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Business Crime Costing SMEs €1.5bn Per AnnumDownload PDF
ISME, Friday, May 25th, 2012.
The NATIONAL CRIME SURVEY (sponsored by Top Security Ltd.) issued today (May 25th 2012), by ISME, the Irish Small & Medium Enterprises Association, confirms that the annual cost of crime is now €1.5bn. The survey reveals that while the number of enterprises affected by crime has reduced slightly, the number of incidents and the costs of crime against business have increased in the last 12 months. The Association called on the Government to prioritise business crime, an area that has not, to date, received the attention it warrants.
The results of the survey, which attracted a response from 648 businesses, confirms that in the last 12 months, one third of companies (32%), have been the target of criminal activity. Construction (61%) and the Retail (44%) sector were the areas of the business community most affected.
Regionally, the highest incidence of crime was reported in Dublin County and Ulster (40% each) closely followed by Dublin City 39%, Rest of Leinster 33% and Connacht 19%.
The total cost of crime per enterprise has risen by 59% since 2007. This figure is a composite of the actual loss suffered, repairs required and the annual cost of prevention. While the cost of prevention has reduced by 7% since 2007 to €4,193, the direct costs have increased by a massive 130% to €9,640 per enterprise since 2007.
The total direct cost of crime against business in the last 12 months is estimated at €1.455bn, (calculated on 200,000 businesses in Ireland compared to 233,000 in 2011). This does not take into account the indirect costs of crime on the business, including poor staff morale, business disruption and in some cases relocation.
Key issues that are highlighted include:
The survey results confirm that the full extent, impact and cost of crime against business are not properly recorded, as a significant number of companies (20%) do not report crime to the authorities. There are a number of factors contributing to this situation, including a perception among small business owners that crimes against their businesses are not viewed as real crime and therefore are not taken seriously. Also only 8% of small business owners surveyed had confidence that if they were a victim of crime, the criminal would be apprehended.
The SME community have lost faith in the ability of the judicial system to protect them, with only 3% having faith in the judiciary. This figure has remained this low for a number of years with absolutely no effort forthcoming from our well paid judiciary to rectify the situation.
It should also be noted that business crime statistics are not recorded separately, indicating once again that crimes against business are not treated as seriously as crimes against the individual, this despite the fact that businesses are twice as likely to be the victims of crime as individuals.
Instead of investing in capital or labour, precious resources are frittered away on rectifying criminal damage, crime prevention measures and higher insurance costs. In extreme cases the incidence and cost of crime can threaten the viability of the business. Some of the costs of the crimes incurred by businesses will be passed on to consumers. If businesses are forced to relocate from a particular area because of the prevalence of crime, then local customers are deprived of the businesses’ services and potential employees lose the work opportunities.
Commenting on the findings, ISME Chief Executive, Mark Fielding, outlined, “This year’s crime statistics highlight the need to establish a robust crime reduction strategy with key performance indicators to measure the success of any implementation measures. Business crime has long been seen as a victimless crime, however it has a devastating effect on jobs, livelihoods and whole communities.”
“Small business believe that the authorities, both legislature and judiciary, have ineffectively dealt with the scourge of business crime locally and nationally. A properly resourced Crime Prevention Office with specialists in business crime would reduce the €1.5bn bill that SMEs face annually in terms of direct crime costs and prevention.”
“Business owners will continue to postpone or cancel investment in their company until sufficient action is taken against the perpetrators of business crime. Small business needs action now in terms of enforcement and a more visible presence of Gardai on our streets,” he added.
Emmet O’Rafferty, Chairman of Top Security, said, “From our experience, many smaller businesses are not reporting crimes because they either have no insurance or are fearful of rising insurance premiums. Inadequate security leaves a business vulnerable to crime and the financial and psychological impact can suck the energy out of a small business very quickly, thereby threatening its very existence. The peace of mind that good security brings is worth the minimal investment when compared to the post-crime costs.”
To address the ever increasing levels of business crime, ISME recommends the following initiatives:
In conclusion ISME demanded that the Government crackdown on business crime by implementing ISME’s recommendations and adopting a tougher stance with the perpetrators.
The Top Security sponsored ISME National Crime Survey Report is attached and available for download at www.topsecurity.ie
ISME is the independent voice of Small & Medium business in Ireland, representing in excess of 8,750 members across all sectors. The Association is owned and run by owner managers and is independent of big business, government and unions; ISME the TRUE voice of the SME.
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