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Retail Loss Detection and Prevention - Policies and Procedures

Learn retail loss detection strategies for small businesses. Learn to identify the most common loss and fraud hazards of retail entities.

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ComplianceOnline
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397 views

Retail Loss Detection and Prevention - Policies and Procedures

Learn retail loss detection strategies for small businesses. Learn to identify the most common loss and fraud hazards of retail entities.

Uploaded by

ComplianceOnline
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Retail Loss Detection and

Prevention Policies and


Procedures
By -John E. Grimes III, MS, CFE, CFI

Loss prevention defined


Loss Prevention is the concept of
establishing policies, procedures and
business practices to prevent the loss of
inventory or monies and preserve profit in a
retail environment.

Role of Loss prevention


While each retail company approaches the mission and
purpose of their loss prevention programs based upon the
unique needs, structure and culture of the organization, at
its core the role of loss prevention is to enhance the
profitability of the company just like every other role in
retail. Primarily, that role focuses on the reduction of shrink
(losses).
Loss prevention departments look at all of the various issues
that can potentially lead to losses, devise strategies to
minimize those pitfalls within the business, and implement
strategies that are practical, actionable, and consistent with
the goals of the business.

Shrinkage (shrink)
Inventory Losses in a Retail Environment are referred to as
Shrinkage.
Shrinkage can best be described as the amount of
merchandise physically available in a location versus the
amount of merchandise that should be on hand based on
inventory records. In simple term it is missing product.

Measuring shrink
There are many other factors that are
accounted for when determining the expected
inventory count other than purchases and
sales. They include:

Markdowns
Markups
Returns by customers
Returns to the supplier
Damaged merchandise

What causes inventory


shrinkage
Internal Theft (various schemes, including cash theft
schemes)
External Theft
Vendor Theft
Paperwork Errors
Inaccurate shipments
Inventory miscounts
Poor receiving practices
Failure to record all markdowns.

Non-inventory dollar
losses
Non-inventory related losses that occur at
store level.

Net Cash Register Discrepancies


Net Deposit Loss and Discrepancies
Credit Card Charge backs
Bad Check Loss
Gift Card Loss due to theft
Cash Robberies

THIS IS WHY IT IS IMPERATIVE


THAT LOSS PREVENTION BECOME
A CRITICAL COMPONENT OF
BUSINESS PHILOSOPHY!

The 5 ps of loss prevention


Philosop
hy

Practic
es

Peopl
e
Procedur
es

Policies

Philosophy

Have a
Written Code
of Ethics!
Create a
Positive
Organizatio
nal Culture!
Set The
Tone at
the Top!

Zero
tolerance for
fraud!

Empower
People to
Achieve
Goals!

Policies

Fortifies the
corporate
philosophy
Overarching
published rules
that govern
and embrace
general goals
of your
business

Procedures

Published
Directives that
govern personnel
in conducting
business
operations,
including internal
controls to
prevent and
detect losses.

Published
Directives that
govern
personnel in
what steps to
take when
detecting
indications of
loss.

Practices

Acts that are


performed
habitually or
repeatedly

Practices should
conform to
established
procedures

People
THE HUMAN FACTOR
Employee Theft

10-10-80 Rule

10% of the human


population is good. They
will not do anything
wrong, no matter what
pressure or opportunity
presents itself to them.

10% of the human


population is bad. They
will take advantage of
opportunities or create
opportunities to steal.

80% of the human


population are on the
fence and could possibly
fall on the wrong side of
the fence if pressure
enters their lives, and
could take advantage of
an opportunity and make
the wrong decision and
steal, rationalizing their
decision in a number of
ways

Understand why some of


the 80% fall on the
wrong side of the fence.

NI
T
OP
Y PO
RT
U

Fraud
Triangle

Variations of the
Fraud Triangle
have been
discussed since
that time,
including the
Fraud Diamond
adding a fourth
side representing
capability.

I
AT
LIZ
NA
TIO
RA
ON

The Fraud
Triangle was
developed by
Dr. Donald
Cressey in the
1950s while
conducting
research on why
people commit
fraud.

For the proposes


of this course the
Fraud Triangle
with the 3 sides of
Pressure,
Opportunity, and
Rationalization
will be utilized.

PRESSURE

Thank you !

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