Loss prevention

Loss prevention is a set of processes used by businesses to preserve their profit, generally in reference to theft.

What is loss prevention?

Loss prevention is all of the processes that companies use to preserve their profit. It is most commonly discussed in regards to retail and hospitality, but other industries also experience loss and put in place loss prevention strategies.

Many consider loss prevention solely in reference to theft, both internal and external theft. Others include all the issues that needlessly reduce profit in their loss prevention systems. This can include related crimes such as supplier fraud, excess waste due to employee error, and damaged merchandise.

Why is loss prevention important?

Loss prevention is important to all businesses because losses eat away at profit. Any dollar in expense reduction that can be found is welcome.

Losses are expenses that do not directly or indirectly lead to improved sales, which makes them the ideal expenses to reduce or eliminate. Companies that can get a handle on their losses are able to outcompete their competitors through more efficient business management.

Loss prevention has never been more important:

• High inflation is already reducing margins and leading some consumers to cut back on their spending.
• There appears to be a recession on the horizon.
• Higher interest rates are also making it more expensive to expand.

While better loss prevention might not solve these issues, it can help. Proper loss prevention is a way to run a leaner business where higher supplier costs and reduced sales are not as punishing.