3 Strategies for Loss Prevention Risk Management

More retailers are learning that if they want to truly combat losses ranging from online and returns fraud to data-related losses within their business, they need to create and analyze real-time data in order to stay one step ahead of recurring shrink, according to a recent Aberdeen Group analysis report.

The report, “The State of Loss Prevention in Retail: Controlling Losses and Maximizing Profits,” has found that retailers who use loss prevention risk management strategies see a reduction in fraud-related and operational costs. These strategies, if used over time, can also “enhance profit, customer satisfaction, and employee and customer safety,” the report said.

Here are three tips from the report to help retailers improve their loss prevention efforts:

Create a centralized team to oversee enterprise loss prevention efforts and training. The first step to any loss prevention strategy is to get your company’s centralized loss department involved. Even though 16% of the companies in the report found it beneficial to deploy loss prevention teams at every store, 40% of retailers said they were allocating regional loss prevention managers who are responsible for activities across multiple stores.

Link analytical platforms to loss prevention data. Realizing the power that business intelligence offers an enterprise, savvy retailers are ready to exploit the power of analytical platforms to improve their loss propositions. The report found that currently 56% of retailers have a centralized data analysis group focused on loss prevention exception reporting. Based on the companies that have established analytical tools, 49% of retailers are successfully applying the results they learn to control their loss levels.

Combine real-time and historical data to make the best loss-fighting decisions. Retailers have had a history of using analytics and business intelligence to improve their decision making across all lines. Loss prevention is no exception, however, relying solely on historical data makes loss prevention strategies less effective.

The report also found that the key to a successful loss prevention strategy is to become more events focused and use real time information to make projections. By looking into analytics, reporting tools or smart tracking solutions, retailers will be able to make a positive impact on their bottom line.