Annotation: The loss prevention budget is described through an analysis of its use as a management tool. Applicability of a Department of Defense (DOD) security manual to industrial security procedures is also discussed.
Abstract: Through a program uniting cost accounting and cost analysis, security executives are able to measure organizational loss prevention. Security is an indirect labor expense comprising per hour cost of personnel and a fringe benefits package of an additional 30-35 percent. Fringe package items are those times that management desires to give employees as a benevolent gesture, that have been bargained for under a union contract, or that have been mandated by law. Administrative security personnel are the support function of the security labor group and include the executive in charge, supervisors, secretaries, investigators, fingerprinters and other personnel assisting the security function. Direct material costs within a loss prevention budget relate to physical security hardware such as fences, locks, uniforms, and miscellaneous guard equipment. Indirect cost items include maintenance and utility costs, service and central alarm contracts and reproduction, control and destruction of classified material. DOD contractors must add the cost of security guidance to subcontractors and associated typing, reproduction, updates, retention authority, approvals, and disclosure authorizations. DOD procedures as outlined in the Industrial Security Manual for the Safeguarding of Classified Material are described. Periodic in-house reviews of loss prevention systems are recommended. For DOD contractors, reduction of classified inventory saves accountability, inventories, storage space, secured containers, locks and surveillance hours. In storage areas not securing classified material alternative record retention and retrieval systems should be considered.