The business case for plant security

Securing the bottom line

26 March 2010 17:56  [Source: ICB]

Proper security measures pay for themselves

Consultant's corner
David S McCann/Wivenhoe Group

MANY CHEMICAL executives regard security as a necessary evil, but when they view it in the budget, they see an unnecessary cost item that does not produce revenues or add to a company's profitability.

Rex Features/Chris Eyles

They are simply wrong. Security systems and measures, when applied correctly to meet design criteria in compliance with the accepted standards and practices of the security industry, can greatly enhance the bottom line, particularly in today's uncertain economic climate.

PREVENTING INCIDENTS
Obviously, a primary goal of any security department and the systems and measures adopted is to prevent incidents, particularly those that might affect employees, company operations, infrastructure, or inventories. A stoppage in operations or provision of services is measurable in many different ways, and security measures preventing such stoppages provide a valuable addition to the bottom line, as does the prevention of damage to infrastructure and other situations.

What would be the cost to the company if a primary manufacturing area was damaged, or a warehouse destroyed with its inventory, or if there was critical damage to a series of loading docks that disrupted supplies?

It should also be remembered that while chemical facilities have always been concerned about safety and the prevention of accidents at a plant, they now have to be very concerned about deliberate acts of sabotage. Such acts may be terrorist-related or the vengeful act of a disgruntled employee. In either case, a successful event could be financially crippling to the company.

PREVENTION OF NEGLIGENT LIABILITY
It is unfortunate that many executives believe negligence is something measured "after the fact," for the issue should actually be considered in anticipation of any incident that could lead to allegations of negligence or gross negligence.

In the US especially, the occurrence of a security event, such as an assault in the workplace or the theft of private data, will almost certainly trigger a legal action of some sort. It is unlikely that an organization would be able to completely avoid a lawsuit as such, but it is vital that the company be in a position to defend itself against any alleged negligence.

Companies and organizations that take sound and effective security measures and utilize adequate security design criteria to develop their security measures will be in a much better position to rebut charges of negligence than those that have not pursued such measures. Punitive damages, if proven in court, could mean very significant penalties in the hundreds of thousands - and possibly millions - of dollars that will go straight to the bottom line, even with the best insurance coverage.

LOSS OF PUBLIC CONFIDENCE
In the event that a serious incident takes place, particularly for chemical companies, there is a secondary cost additional to any legal and health consequences: the loss of public confidence. Almost immediately, the company will also lose its customers' confidence. Everyone remembers the 1982 Tylenol incident in the US and the 1984 Bhopal tragedy in India. Imagine the effect that a deliberate incident with similar consequences would have upon your own company.

The cost of good security needs to be looked at in comparison to the cost of such consequences, though not necessarily on the scale of the two events referred to above.

STAFF MORALE
A multitude of sources detail the effects of low staff morale on productivity, whether the cause is the Monday morning blues, personal issues or fears concerning personal safety or the damage or theft of property. Good security will generally give an employee a feeling of being in a safe environment, which is normally a morale booster. If a person is concerned that they may be accosted or assaulted at any moment, or harassed in a myriad of ways, their productivity will not be high.

For example, when closed-circuit television surveillance systems are employed, areas such as the cafeteria, meeting rooms and supervisor offices can be fitted with inexpensive video monitors where employees can see that areas such as facility parking lots are being monitored. The increase in morale and, by extension, productivity is considerable. The additional eyes also effectively boost security manpower, as those same employees checking up on their vehicles would almost certainly report suspicious activity.

Security professionals often refer to the "10/80/10 rule," which states that 10% of the population are honest all of the time, 10% are dishonest all of the time, and the remaining 80% are prone to dishonesty if there is opportunity. Sound security measures are a deterrent not only to criminal acts from the outside, but also to "insider" crime, which may range from petty theft and pilferage to fatal assault.

Unfortunately, pilferage takes on an entirely new meaning at chemical facilities where certain types of chemicals can be used to build Improvised Explosive Devices (IEDs). Terrorists are willing to pay well for small amounts of such chemicals.

SALES ADVANTAGE
It may at first sound a little incredible to suggest that good security can assist and actually increase sales, but the point is perfectly valid. Particularly in industries such as chemicals, where companies supply raw materials or key ingredients to their customers, continuity of supply can often be as important as price and other factors, and in many cases, being able to rely upon a vendor for continuous deliveries at all times, particularly in a crisis, is paramount.

Indicating to a customer that you have carried out a qualified Security Vulnerability Assessment (SVA), devised appropriate security design criteria, and implemented sound security measures will greatly aid in the customer's sense of your company and its ability to provide products or services without interruption. In addition to reinforcing long-term customer relationships, such perceptions will often lead to increased sales, as well as referrals from that customer to other potential customers.

SECURITY LEGISLATION
In 2006, the US released its initial version of new security legislation, the Chemical Facility Anti-Terrorism Standards (CFATS), 6CFR Part 27. The final Chemicals of Interest (COI) list was approved in late 2007.

These regulations are substantially different from prior regulations on security, such as the 2003-2004 Public Health Security and Bioterrorism Preparedness and Response Act (BPRA), and involve not only the completion of a Security Vulnerability Assessment of a facility, but where applicable, the submission of a Site Security Plan (SSP), followed by a timetable of implementation.

At last count, the Department of Homeland Security (DHS) had trained some 250 inspectors to monitor and enforce the security regulations. Failure to meet the regulations in a timely manner can result in severe fines of up to $25,000 (€18,720) per day of violation, and in certain circumstances, the DHS has the power to shut down a facility altogether.

As can be seen, the cost of inadequate security may well outweigh whatever budget costs apply to actual security measures and systems at a facility.

There are other ways good security can add to the bottom line, as well. These are some of the major ones and well worth noting.

Quote: It is unfortunate that many executives believe negligence is something measured "after the fact"

David S. McCann is principal consultant at the US-based security consulting firm Wivenhoe Management Group

Author: David McCann

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