2005
(11/02/05) Research identifies 'true' cost of criminal activity on small businesses
The implications of criminal activity on businesses are far reaching and involve much more than just replacing stolen stock or paying to repair damaged property. New research1 from AXA reveals that over the past five years, some 2,000 small businesses2 claim that they have been forced to close down as a result of suffering at the hands of criminals.
Since 1999, around 34,000 small businesses said that being a victim of crime has meant that they have had to close their operations for a period of time, and in some cases criminal activity was so severe 16,000 businesses decided to move premises. Some 30,000 small businesses claim that over the past five years, their staff have been injured or traumatised as a result of criminal activity.
Neil Mercier, property insurance manager at AXA said: “When discussing the impact of crime on businesses, it is easy to just focus on the immediate cost of replacing stolen items or repairing any damage caused. However, the real effect of crime is much greater than this and businesses need to review their risk management programmes to ensure that they are reducing the chances of falling victim to criminals.
“Thankfully, this message seems to be getting through because our latest research3 shows that for the third quarter of 2004, there was a 15.8% fall in the frequency of crimes against businesses when compared to the second quarter of 2004.”
The most obvious effects of criminal activity on businesses over the past five years have been the investment of time and money; 439,000 small companies claim to have incurred costs improving security or repairing damage, while some 272,000 have had to waste time dealing with problems caused by criminal activity as opposed to running their businesses. Many small companies also complained that the performance of their business was affected with over 50,000 noticing a decline in sales and 186,000 seeing a fall in profits.
| Effect of crime on business | Percentage of businesses that have been a victim of criminal activity over the past five years | Number of small businesses2 |
|---|---|---|
| Incurred cost of improving security or repairing damage | 64% | 439,000 |
| Spent a lot of time sorting out the problems caused instead of running your business | 40% | 272,000 |
| Decline in profits | 27% | 186,000 |
| Staffing problems | 22% | 151,000 |
| Decline in sales or custom | 8% | 54,000 |
| Business reputation was damaged | 6% | 39,000 |
| Business closed for period of time | 5% | 34,000 |
| Staff were injured or traumatised | 4% | 30,000 |
| Moved premises | 2% | 16,000 |
Commenting on the findings of the AXA survey, the British Chambers of Commerce's Director General, David Frost, said: “The results of this survey reinforce the fact that crime has a hugely damaging impact on British businesses. Crime is a cause of deep concern to our members as it hampers their ability to trade and undermines staff morale. The government must continue to work with the business community if we are to tackle the issue and the agenda must now switch from focusing primarily on the retail sector to the problems faced by all types of businesses.”
AXA offers a free crime prevention toolkit designed to help businesses protect themselves against criminal activity. The AXA Business Security Blueprint provides best practice advice on everything from securing windows and doors to CCTV and fire suppression systems. It can be downloaded free of charge from www.axa4business.co.uk.
1Market research company Continental research interviewed 300 Managing, Financial Directors and other senior managers of businesses with an annual turnover of between £50,000 and £ 1million. Interviews took place between 29th November 2004 and 3rd December 2004.
2The 300 companies interviewed were subject to weighting applied by turnover, region and industry type to make the sample representative of the 1,095,000 companies with annual turnovers of between £50,000 and £1 million as estimated by the DTI.
3AXA Business Crime Index
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