance sheet causing lost profits why do you need a loss prevention function a loss prevention function helps make business better protection of inventory and the prevention of losing it size depends on your business, the number of locations, what you are selling and the potential threat risks and concerns facing your business program elements and resources to establish implement and monitor loss will make your business more profitable and less susceptible to certain losses How do losses occur? Internal (employee) theft largest contributor for most retailers simple merchandise theft, collusion with other employees, point of sale theft conversion fraud refund, void or discount theft point of sale theft can cause a double dip effect where you lose inventory and money External theft shoplifting, break ins, robberies or other acts by outside sources commitment to educating your employees or good customer service, awareness of the signs of a potential loss and how to best protect the store against external loss this requires the establishment of procedures and training in areas like shoplifting prevention, robbery awareness, safety and how to handle various situations dealing with people Errors most errors are employee caused from checking to shipping, to ringing the register to transferring merchandise inaccurate counting of merchandise to the inaccurate discounting or accounting of a sale or tender How do I know if I have a loss prevention problem cost of goods are increasing but your sales are staying the same or decreasing empty containers, hangers, or missing items victim of a robbery losing inventory not due to shoplifting one employee witnesses shoplifting events but nobody else is witness sales are down considerably when a certain employee works cash drawer never balances certain employee has a high number of refunds voids or no sales friends hanging around asking for a certain employee Risk management and lp partners for profit they both manage risk, try to minimize losses to the company, and they both need to asses the cost of the loss control solution vs the benefit it brings risk management mission identify and measure exposure to loss risk management is more financially based and concentrates on defining exposure focused on losses small or no field staff significant dealings with third party representatives such as insurance brokers and carriers risk handling tactics involve avoidance, prevention, reduction, segregation, and risk transfer responsible for managing claims and litigation reserves risk manager is more involved in the big picture and disaster planning loss prevention mission identify and evaluate the potential exposure to loss incidents loss prevention manager is more asset based protecting cash property and people small office staff with larger store oriented field organization focused primarily on prevention risk handling tactics can be defined as prevention, detection, investigation resolution and recovery more involved in store operations and the day in day out details Risk management process Risk identification process of examining and determining the potential sources of loss faced by an organization check lists and surveys, policy analysis Risk analysis first is a qualitative element, looking at what risks the organization is exposed to. Risk assessment, financial assessment, and loss data assessment are all examples of qualitative analysis second is quantitative analysis, process of determining how much risks there is involves quantifying exposure, projecting losses, cost/ benefit analysis, and deduction analysis Risk control any conscious action or inaction to reduce the probability, frequency severity, or unpredictability of loss broken down to pre loss and post loss activities pre loss control activities include avoidance, prevention, reduction, segregation, physical transfer, or a combination of these activities post loss control includes claim management, litigation management, and disaster recovery Risk financing the acquisition of funds, at most the optimal cost, to pay for losses that strike the organization this is the insurance portion of risk management risk administration the implementation and monitoring of risk management policies and procedures planning, policy development, implementation, and monitoring Ways risk management and lp can partner Threat assessment security surveys physical security regulatory compliance safety programs emergency preparedness Shrinkage reduction in inventory due to shoplifting, employee theft, and clerical error also known as inventory shrinkage, loss, shortage shrinkage dollars= retail value of inventory bought sales for the period covered shrinkage percent= shrinkage dollars/ sales for the period covered risk management is a comprehensive approach to identify and measure exposure to loss avoid, reduce, and or transfer risk potential risks: technical, cost, client, weather, financial, political, environmental, people Phase 1: Risk assessment security survey cooperative onsite examination of a business to determine a. risks b. probability of each risk c. vulnerability to those risks d. security measures and policies already in effect e. effectiveness of countermeasures Phase 2: Risk Response a. appropriate level of response based on the risk Why do employees steal he or she is not paid enough overworked job is beneath their level of skill attitude of “i deserve this” for whatever they plan to steal conducting regular check ins with your employees, asking them about job satisfaction can help seasonality of retail work is another cause of employee theft temporary nature and relatively lower compensation screening can prevent theft check their references did they change jobs often run a credit check drug screening use physical space to reduce risk if your space has security cameras, are they picking up all areas or are there blind spots store layout invite theft by providing hiding spots for product and easy discreet access to exists implementing an employee control point can also reduce theft opportunities by having employees enter and exit with a system for logging their time on the site Theft of time and supplies especially among younger employees cell phone use theft of office supplies for personal use theft of corporate intelligence stealing corporate secrets and intelligence unauthorized taking of clients, marketing information, and proprietary information perceived inequitable treatment employees will take matters into their own hands by means of theft, dishonesty, and counterproductivity Employee theft is an expensive problem ten times as costly as street crimes Employee Deviance property deviance includes employee behavior that involve the unauthorized taking, control, or transfer of money or property of the formal work organization by an employee, either for an employee's own use or for the sale to another during the course of occupational activity behaviors such as misuse of employee discounts, taking merchandise, supplies, or information for personal use filching money or production material and falsifying time records do not include theft of coworker property production deviance referred to as work withdraw behavior form or reduced productivity, increased absences and tardies, low job involvement, and low organizational commitment includes behavior such as leaving work early and taking unauthorized breaks maximize or to maintain organizational and social roles production deviance behavior that result in the reduction of time working are considered to be time theft satisfaction and theft satisfied individuals tend to exhibit prosocial behaviors, whereas unsatisfied individuals tend to commit acts of property and production deviance dissatisfaction is the catalyst for behaviors such as time theft Climate for theft includes the opportunity to steal and the perceived and communicated norms of the organization, management, and work group included in these norms is the attitude towards theft, perceived extent of co worker and management theft, perceived certainty of sanctions for theft, and perceived severity of sanctions for theft perception of certainty and severity of organizational sanctions were related to employee theft the perceived certainty of sanctions had a stronger relation with theft than did the perceived the perceived severity of sanctions the least theft occurred in situations in which sanctions were perceived as severe and certain norms, unwritten rules that guide behavior and contribute to an organization's climate, often condone or encourage employee theft The dark side of good customer service one of the most commonly held principles of shrinkage reduction, especially for shoplifting deterrence, is achieved by giving good customer service assumption that if thieves enter the store, they will be deterred from stealing if sales associates quickly make contact with them by offering service the, “good customer service” sends an indirect message that ‘we know youre here” sweethearting is an illicit behavior that costs firms billions of dollars annually in lost revenues occurs when front line workers get unauthorized free or discounted goods and services to customer conspirators tips for detecting and preventing employee theft typical organization loses five percent of its annual revenue to fraud anonymous tips were the most common means of detection smart hiring checking references and performing criminal and other background checks confirm name and address of participant confirm educational qualifications check membership in professional bodies check financial status confirm directorships held and any disqualifications perform a media and internet search 2. training and education provide your employees with anti fraud and theft policies and training make sure the consequences for violating such policies are clearly laid out and understood by all employees 3. establish a reporting system most effective way to detect fraud 4. positive work environment mutual respect between employer and employee open door policy for managers positive work environment encourages employees to follow established procedures and policies and act in the best interests of the company 5. internal security policies establish and assess the the fraud and theft prevention tools that have been put into place separation of duties no employee should be responsible for both recording and processing a transaction access controls access to physical and financial assets and information, as well as accounting systems, should be restricted to authorized employees authorized controls develop and implement policies to determine how financial transactions are initiated recorded and reviewed 6. audits conduct scheduled and random financial and accounting audits employees will be more likely to be honest 7. pay attention to change change in employees behavior openness with employees so they feel comfortable talking to you about problems such as financial difficulties that could tempt them to steal 8. consistent investigation of all tips investigate every incident reported about fraud or theft action must be taken immediately 9. lead by example everyone in organization needs to be on board need to believe management is serious about fraud and theft everyone should be held to the same standard 10. continuous improvements General loss interviewing part 1 internal resistance once loss prevention has made the decision that general loss interviewing may be an effective way to reconcile shrinkage in a high loss location, the next step is selling the decision to human resources, legal, and operations general loss interviewing will face resistance because of perceived difficulties another potential problem is the perception of how the interviews will be conducted in the store reluctant to put their people through accusations and interrogations without evidence of wrong doings personal and legal problems if they are not handled correctly selling to management walk them through a non confrontational approach to the interview part two determining order of the interviews random most basic and least effective does not allow an interviewer to build on information developed moving to the next logical interview tenured the longest tenured employees are likely to be the most loyal and honest employees use them to pinpoint when problems first arose in the company questionnaire evaluating narrative responses to the questions data sheet categorizes information about each employee and produces a hierarchy of the associates based on the likelihood that they would be involved in counter productive behavior excellent tool for identifying those who have attitudes similar to those who would steal employee attitude inventory strong correlation between the attitude of individuals torward workplace integrity and their propensity to steal employees are grouped into three risk levels low,average, and high risk managing threats and acts of violence forming a threat assessment team before acts of workplace violence occur has a return on investment; as threats and acts of violence are eliminated, risks are mitigated, and employee morale and trust in management helps reduce turnover and increase productivity rule 1 rotate employees without professional training off the threat assessment team mentor each member for a year or two through several events so that the rules of the road, policies, procedures, and best practices are integrated in a cohesive manner every employee must receive workplace violence prevention training rule 2 use a multidisciplinary approach in forming the team rule 3 the first expert is the workplace violence threat assessment and intervention consultant the organization must select an expert who knows how to perform threat assessments and evaluate the propensity for violence rule 4 the second expert is the operational psychologist rule 5 the threat assessment team must be empowered to act rule 6 preserve all evidence records and reports rule 7 voluntary separation over involuntary termination is essential in long term risk mitigation strategy 8 pre employment and periodic employee background checks are industry standards 9 future focused prevention is essential 10 avoid the failure to warn and no trespass agreement landmines workplace violence prevention active shooter an individual actively engaged in killing or attempting to kill people in a confined and populated area, in most cases active shooters use firearms and there is no pattern or method to their selection of victims practices for coping withan active shooter be aware of environment and possible dangers note of two nearest exits in any facility you visit if you are in an office stay there and close the door at last resort attempt to take shooter down call 911 if at all possible
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