What is Loss Prevention Management?

Matthew Brodsky

Businesses purchase insurance and invest in other ways to mitigate and overcome losses from property damage, theft, and fraud. The best way to handle these losses, however, is to prevent them. The practice of loss prevention management is about understanding what particular vulnerabilities a business has and then attempting to stop them from happening or to reduce their impact given the resources and nature of the business. There are many different forms of loss prevention management, such as asset protection for retail organizations, loss prevention for workers' comp, and loss control for facilities and other properties.

A loss prevention officer may monitor customers for signs of shoplifting.
A loss prevention officer may monitor customers for signs of shoplifting.

Loss prevention for properties, involves properly engineering and constructing buildings so that they don't suffer damage from such perils as fires, hurricanes, earthquakes, and snow storms. For hurricane, for instance, the roof of a building can be strengthened so that high winds do not rip them off, and windows can be protected so that they do not shatter from flying debris. Loss prevention management for earthquakes, on the other hand, can involve properly securing shelving and other internal contents of a building, while making sure that the structure can withstand ground shaking from a tremor.

Loss prevention management personnel may deal with cases of embezzlement.
Loss prevention management personnel may deal with cases of embezzlement.

In the workers' comp framework, loss prevention management is about creating a safer work environment so that employees are not injured while on the job. This can be a simple matter of requiring employees to wear slip resistant shoes at a restaurant so that they do not slip while serving tables or working in the kitchen. For factory or warehouse employees, loss prevention management can involve teaching employees proper ergonomics so that they lift packages properly and use machinery safely. Another aspect of loss prevention management for workers' comp is to create a culture of safety within the organization, from the executives down to the hourly employees.

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Retail loss prevention, also known as asset protection, begins by trying to stop employee theft, shoplifting, embezzlement, and fraud. When a loss occurs, this type of loss prevention management takes the form of private investigation. Loss control professionals are in charge of managing the store security programs and dealing with any employee who might be responsible for the losses. Some of the main types of retail losses that loss prevention management professionals look out for include stolen credit card usage, check fraud, margin losses, and sweethearting. The latter occurs when employees find competitor prices to match for customers, giving special deals to friends and family, or reducing the fees associated with deliveries and warranties.

Retail loss prevention may focus on stopping employee theft.
Retail loss prevention may focus on stopping employee theft.

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Discussion Comments


What I don't understand is, if loss is a common problem for all industries, why isn't technical expertise and security automatically provided?

If businesses are unwilling to pay for loss prevention management because they already have too much on their hands and are barely making it month to month, why not help them out by providing this for them? Wouldn't it be better than sporadic tax cuts?


If a company does loss prevention management successfully, I think it will also improve its prospects to grow further. I know it's not cheap to prevent loss, you would have to invest in new technologies, security and software for it to be done properly. But it's an investment with good return in both the short and long term.

I read in a magazine that most new businesses fail in their initial years because of huge losses that are more than their profits. That means that if these businesses had invested in loss prevention equipment and services from the very beginning, they could have prevented their doom. But instead, many businesses think that it's unnecessary because they are still small. My view is that all businesses should put this as priority number one when they are starting out.


Loss prevention management also includes reviewing data about transactions and looking for irregularities right? But how do managers review so much data?

It must easy to do if it's a small business but what do big businesses like big retail chains do? They have hundreds or thousands of sales everyday at each of their stores. Can computers detect mishaps easily, or do people actually look for errors and trends? It seems like a really hard thing to do.

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