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A food store in Vosloorus, east of Johannesburg on July 12 2021. Picture: THE SUNDAY TIMES/ALAISTER RUSSELL
A food store in Vosloorus, east of Johannesburg on July 12 2021. Picture: THE SUNDAY TIMES/ALAISTER RUSSELL

With losses running into billions of rand, the looting and mayhem in KwaZulu-Natal and Gauteng in July have once again shown that no business — particularly in SA — should be without adequate insurance. Surely, nobody will doubt the value of the SA Special Risks Insurance Association (Sasria) cover again, but there are other basic steps businesses can take to improve their ability to reduce risk — and premiums.

For companies, the point of departure must be the recognition that a number of trends are increasing the security threats they face. The poor (and arguably worsening) economy is driving some to see theft as morally acceptable, or least deadening cultural barriers to theft, creating a general vulnerability. Another issue is the poor conditions many drivers in the logistics industry endure. Long hours and inadequate resting periods lead to driver fatigue and, ultimately accidents that might have been avoided. At the same time, poor driver training and ineffective driver management means bad driving behaviour is not corrected.

 The first step to improving security id for businesses to assess the risks they face. For example, an e-hailing business is most at risk from the drivers it uses, and thus the driving history and skills of each driver is most relevant. A telematics device can also enhance the safety of drivers and passengers, and provide data that can be used to improve driver performance and the overall customer experience.

For a landlord, the location of the property is a key factor as are the security measures in place. In addition, the kind of tenants and their businesses is also important; for example, are any of the tenants engaged in hazardous activities that could threaten the building or its inhabitants? Here are a few examples of the kinds of security measures to reduce the risk and make your business more secure:

  • For a logistics business, telematics devices that measure vehicle position, route and speed, and along with dash cams would improve security and aid in the case of an accident. The same is true for e-hailing companies.
  • In all types of vehicles, alarms are generally automatically included. In commercial vehicles, early-warning tracking devices are to be preferred to passive ones for the reason that the tracking company reacts more quickly to the former.
  • When it comes to properties, a monitored alarm linked to armed response is very important. Other measures could include guards on premises and securing the physical perimeter. Technology also has a growing role, and some business owners are turning to CCTV cameras more and more to monitor premises either via a control room staffed by people, or, increasingly, by artificial intelligence software that can detect abnormal activity. Smoke alarms and sprinkler systems are also worth investigating as a way to protect both staff and goods.

The insurer will appoint a risk surveyor to visit a property and his or her recommendations should be followed. Advise your insurer in detail of the security arrangements made, and make updates if they change. The benefits can be substantial. Good security measures on a property could see premiums reduced by about 10%, while telematics and other electronic devices on commercial vehicles could see a 15% premium reduction.

Understand your risk

At the same time, though, it is important to point out that security measures need to be commensurate to the risk the business faces. From the insurer’s point of view, the best advice is to have a proper risk management process in place. This would involve not only assessing an individual business’s risks and adequate mitigation interventions, but regularly monitoring the threat landscape to identify new risks or a change in existing risks.

Risk management also has to include oversight of the mitigation interventions. If technology is in place, is it being maintained and is it integrated into normal business routines? For example, are alarms checked regularly, is there a robust roster of who is in charge of setting alarms or reading guard reports, and does somebody analyse the reports of vehicle movements from the tracking company, and take appropriate action?

It’s worth emphasising that a security-conscious company would have processes in place to assess not just how well its risk-mitigation strategies are working, but also how the insights gained from any reports could be used to improve its overall security and the general health of the business.

Security is a challenge for SA companies, but taking the necessary actions can greatly reduce the risks and the associated insurance premiums.

• Mellow is head of MiWay Business Insurance.

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