Retailers Need to Take Stock of Their Risk Strategies if They Want to Be Resilient

This article is brought to you by Retail Technology Review: Retailers Need to Take Stock of Their Risk Strategies if They Want to Be Resilient.

By Sarah Hayward-Turton, Linx International Group.

Some retailers might be finding themselves hankering after the good old days when in-store theft was the major threat to their business from a security perspective.

The threat landscape is continually changing and whilst in-store crime is still a major issue, retailers are now faced with needing to protect the business from cybercriminals who may well be operating from thousands of miles away, as well as all of the other risks that could adversely affect operations.

Ransomware is a real threat for retailers in 2020

Cybercrime isn’t new but the techniques being employed are constantly evolving and one of the most worrying trends for retailers is ransomware, such as the attack experienced by the foreign exchange company, Travelex, earlier this month. Cybersecurity professionals have been warning about the potential scale and impact of such attacks for many years and reports of ‘infected’ organisations are becoming more frequent. In fact, ransomware is reported as being the second biggest cybersecurity threat to retailers.

For businesses in the UK, the wake-up call should have come in May 2017 when the WannaCry ransomware spread through the NHS IT systems. Yet the truth is 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.

Physical and cyber security planning need to converge

Many businesses (not just retail) wrongly view cybersecurity as an IT issue, 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. Staff switched on their computers and they were 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 is estimated that last year ransomware attacks alone damaged organisations to the tune of more than $12 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 Commissioners Office with new powers to impose hefty financial penalties as a result of GDPR).

Whereas in the past shrinkage would be consigned to a line entry on the P&L report, breaches and attacks are front page news and the resulting reputational harm (if not dealt with in the right way) 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.

Make security and risk management an ongoing activity

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 of operating in the world of retail it is no surprise that risk management is all too often a reactive activity with expertise being called upon only when an incident occurs. But ongoing risk management can deliver tangible returns that improve performance and profitability as well as providing protection. In June 2019, the cybersecurity company Checkpoint reported that retailers in the UK are losing more than £10 billion every year to shrinkage (the most of any country in Europe). Better risk management will inevitability have a positive effect on this number as causes of external and internal theft and fraud (cyber and physical), stock damage, vulnerabilities in the supply chain, risk to infrastructure etc are identified.

Retailers thrive in their chosen sectors because they are 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.

Author:
Sarah Hayward-Turton, Linx International Group

PerpetuityARC Training runs an online Managing Retail Security IQ Level 4 course which shows retailers how to mitigate threats to their stock, premises, staff and customers. The course provides critical 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.