Understanding the distinct roles of loss prevention and asset protection is crucial for any business aiming to safeguard its resources. While both strategies are essential for minimizing risks and enhancing security, they cater to different aspects of business protection.
This article dives into the key differences between loss prevention and asset protection, highlighting how each approach contributes uniquely to the overall security and efficiency of your business. Stay tuned to unravel these concepts and determine which strategy best fits your organizational needs.
The 2020 National Retail Security Survey reports that in-store businesses experienced a 49.3% increase in fraud in 2020, which amounts to higher rates of loss than online and omnichannel stores. Physical stores are the most vulnerable target for break-ins, shoplifters, and organized retail theft. Hence, they experience higher shrinkage.
That’s where asset protection and loss prevention come in.
Asset protection and loss prevention are similar programs with different scopes. AP/LP are the use of strategies, technologies, and professionals to forestall inventory shrinkage, avoid damages, and mitigate liabilities in a business.
As mentioned, the difference is in the scope. Asset protection covers a broader set of strategies than loss prevention. AP—often used by big enterprises—is a risk management strategy used for shielding an organization from internal and external theft, protecting the business interests, and deterring litigation and liability claims from customers and employees. Meanwhile, loss prevention—a term often used by smaller businesses—involves the use of technology and processes to avert inventory shrinkage due to shoplifting and employee theft.
AP/LP professionals employ various strategies to reduce shrinkage in their business, especially brick-and-mortar retail enterprises.
What is loss prevention (LP)?
Loss prevention (LP) is a tactical measure employed by business owners to reduce shrinkage by stopping shoplifters, monitoring employees, and preventing organized retail crime (ORC) invasions that cost businesses money. LP’s primary goal is to avoid the loss of company goods or assets in a physical domain.
Businesses such as retail stores, gas stations, restaurants, warehouses, and other physical stores are affected by both internal and external threats, which reduce profit.
The National Retail Foundation reveals that, in 2021, retail shrinkage was at an all-time high. A shocking $94.5 billion dollars was swallowed up by retail losses.
Business owners’ reactions to this development were rapid too, as many now turn to effective loss prevention tools to mitigate their possible losses.
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What is asset protection?
Asset protection (AP) includes all measures, strategies, and techniques used by a business to protect its assets from employee theft, shoplifters, and any unforeseen conditions that could have legal claims to the company’s assets, intending to deter loss. This last part is what separates AP from LP.
As a business owner, some legal charges or claims could make you lose your business assets. Some of the charges may come from an accident, for example, a customer filing a lawsuit against your company for slipping on a wet floor.
AP specialists observe the business premises for noteworthy occurrences that could cause a loss of business assets. They often use cloud-based security technologies to spot unnatural activities going on inside and around the store. They perform technical activities such as analyzing reports and trend thresholds at their assigned location and using radiofrequency identification (RFID) chips to quickly spot theft.
An AP specialist also has to train employees to spot theft, patrol the store, and give detailed reports to law enforcement personnel when needed.
AP pays attention to every form of asset a business has, which includes cash, raw materials and merchandise, company machines, store interior accessories, employees, and more.
Protecting people is a second major distinction between asset protection vs. loss prevention. Mitigating and preventing violence is an important part of asset protection because it also reduces the potential for legal liability.
Asset protection (AP) includes all measures, strategies, and techniques used by a business to protect its assets from employee theft, shoplifters, and any unforeseen conditions that could have legal claims to the company’s assets, intending to deter loss. This last part is what separates AP from LP.
As a business owner, some legal charges or claims could make you lose your business assets. Some of the charges may come from an accident, for example, a customer filing a lawsuit against your company for slipping on a wet floor.
AP specialists observe the business premises for noteworthy occurrences that could cause a loss of business assets. They often use cloud-based security technologies to spot unnatural activities going on inside and around the store. They perform technical activities such as analyzing reports and trend thresholds at their assigned location and using radiofrequency identification (RFID) chips to quickly spot theft.
An AP specialist also has to train employees to spot theft, patrol the store, and give detailed reports to law enforcement personnel when needed.
AP pays attention to every form of asset a business has, which includes cash, raw materials and merchandise, company machines, store interior accessories, employees, and more.
Protecting people is a second major distinction between asset protection vs. loss prevention. Mitigating and preventing violence is an important part of asset protection because it also reduces the potential for legal liability.
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Causes of shrink
What are the common causes of inventory shrink and loss in retail stores? While shoplifting might come to your mind first, it isn’t the main cause of shrinkage in physical stores. Factors like employee theft and organized retail crime (ORC) are right at the top of the list.
Here are the common causes you should watch out for:
- Supplier fraud
- Employee theft
- Damage or spoilage
- Operational errors
- Cybercrime
- Organized retail crime (ORC)
- Increased liability due to health and safety violations
Supplier fraud
Supplier fraud, although not common, is still worth mentioning. This is when a business supplier acts in an unethical way to get paid for items that are not delivered. This often happens when there is no supervisor overseeing the delivery process of the supplies to the business. Having two people check every shipping manifest is a great loss prevention tip.
Employee theft
Even if loss prevention is often seen as a shield against external factors like shoplifting, break-ins, and organized retail crime (ORC), employee theft is still the dominant cause of business shrinkage. Your employees may commit fraudulent activities from ignorance, negligence, or with full intention. Remember, employee theft can include theft of cash or merchandise, as well as more deceptive tactics such as discount abuse.
Damage or spoilage
Assets can also be damaged by an employee or business owner by accident or out of negligence. It’s important that all employees take care to rotate older items to the front so they are sold before spoiling. Similarly, care must be taken when moving merchandise to not carelessly damage any items, as this can lead to big losses.
Operational errors
Operational errors occur when employees fail to follow laid down protocols and rules for preventing losses to the business, as well as safety measures to avoid hazardous conditions.
Cybercrime attack
Cybercrime is quickly becoming a major cause of loss to brick-and-mortar businesses. With the rapid adoption and integration of digitized technologies in the daily activities of in-stores, some businesses fall prey to cybercrime tactics.
Solink understands the trust placed in our products. We take our responsibility to protect your data very seriously. That’s why we recently attained our SOC 2 Type II certification.
Organized retail crime (ORC)
Organized retail crime (ORC) is on the rise. ORC consists of major crime incidents perpetrated by criminal organizations, such as strategic attacks, shoplifting raids, or break-ins. ORC groups move from town to town conducting these operations. It is a costly cause of loss to a business because they often obtain highly expensive goods to resell at flea markets or auction houses. They are also likely to damage your remaining property with careless attacks, unlike individual shoplifters who prefer stealth.
The key steps to implementing comprehensive loss prevention include:
- Install cloud video security.
- Implement internal control measures.
- Train employees to handle sensitive situations.
- Hire trained loss prevention personnel to monitor the premises.
- Build a healthy relationship with local security officers.
To see how Solink can transform your business with loss prevention strategies set up by our seasoned experts, book a free demo.
Increased liability due to health and safety violations
As mentioned above, loss prevention is mostly concerned with reducing visible losses such as theft, while asset protection goes beyond this to think about potential costs to a business more holistically.
Healthy and safety violations, customer injuries, and violent events all have the potential to cost a company money. In fact, a single liability claim could be more expensive than an entire year’s worth of theft events.
Asset protection vs. loss prevention
The difference between asset protection and loss prevention is the scope of work they perform for a business, but oftentimes, people use the term AP/LP to mean the same thing.
Asset protection takes a broader role beyond preventing shoplifters, employee theft, or ORC from causing shrink in a retail store.
AP focuses on protecting every asset on the store premises. Meanwhile, loss prevention’s sole aim is to spot and prevent every source of inventory shrinkage in a business.
Asset protection/loss prevention similarities
While there are differences between asset protection and loss prevention, AP and LP are both risk management strategies used by physical stores to reduce inventory shrinkage and other forms of loss. Both AP and LP require security cameras and other security equipment to remotely monitor the in-store environment and patrol around buildings in person. Lastly, both AP and LP combat factors that cause asset loss/claims and reduce profit.
Solink can help with your asset protection/loss prevention needs
Solink is built with AP/LP professionals in mind. We have the tools you need to excel in your profession. Motion and event searches let you see videos of high-risk situations, from people where they shouldn’t be to voids, no sales, and cash returns at the POS.
To see how Solink saves AP/LP professionals time, sign up for a demo today.
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Chuks Wesley | 
Wesley brings three years of writing and on-page SEO experience to the job. When he isn’t writing about loss prevention and asset protection, he’s busy tweeting and hanging with niche site builders, digital marketers, and football pundits. He also loves to watch the NBA. His work has appeared on SaaS sites like SEOblog and FutureofSaaS.
