Some retailers might be finding themselves hankering after the good old days when, from a security perspective, in-store theft was the major threat posed to their business. The threat landscape is continually changing and, while in-store crime is still a major issue, retailers are now faced with the need to protect their businesses from cyber criminals who may well be operating from thousands of miles away, as well as all of the other risks that could adversely affect operations. Sarah Hayward-Turton evaluates the issues involved.
Cyber crime isn’t new, of course, but the techniques being employed are constantly evolving. One of the most worrying trends for retailers is ransomware, such as the attack experienced by the foreign exchange company, Travelex, earlier this month. Cyber security professionals have been warning about the potential scale and impact of such attacks for many years now and reports of ‘infected’ organisations are becoming more frequent. In fact, ransomware is reported as being the second biggest cyber security threat posed to retailers.
For businesses in the UK, the wake-up call should have come in May 2017 when the WannaCry ransomware spread through the National Health Service’s (NHS) IT systems. Yet the truth is that, today, most organisations are vulnerable to a similar attack as a result of inefficient and ineffective security and risk management, relying too heavily on technology without the necessary teaching and training.
Need for convergence
Many businesses (not just those in the retail sector) wrongly view cyber security as an IT issue and one separate from the physical security of their stores and warehouses, etc. Yet when it comes to something like a ransomware attack it spreads quickly, impacting the online and physical worlds (as witnessed by the NHS episode). NHS staff switched on their computers and the machines were then instantly infected, rendering them useless unless a payment was made to the criminals for the key to unlock it. Consequently, operations and appointments were cancelled and it took considerable time, effort and money to get back on track.
It’s estimated that, last year, ransomware attacks alone damaged organisations to the tune of more than £9 billion and the reality is that this is just one of many relatively new risks facing retailers alongside the likes of personal data breaches, both of which are almost guaranteed to make the headlines should an organisation succumb (as well as catch the attention of the Information Commissioner’s Office with new powers to impose hefty financial penalties as a result of the introduction of the European Union’s General Data Protection Regulation).
Whereas in the past shrinkage would be consigned to a line entry on the P&L report, breaches and attacks are now front page news and, if not dealt with in the right way, the resulting reputational harm can be significant and lasting. Large retailers may weather the storm, but smaller businesses, operating without large reserves, may not be so fortunate as consumer confidence plummets and customers vote with their feet.
Security and risk management
It may seem like a gloomy picture is being painted, but there are positive steps retailers can put in place to prevent attacks and incidents, as well as mitigate the impact if the worst should happen.
The key is to view security and risk management in the round and to make it an ongoing activity within the business. Knowing how to conduct a risk assessment and business impact analysis, devise business continuity and contingency plans, build a crisis management team and run a crisis operation are skills that every retailer should have in-house.
With so many pressures involved in the world of retail, it’s no surprise that risk management is all-too-often a reactive activity with expertise being called upon only when an incident occurs. Ongoing risk management can deliver tangible returns that improve performance and profitability as well as providing protection.
In June last year, the cyber security company Checkpoint reported that retailers in the UK are losing more than £10 billion every year to shrinkage (the highest total of any country in Europe). Better risk management will inevitability have a positive effect on this number as the causes of external and internal theft and fraud (cyber and physical), stock damage, vulnerabilities in the supply chain and risk to infrastructure, etc are identified.
Retailers thrive in their chosen sectors because they’re adaptable and agile to the changing market, and are able to identify trends and opportunities quickly. These are exactly the qualities of a good risk management strategy.
Sarah Hayward-Turton is Head of Sales at the Linx International Group
*PerpetuityARC Training runs an online Managing Retail IQ Level 4 course which is designed to show retailers how to mitigate threats posed to their premises, stock, members of staff and customers. The course provides insights into retail security and examines the key techniques involved in identifying and managing loss, as well as the essential security management knowledge and skills needed to work within the retail sector. For more information visit www.perpetuityarc.com/course/managing-retail-security