****************** chapter 17 risk management, insurance, and crime prevention...

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Chapter 17Chapter 17

Risk Management, Risk Management, Insurance, and Insurance, and

Crime PreventionCrime Prevention

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

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Risk Management, Insurance,And Crime Prevention

Defining & Coping With Defining & Coping With RiskRisk

Insurance & RiskInsurance & Risk Choosing An InsurerChoosing An Insurer Reducing RiskReducing Risk Safeguarding Against TheftSafeguarding Against Theft Protecting EmployeesProtecting Employees

17 - 2

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17 - 3McGraw-Hill/Irwin

Types Of RiskTypes Of RiskPure- UnpredictablePure- Unpredictable

Speculative- VoluntarySpeculative- Voluntary

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17 - 4

Coping With RiskCoping With Risk

AvoidanceAvoidance

Prevention/ControlPrevention/Control

TransferTransfer

Assumption- Self-InsuranceAssumption- Self-InsuranceLawrence Lawry/Getty Images

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17 - 5

Determine Insurance NeedDetermine Insurance Need

What Will Happen If:What Will Happen If:I DieI DieFireFireTheft/EmbezzlementTheft/EmbezzlementRobberyRobberySettlementSettlementUnauthorized InformationUnauthorized Information

Steve Cole/Getty Images

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17 - 6

Types Of InsuranceTypes Of Insurance FireFire Business InterruptionBusiness Interruption CasualtyCasualty Product/Service LiabilityProduct/Service Liability Workers’ CompensationWorkers’ Compensation Group Health/LifeGroup Health/Life Business OwnerBusiness Owner Fidelity/Surety BondsFidelity/Surety Bonds

PhotoDisc/Getty Images

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17 - 7

CoinsuranceCoinsurance

“…“…having the having the business buy business buy

insurance equal to a insurance equal to a specific percentage specific percentage of property value.”of property value.”

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17 - 8

Actions To Improve Safety Actions To Improve Safety and Reduce Premiumsand Reduce Premiums

Involve EmployeesInvolve EmployeesEstablish Establish

CommunicationsCommunicationsCompanywide Companywide

ParticipationParticipationSafety AwardsSafety AwardsExciting ProgramExciting ProgramBe WatchfulBe Watchful

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17 - 9

Small Business Health CareSmall Business Health Care(Employee Contribution With)(Employee Contribution With)

$0

$50

$100

$150

$200

$250

Self

Spouse/DomesticPartner

Spouse/DomesticPartner & Children

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17 - 10

Red Flags OnRed Flags OnAgent SelectionAgent Selection

Delayed Delayed ResponsesResponses

Routine AnswersRoutine Answers Delayed RefundsDelayed Refunds Hand-Delivered Hand-Delivered

PolicyPolicy Claim More Claim More

Expensive Than Expensive Than DeductibleDeductible

Delay TacticsDelay Tactics

Attempts To Attempts To

Minimize DamageMinimize Damage

Secret Claim Or Secret Claim Or

SettlementSettlement

Replace Old Replace Old

Flawed PolicyFlawed Policy

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17 - 11

Criteria ForCriteria ForInsurer ComparisonInsurer Comparison

Financial Stability & Financial Stability &

SafetySafety

SpecializationSpecialization

Tailor PolicyTailor Policy

Cost Of ProtectionCost Of ProtectionPhotoLink/Getty Images

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Insurance RenewalInsurance Renewal

Agent = Minimize PremiumAgent = Minimize PremiumBoost DeductibleBoost DeductibleShop Several AgentsShop Several AgentsProfessional Professional

OrganizationOrganizationSpecial-Risk PoolsSpecial-Risk PoolsSelf-Insurance/CoinsuranceSelf-Insurance/Coinsurance

PhotoLink/Getty Images

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Agent’s ServicesAgent’s Services

Devote Time To Your Devote Time To Your

ProblemsProblems

Exposure To LossExposure To Loss

Recommend Insurance Recommend Insurance

& Loss Prevention & Loss Prevention

Offer AlternativesOffer Alternatives

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CrimeCrimePrevention For ProtectionPrevention For Protection

Zero-Tolerance PolicyZero-Tolerance Policy ScreenScreen TrainTrain Defuse DisputesDefuse Disputes Check SecurityCheck Security Terminate With CareTerminate With Care

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17 - 15

OSHA GuidelinesOSHA GuidelinesTo Prevent RobberyTo Prevent Robbery

Adequate LightingAdequate Lighting

Video CamerasVideo Cameras

Increase Night StaffIncrease Night Staff

AlarmsAlarms

Bulletproof GlassBulletproof GlassRoyalty-Free/CORBIS

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Reducing Reducing Chances Of RobberyChances Of Robbery

Modify Store LayoutModify Store Layout

Secure EntrancesSecure Entrances

Use DogsUse Dogs

Control CashControl Cash

Redesign SurroundingsRedesign SurroundingsDon Farrall/Getty Images

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Sources OfSources OfInventory TheftInventory Theft

Vendor Fraud

6%Shoplifting

32%Employee Theft47%

Admin. Error15%

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Amount Of Theft- 2003Amount Of Theft- 2003

$15

$10

$5

$2

$0 $5 $10 $15Employee Theft

Shoplifting

Admin. ErrorVendor Fraud In $ BillonIn $ Billon

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Preventing TheftPreventing TheftMirrorsMirrorsCameras/MonitorsCameras/MonitorsNoise ActivatorsNoise ActivatorsEmployee Honesty TestsEmployee Honesty TestsSecurity GuardsSecurity GuardsSecurity AuditsSecurity AuditsSpot ChecksSpot ChecksVisible SurveillanceVisible SurveillancePhysical Inventory ChecksPhysical Inventory ChecksRyan McVay/Getty Images

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White Collar CrimeWhite Collar Crime

“…“…committed by committed by managerial, managerial,

professional, and professional, and technical technical

employees.”employees.”

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Types OfTypes OfWhite Collar CrimeWhite Collar CrimeFalsification Of AccountsFalsification Of Accounts

Fraudulent Computer UseFraudulent Computer Use

Bribing OfficialsBribing Officials

CollusionCollusion

Sale Of Proprietary Sale Of Proprietary InformationInformation

SabotageSabotage

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Computer CrimesComputer CrimesIntentional Intentional

Destruction Of DataDestruction Of Data

Fraudulent UseFraudulent Use

Getty Images

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MinimizeMinimizeWhite Collar CrimeWhite Collar Crime

Track CostTrack Cost

Increase BudgetIncrease Budget

Ban CriminalsBan Criminals

Crack Down On Crack Down On

Tax AvoidanceTax Avoidance

Restore RightsRestore Rights

DemocratizeDemocratize

Rein In PayRein In Pay

Regulate TradingRegulate Trading

Expand Expand DisclosureDisclosure

End Conflicts Of End Conflicts Of InterestInterest

Fix PensionsFix Pensions

Foster DiscussionFoster Discussion

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17 - 24

Document SecurityDocument Security

List of Authorized List of Authorized PersonnelPersonnel

No Permission to No Permission to Remove Sensitive Remove Sensitive Document from Document from PremisesPremises

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17 - 25

Workplace SafeguardsWorkplace Safeguards

Guards Over Moving ToolsGuards Over Moving ToolsDevices to Protect Hands Devices to Protect Hands

from Machinesfrom MachinesProtective GearProtective GearWarningsWarningsMedical TreatmentMedical Treatment