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The FRUSTRATION of Loss
Prevention's way of calculating an ROI
By Francis Clark
VP Business Development
Profitect
I very recently read of a case of lottery fraud in D&D and
clipped these 3 lines out to make a point about how Loss
Prevention’s use of LOSS as Value is misleading in examples
of ROI.
√ $82,000 in losses
√ Validated Losses: $1210
√ Total value to client: $82,000
Obviously, the ONLY VALUE to the client was that the
blood-letting stopped at $82,000 in LOSS. Not one penny of
this proclaimed ‘value’ will show up in anyone’s pay check,
bonus or shareholder benefit. It’s LOSS. Depending on the
profit margin of the client and ENORMOUS AMOUNT OF SALES
will have to be recorded to offset this NON VALUE-LOSS.
The additional frustrating element is that lottery schemes
are ‘on going’ and by not being able to detect the initial
patterns of deception the LOSS accumulates to $82,000 or
greater before being discovered.
And likely this LOSS represents only the face value of the
tickets scammed which has to be reimbursed to the lottery
commission and does NOT include labor to investigate,
potential prosecution costs, court costs, time in court away
from work costs and ‘if’ a restitution scenario is
developed...the cost to manage that scenario.
In addition, by publicizing this high LOSS amount the shift
is definitely in the direction or REWARD than PENALTY. If
the person hadn’t been so greedy, had been more clever,
etc., it could have been more OR they would have moved on
before being discovered. The ‘value’ of the $82,000 is what
the their enjoyed, not the client!
Over and over we see high value lottery schemes and to me,
VALUE would be in detection at a very much lower LOSS to the
client but is still a LOSS.
But I’ve also seen these ROI conversations taken to an even
greater extreme where it is claimed that ‘if we weren’t
using X to find this the losses would likely have climbed to
$146,000 until traditional audit or reporting scenarios
would have tumbled to it...so then they claim the even
higher value as part of an ROI. REALLY?
I guess the perfect parting shot would be to find my ‘rose
colored glasses’ so I can spin of a value proposition for a
missing tractor trailer of iPads...wonder how much ‘value’ I
can get out of that LOSS?? |
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