Taking a hit from crime

Tough on crime, tough on the causes of crime was the rallying call of our once untarnished prime minister, in the days when the Labour party was trying to establish its credibility on the issue in the eyes of the electorate. But since those heady days it seems the reality of life in modern Britain has kicked in, and the reality is slightly depressing if the results of a recent survey by Hiscox are to be believed.

The survey, which was taken among SMEs in the UK, was an attempt to gauge what the most pressing concerns are for the majority of businesses in this country. It revealed that fast rising costs for energy and rent, followed closely by business taxation, are the top two business concerns. Significantly, crime is also a major factor.

Specifically, theft or vandalism are now seen as a very real possibility for SMEs, with nearly one in four having suffered from either or both during the past five years, costing each business an average of £2,504. And the Hiscox survey is not the only one to present such a picture.

Banking cash
According to Zurich, which undertook research at the end of last year, SMEs are leaving themselves open to become victims of crime. The findings revealed that 23% of over a thousand small business owners questioned take cash to the bank every day, with 43% using the same route and 10% going at the same time.

And one in five has more than £500 in cash on the premises at any one time. According to David Nichols, Zurich Commercial's head of package business, small businesses may run the risk of being targeted by thieves if they follow the same route to the bank at the same time every day.

Zurich also found a generic concern among small business owners in relation to crime, with just over 20% reporting the prospect causes them added stress. Over half reported that crime had generally increased over the last year, to the extent that more than one in three owners actually fears physical assault or armed robbery.

Lack of CCTV
As far as the insurance industry is concerned there is a major problem with regard to SMEs and crime. Difficulties with cash management, continuing lack of alarms, lack of CCTV and failure even to lock up properly have all been cited as continuing failures that add to the problem.

Given the magnitude of the issue, the question is surely whose responsibility is it to manage the situation better? Is it simply a question of business owners taking the issue more seriously and assuming a greater deal of responsibility for the problem of rising crime?

As far as Gary Head, professions underwriting director at Hiscox is concerned, there is no doubt that SMEs themselves have to accept some of the responsibility for this issue.

"It's easy for SMEs to skip over these sorts of risks, viewing them as out of their agendas," he comments. "But actually any time and money that they invest in risk management is a good investment. So this is really a plea for SMEs to bring risk management further up the agenda.

"If you look at global organisations they have huge risk management departments, and all business will experience a loss at one time or another."

He cannot emphasise enough the importance of treating crime seriously: "It's very widespread – probably more than people realise. The trend we've seen in relation to crime and vandalism is that it's on the increase."

Once again, Head feels the onus lies squarely with the business itself. "They can get some expert help and guidance from their brokers and from their insurers, but at the end of the day it has to be up to them. Taking crime seriously needs to be driven from the organisation, and it's ultimately the responsibility of the management."

Not everyone agrees with this point of view. David Bruce, development manager of commercial propositions at Norwich Union, sees shoplifting as the major issue at the moment for many SMEs. For shoplifters, according to the British Retail Consortium, made off with £767m worth of goods in 2005.

As such, Bruce says that businesses should undertake a risk survey, which will entail "a full investigation into the business, suggesting possible improvements in security measures. Insurers can then provide access to a cross section of security system suppliers, at discounted competitive rates".

But isn't all this making the issue sound more worrying than it actually is? For Ian Richens, director of affinity and schemes at the Bollington Group, this is exactly the case.

"Our experience is that we haven't seen the shires hit by crime as much as inner-city areas," he says. "Though I agree it's a problem, I would say it's mainly restricted to city areas. It's not only crime we're talking about, but also vandalism and graffiti, which have become serious problems.

"As alarms become more sophisticated most SME schemes require these new alarms as a matter of course."

Richens feels that advice from brokers is important here and sees direct contact as crucial: "The emphasis here is on good risk management. But there can be problems if you're getting your insurance over the internet, as purchasing it that way means the business won't always know what is meant by a good alarm.

"But if you're dealing directly with a broker and a have a good relationship, their expertise can help tease these things out and ensure that you have the right protection for your business."

But even with the best system in the world, the determined criminal will still target a business. The key, it seems, is whether SMEs use the advice of a broker, insurer or shoulder the responsibility themselves. But they must not remain ignorant and simply ignore the issue. IT